A company is considering investing £46,000 in a machine that will be operated for 4 years, after which time it will sell for £4,000. Depreciation is charged on a straight line basis. Forecast operating cashflows are £28,000, £35,000, £25,000 and £9,000.   What is the Payback Period and the ARR based on average investment?     PP ARR A 1.5 years 52% B 2.4 years 55% C 2.4 years 52% D 1.5 years 55%

Q: Part II - Average Rate of Return (Ch 26) The management of River Corporation is considering the…

A: concept. average rate of return can be calculated in two ways:- 1. on basis of initial investment.…

Q: 30. Capital outlay. Chrome Solutions determines that the rate of revenue coming in from a new…

A: Annuity means finite no. of payments which are same in size and made in equal intervals. Person gets…

Q: Assume a company is going to make an investment of $440,000 in a machine and the following are the…

A: Payback period is the period or number of years in which initial investment amount can be recovered…

Q: Alfarsi Industries uses the net present value method to make investment decisions and requires a 15%…

A: Net Present Value Net present value of the investment means difference between present values of…

Q: 2. An office building has the following investment characteristics: Year 1 NOI $2,100,000 $2,200,000…

A: Here, To Find: Purchase price =? Loan to value ratio =? Annual debt service =? Debt service…

Q: No salvage/residual v expected. The company's cost 12%. Deguiredd.

A: Using excel for discounted payback period.

Q: A company has two investment possibilities, with the following cash inflows: If the firm can earn 7…

A: We need to use the concept of time value of money to solve the question. According to the concept of…

Q: Question 1 Next Gen Corporation is considering two investment opportunities. The company can choose…

A: For Selecting the best project from the others we use various techniques like the payback period…

Q: A project capitalized for ₱150,000 invested in depreciable assets will earn a uniform, annual income…

A: Initial Cost = 150,000 Annual Cash Flow = Annual Income - Operations and Maintenance Cost -…

Q: Brenton Industries has a project that costs $10,000 today and will produce cash flows of $3,000 in…

A: Initial Costs  $                  10,000.00 Cash Flow  $                    3,000.00 Time Period…

Q: All techniques  Rieger International is evaluating the feasibility of investing​$91,000in a piece of…

A: Here, Cost of Capital is 8% Cash Flows are as follows:

Q: Problem -1-: Here are the projected cash inflows from a proposed investment: Years 1 2 3 4…

A: Payback Period = Years before full recovery + (unrecovered cost at the start of the year/ cashflow…

Q: An investment product promises to pay $43,000 at the end of 8 years. If an investor feels this…

A: The future value formula:Future value = Investment ( 1+ r) nGiven,future value = $43000r is the…

Q: Question One: a) For the given projects with useful life equal six years. Find best alternative…

A: Net Present Value (NPV) is one of the important concepts of capital budgeting which evaluates the…

Q: 7.5 years

A: Given information : Initial investment = OR 60,000 Periodic cash flows = OR 8000 per year

Q: Compute the IRR of a project which will start generating positive cash flows after 2-years of…

A: the Given details are:Initial investment: $8,000Cash inflows (end of year 2-6)1st cash inflow:…

Q: a) What is the payback period for this project? b) If a hurdle rate of 20% is considered; what is…

A: Payback Period: It is one of the methods used in capital budgeting to determine the period in which…

Q: 3. A company would like to buy an equipment will increase 30 % in the production capacity. This…

A: IRR: IRR or internal rate of return is a capital budgeting method where NPV becomes 0. IRR is…

Q: Below are two potential investment alternatives:   Initial capital investment…

A: Net Present Value(NPV) refers to one of the concepts from the modern techniques of capital budgeting…

Q: Question 1: A company invested $ 800,000 in a project, if the interest rate is 12% per year…

A: There are multiple questions but as per our protocol, only the first question is solved.The income…

Q: Topic: Annual Worth Analysis 1.) Determine the annual worth (per month) of a truck with an initial…

A: Solution Given Initial cost $38000 Operating cost per  month $2000 Salvage value at…

Q: The data required for a new investment are calculated as follows: Cost of the investment: 10.000.000…

A: Depreciation = Cost of investment / Economic life

Q: What is the simple annual rate of return on a $10,000, 3-year investment with cash inflows of $2,000…

A: The simple annual rate of return is calculated by dividing the annual cash flow by the initial…

Q: NPV and maximum return A firm can purchase new equipment for $37,000 that generates an annual cash…

A: The present value function or concept can be used to determine the present value of a future sum or…

Q: Malema Pty Ltd, a furniture manufacturer, has been offered an opportunity to accept a project that…

A: Interest Rate = r = 12%Cash Flow for Year 1 = cf1 = 7000Cash Flow for Year 2 = cf2 = 8000Cash Flow…

Q: A man invests in a project that requires a fixed capital of P 2.5 M with no salvage, and life of 12…

A: Fixed Capital is of P2.5 million Life of project is 12 years Estmated maintenance cost is of…

Q: Intro A project requires an initial investment of $77.4 million to buy new equipment, and will…

A: The IRR method is used to measure the profitability of a project. It uses the NPV formula but…

Q: 6. A company will invest $37,072 on a capital expenditure (an asset with multi-year use). They…

A: Net present worth of investment = PV of future cash inflows - initial cost  PV is given by  PV =…

Q: What is the internal rate of return (IRR) of an investment that requires an initial investment of…

A: Initial investment (PV) = $14,000Future value (FV) = $19,320Number of years = 1 years

Q: Compute for the following: 1. Accounting rate or return based on the average investment 2. Net…

A: The capital budgeting is a technique that helps to analyze the profitability of the project.

Q: The present value of an annuity of $1 for 3 years at 15% is 2.2832 The net present value of…

A: Net Present Value: It represents the project's or investment's absolute profitability in amount.…

Q: QUESTION 1 Mobile LLC is evaluating a new project of constructing a building for rental purpose. The…

A: NPV = net present value  Net present value is the difference between the present value of your cash…

Q: Consider a project that will bring in upfront cash inflows for the first two yearsbut require paying…

A: Information Provided: Initial cash flow = 6500 Cash flow for year 1 = 4500 Cash flow for year 2 =…

Q: What follows is a fill in the blank question with 2 blanks. An amount of R60000 is invested in a…

A: Here, Initial Investment is R60,000 Interest Rate is 12.55% NPV of the Project is -R4,327.02 Cash…

Q: Red Zone Corporation recently purchased a new machine for $339,0 13.20. The new equipment has a…

A: Internal rate of return is a capital budgeting technique used to assess the profitability of an…

Q: What is the bail-out period for this project in years? * Round off to 2 decimal places. Sample…

A: Year Cash inflow Total Salvage value Cumulative cash flow 1 40000 40000 50000 90000 2 36000…

Q: Question 1Real Estate Ltd is considering investing in property development, which requires an…

A: The objective of the question is to evaluate the financial viability of a property development…

Q: Calculate the Profitability Index of the Project using the given interest rate and 8%. The interest…

A: Net Present Value (NPV) and Profitability Index (PI) are the analysis technique by which…

Q: Minn is considering an investment proposal with the following cash flows: Initial investment -…

A: ACF = Annual net cash inflow = $25,000

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.