4. Galindo Long-Haul, Inc., is considering the purchase of a tractor-trailer that would cost$178,848, would have a useful life of 8 years, and would have no salvage value. The tractor-trailer would be used in the company's hauling business, resulting in additional net cashinflows of $36,000 per year. Galindo Long-Haul, Inc. has a cost of capital of 9%. What is theinternal rate of return on the investment in the tractor-trailer? And is the investmentacceptable for the company?

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Answered: 4. Galindo Long-Haul, Inc., is…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 4P

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Cortland Corp is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net cash flows of $169,400. The equipment will have an initial cost of $605,000 and have a 5 year life. If the salvage value of the equipment is estimated to be $17,000, what is the annual net income? Ignore income taxes.A.) 152,400B.) 51,800C.) 287,000D.) 186,400
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Lor Industries is analyzing a capital investment proposal for new machinery to produce a new product over the next ten years. At the end of the ten years, the machinery must be disposed of with a zero net book value but with a scrap salvage value of P20,000. It will require some P30,000 to remove the machinery. The applicable tax rate is 35%. The appropriate “end-of-life” cash flow based on the foregoing information is * A. Inflow of P30,000. B. Outflow of P6,500. C. Outflow of P10,000. D. Outflow of P17,000.
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Addison Corp. is considering the purchase of a new piece of equipment. The equipment will have an initial cost of $960,000 a 4 year life, and no salvage value. If the accounting rate of return for the project is 6%, what is the annual increase in net cash flow? Ignore income taxes.A.) $57,600B.) $182,400C.) $240,000D.) $297,600

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