114115 1426. The following data pertain to Sunlight Corp., whose management is planning topurchase an automated tanning equipment.1. Economic life of equipment - 8 years.2. Disposal value after 8 years - nil.3. Estimated net annual cash inflows for each of the 8 years - P81,000.4. Time-adjusted internal rate of return- 14%5. Cost of capital of Sunlight Corp-6. The table of present values of P1 received annually for 8 years has thesefactors: at 14% = 4.639, at 16% = 4.34416%7. Depreciation is approximately P46,970 annually.Find the required increase in annual cash inflows in order to have the time-adjustedrate of return approximately equal the cost of capital.Group of answer choicesP5 501P4.344P5,871P6,501

Here, Economic Life of Equipment is 8 years Disposable Value after 8 years is NIL Estimated Annual…

26. The following data pertain to Sunlight Corp., whose management is planning to purchase an automated tanning equipment. 1. Economic life of equipment - 8 years. 2. Disposal value after 8 years – nil. 3. Estimated net annual cash inflows for each of the 8 years - P81,000. || | 4. Time-adjusted internal rate of return – 14% 5. Cost of capital of Sunlight Corp - 16% 6. The table of present values of P1 received annually for 8 years has these factors: at 14% = 4.639, at 16% = 4.344 7. Depreciation is approximately P46,970 annually. %3D

26. The following data pertain to Sunlight Corp., whose management is planning to purchase an automated tanning equipment. 1. Economic life of equipment - 8 years. 2. Disposal value after 8 years – nil. 3. Estimated net annual cash inflows for each of the 8 years - P81,000. || | 4. Time-adjusted internal rate of return – 14% 5. Cost of capital of Sunlight Corp - 16% 6. The table of present values of P1 received annually for 8 years has these factors: at 14% = 4.639, at 16% = 4.344 7. Depreciation is approximately P46,970 annually. %3D

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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The expected average rate of return for a proposed investment of $786,000 in a fixed asset, with a useful life of 4 years, straight-line depreciation, no residual value, and an expected total net income of $282,000 for the 4 years, is (round to two decimal points). a.35.88% b.8.97% c.13.90% d.17.94%
Subject :
A man decided to Invest in an equipment worth PHP 12,000,000.00 capital with the following data: Expected revenue - PHP 5.8M/year Cost of Operation and Maintenance - PHP2.4/year Taxes and Insurance. - 2% of the first cost/year Expected earnings is 12% minimum Life of the equipment is 5 years with expected value of PHP1.2M after 5 years a. Determine the desirable investment using ROR method and AW method b. What are the ways and means to make it desirable investment c. In what case we should use the present worth and future worth method of economy study?
Subject: acounting
PART B From Part A above, assume that the bank decided to give a loan of $ 59 million to Nivea Corporation (recorded for initial year). Nivea-Corporation invested the amount in a project and generated the following sequence of cash flows over six years: Year Cash Flow ($ million) 0 -59.00 1 4.00 2 5.00 3 6.00 4 7.33 5 8.00 6 8.25 1.Calculate the terminal value assuming that cash flows after the sixth year grow at 2% annually in perpetuity, and then recalculate the NPV use an interest rate of 10%
Ñ5
For the cash flows below, use an annual worth comparison to determine which alternative is best at an interest rate of 1% per month.
5. The original investment in a project was $66,350. The project has a life of ten years and the company requires a 10% rate of return on all investments. The annual net income was $16,592.1. $ 7,930 was the depreciation expense. What is the project's profitability index rounded to two decimal places?
2. Calculating Project NPV The Fleming Company is considering a new investment. Financial projections for the investment are tabulated below. The corporate tax rate is 22 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project. Investment Sales revenue Operating costs Depreciation Net working capital spending Year 0 $32,800 450 Year 1 Year 2 Year 3 Year 4 $14,200 2,100 8,200 175 $15,900 $15,700 2,100 2,100 8,200 8,200 250 275 $12,900 2,100 8,200 ? a. Compute the incremental net income of the investment for each year. b. Compute the incremental cash flows of the investment for each year. c. Suppose the appropriate discount rate is 12 percent. What is the NPV of the project?
D Company is evaluating three projects. Each project has a useful life of 5 years. Relevantdata on each project are as follows. Depreciation is computed by the straight-line method with no salvage value. The company’scost of capital/interest rate is 15%. (Assume that cash flows occur evenly throughout the year.)a. Compute the cash payback period for each project. (Round to two decimals.) (25%)b. Compute the net present value for each project. (Round to nearest dollar.) (25%)
D1.
Calculate the expected accounting rate of return on average investment for a proposed investment of $9.000,000 in a fued asset, using straight line depreciation with a useful life of 20 years, $600,000 residual value, and is expected to increase the company's total net income (after depreciation and taxes) over the investment's 20-year useful life by $12,000,00. O 12.5% O 250.0% O 18.0% O 14.3% O 6.7%

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