9- Suppose that a company is about to decide on a replacement investment. The old machine on hand was purchased two years ago for 65,000 TL. Straight-line depreciation is employed for the old machine where useful life is 5 years. The current market value of the old machine is determined as 23,000 TL. The new machine that will replace the old one would cost 140,000 TL excluding 4,000 TL shipping and 2,00O TL installation costs. The acquisition of the new machine will increase accounts receivable by 9,00O TL, the inventory by 13,000 TL, and accounts payable by 15,000 TL. The corporate tax rate is 30%. What would be the initial investment outlay? O 125.200 TL O 118.200 TL O 123.000 TL O 134.200 TL

9- Suppose that a company is about to decide on a replacement investment. The old machine on hand was purchased two years ago for 65,000 TL. Straight-line depreciation is employed for the old machine where useful life is 5 years. The current market value of the old machine is determined as 23,000 TL. The new machine that will replace the old one would cost 140,000 TL excluding 4,000 TL shipping and 2,00O TL installation costs. The acquisition of the new machine will increase accounts receivable by 9,00O TL, the inventory by 13,000 TL, and accounts payable by 15,000 TL. The corporate tax rate is 30%. What would be the initial investment outlay? O 125.200 TL O 118.200 TL O 123.000 TL O 134.200 TL

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

See similar textbooks

Similar questions

5. Does your company want to purchase this machine that will provide cost savings of $100,000 annually for its useful life (8 years)? The cost is $250,000; tax rate is 36% and discount rate is 14%. Compute straight-line depreciation for 8 years with zero salvage value. Calculate the cash flows and determine the NPV and IRR. Does your company want to buy this machine?
5. The Akana Company expects to sell 3,000 units, ± 15 percent, of a new product. The variable cost per unit is $8, ± 5 percent, and the annual fixed costs are $12,500, ± 5 percent. The annual depreciation expense is $4,000 and the sale price is $18 per unit, ± 2 percent. The project requires $24,000 of fixed assets which will be worthless when the project ends in six years. Also required is $6,500 of net working capital for the life of the project. The tax rate is 21 percent and the required rate of return is 12 percent. What is the net present value of the optimistic, best, and pessimistic cases using scenario analysis?
if a company is considering buying a system that costs 450,000 with an estimated 10-year life and a salvage value of 70,000, the estimated operating results with the new machine are, incremental revenue = 180,000, incremental expenses = 123,000 which is made up by, expenses other than depreciation = 85,000, depreciation (straight-line basis) = 38,000, and incremental income = 57,000, and all revenue and expenses other than depreciation use cash, how do I find the annual net cash flow, time of the payback period, return on investment percentage, and the Net present value, discounted at an annual rate of 6% (present value of $1 due in 10 years, discounted at 6%, is 0.558; present value of $1 received annually for 10 years, discounted at 6%, is 7.360)?
4
1. Howell Petroleum is considering a new project that complements its existing business. The machine required for the project costs $3.82 million. The marketing department predicts that sales related to the project will be $2.52 million per year for the next four years, after which the firm expects to sell it for $500,000. The machine is a five-year class asset and will be depreciated down to zero over five years under the straight-line method. Cost of goods sold and operating expenses related to the project are predicted to be 25 percent of sales. Howell also needs to add net working capital of $200,000 immediately. The additional net working capital will be recovered in full at the end of the project’s life. The corporate tax rate is 35 percent. The required rate of return (or discount rate) for the project is 12.5 percent. Compute the NPV, IRR, and payback period of the project. The firm’s acceptable payback period is 3 years. Is this project acceptable to the firm?
ces We are evaluating a project that costs $2,160,000, has a 8-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 90,900 units per year. Price per unit is $38.91, variable cost per unit is $24.00, and fixed costs are $863,000 per year. The tax rate is 21 percent and we require a return of 11 percent on this project. Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within ±10 percent. Calculate the best-case and worst-case NPV figures. Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. Best-case NPV Worst-case NPV
Heidi Company is considering the acquisition of a machine that costs $828,800. The machine is expected to have a useful life of six years, a negligible residual value, an annual net cash flow of $112,000, and annual operating income of $80,000. What is the estimated cash payback period for the machine (round to one decimal point)? a.10.4 years b.4.3 years c.7.4 years d.1.4 years Determine the average rate of return for a project that is estimated to yield total income of $411,040 over four years, cost $668,000, and has a $66,000 residual value. %
21. ABC Company is considering a new product that will sell for P11 per unit and have variable costs of P8 per unit and annual cash fixed costs of P90,000. Equipment required to produce the product costs P210,000 and is expected to last, and be depreciated on a straight-line basis, for 6 years, with no expected salvage value. ABC estimates that sales of the new product will be 60,000 units per year for six years. ABC's income tax rate is 40% and its cost of capital is 14%.What annual unit volume must the company sell to earn a return just equal to the 14% cost capital? (nearest whole number)
Subject: accounting
Make this Question
15. Hobie Corp. has the following information for the purchase of a new machine in its manufacturing process: Cost of the machine Expected useful life-the cost of the machine will be depreciated on a straight-line basis to a terminal disposal value of zero. Working capital investment upon machine purchase (fully recovered at the end of the useful life) Annual cost savings with the new machine Machine's expected salvage value at the end of four years Required rate of return Hobie's tax rate a. Calculate the net present value (NPV) of the project (round your solution to dollars). $ 225,000 4 years c. Should the project be accepted or rejected? Why? $12,000 $ 66,000 $8,000 8% 15% b. What is the payback period of the project (round your solution to two decimal places)?
(6) Starling Co. is considering selling a machine with a book value of $24,600 and estimated remaining life of 5 years. The old machine can be sold for $5,900. A new high-speed machine can be purchased at a cost of $70,900. It will have a useful life of 5 years and no residual value. It is estimated that the annual variable manufacturing costs will be reduced from $23,400 to $20,600 if the new machine is purchased. The differential effect on profit for the new machine for the entire 5 years is a(n) a.decrease of $51,000 b.increase of $51,000 c.increase of $66,300 d.decrease of $66,300

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS