38. The Coleman Co. produces canned tomatoes and it is considering the purchase of a new machinethat would increase the speed of the canning process and save money. The cost of this machine is $40,000. The annual cash flows are projected to be the following:YearCash Flow1$5,000$10,0003$25,000$15,000$20,0004What is the net present value of selecting the new machine, assuming an interest rate of 8%?A. $17,686B. $97,686C. $57,686D. $7,86812

Net present value is a capital budgeting technique used to analyse the profitability of a investment…

Answered: 38. The Coleman Co. produces canned…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

. A is considering the purchase of two alternative machinery. Machine 1 has an expected life of 5 years, will cost Rs. 100 lacs, and will produce net cash flows of Rs.30 lacs per year. Machine 2 has a life of 10 years, will cost Rs.140 million, and will produce net cash flows of Rs.25 million per year. It plans to use the chosen machine for only 10 years. Inflation in operating costs, machinery costs, is expected to be zero, and the company’s cost of capital is 12%. Which machine is acceptable as the better project? What is the equivalent annual annuity cost for each machine and by this criterion, which machine is acceptable?
Compute the present value, P, for the following cash flows. You supervise an aging production line that constantly needs maintenance and new parts. Last month you spent $25,000 replacing a failed controller. Should the following plan be accepted if the interest rate is 15%? The net installed cost of the new line to replace the old line is $600,000 with a useful life of six years. In the first year its operating cost will be $100,000, and it will generate annual revenues of $300,000. Each year the operating cost will increase by $5000 and the revenues will fall by $15,000. After six years the equipment will have a value of $100,000 in the next re-building of the line.
Help finish the next exercise: A delivery company is evaluating an investment to purchase vehicles. This is expected to generate a return of $11391.00 one year from now, $16.230 00 two years from now and $21,107.00 three years from now. The required rate of return is 10%. Calculate the discounted cash flow We already know that: • The Present Value of the Cash Flow 2 is $13.413.22 and, The Present Value of the Cash Flow 3 is $15,858.00 Find the Present Value of the Cash Flow 1 and, uning this and the previous information, calculate the discounted cash flow. Note: Write you answer rounded to two decimal places Type just the number, do not type tihe S sign. For example, if your anower is $25,500.55 type only 2550.55 Answer
You are considering purchasing a new injection molding machine. This machinewill have an estimated service life of 10 years with a negligible salvage value.Its annual net operating cash flows are estimated to be $60,000. To expect a 15%rate of return on investment, what would be the maximum amount that should bespent on purchasing the injection molding machine?(a) $301,126 (b) $234,645(c) $600,000 (d) $126,450
Give me step by step full answer
5. A new tablet computer from the R&D department will earn $20,000 in revenue in one year, which will then grow by 20% each subsequent year. Suppose an interest rate of 5% per year and a horizon of 20 years. What is the cutoff value for the initial investment that would make this project worthwhile? (i) Compute the answer using the formula (ii) Compute the answer using a spreadsheet (iii) If we change the interest rate, the cutoff value will change. Draw a plot of the cutoff value versus interest rate.
i need the answer quickly
A business is considering purchasing a piece of new equipment for $200,000. The equipment will generate the following revenues: Year 1: $50,000Year 2: $50,000Year 3: $50,000Year 4: $60,000The machine can be sold at the end of the year four for $25,000. Assume a discount of 8%. 2. What is the compounded return(IRR) for this project?

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS