A contractor purchased equipment for $600 which provided future income of $52,000 after 25 years. Please write formula, use compound interest table for extracting factors, show your solution step by step. a) Apply trial and fault method for finding acceptable range for rate of return. b) Apply interpolation method for finding acceptable range for rate of return.

A contractor purchased equipment for $600 which provided future income of $52,000 after 25 years. Please write formula, use compound interest table for extracting factors, show your solution step by step. a) Apply trial and fault method for finding acceptable range for rate of return. b) Apply interpolation method for finding acceptable range for rate of return.

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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X Oil Company just completed its first year of operations and is considering using either the SE method or the FC method. During the year, X drilled 3 wells, 1 of which was an unsuccessful exploratory well. Determine which of the following is correct regarding X Company’s first year financial statements. Group of answer choices A. The full cost method will show more assets and more net income for the first year. B. The full cost method will show more assets and less net income for the first year. C. The full cost method will show less assets and more net income for the first year. D. The full cost method will show less assets and less net income for the first year.
Meman
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You are a real estate agent thinking of placing a sign advertising your services at a local bus stop. The sign will cost $4,200 and will be posted for one year. You expect that it will generate additional revenue of $714 a month. What is the payback period? The payback period is ___ months (Round to one decimal place)
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You have been assigned to check the valuation of InfoSystems, a software firm, done by a colleague of you. Infosystems has an expected life 5 years, constant cash flows over this period, and zero salvage value. The income statement of the Infosystems is given as follows: Revenues - Operating Expenses EBIT - Interest expenses Taxable Income - Taxes Net Income Years 1-5 €1,000 €550 €450 €85 €365 €146 €219 Infosystems has no capital expenditures, depreciation or working capital needs, i.e. the earnings are the cash flows to the firm. The cost of capital is 10% i. Estimate the value of Infosystems. ii. Assume that the value derived in (i) is the one also estimated by your colleague. How would you change your calculations if you are given that the cash flows are real cash flows and the cost of capital is the nominal cost of capital. The expected inflation rate is 2% annually. Comment on your answer.
The number of properties newly listed with a real estate agency in each quarter over the last four years is given below. Assume the time series has seasonality without trend. Quarter 1 2 3 4 Year 1 73 89 123 92 Year 2 81 87 115 95 Year 3 76 91 108 87 Year 4 77 88 120 97 a. Develop the optimization model that finds the estimated regression equation that minimize the sum of squared error. b. Solve for the estimated regression equation. c. Forecast the four quarters of Year 5. *Please solve in excel
Tires-R-Us is considering the purchase of new tire-balancing equipment. The machine, which will cost $12,699, will result in annual savings of $1500 with a salvage value at the end of 12 years of $250. For a MARR of 6%, use B/C analysis to determine whether the equipment should be purchased.
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
3. Compute Project Y’s accounting rate of return. The numerator drop down options are: accounts receivable, annual income, average investment, average total assets, cost of goods sold, current assets, current liabilities, net sales, total assets The denominator dropdown options are: accounts receivable, annual income, average investment, average total assets,
Perform a present worth (PW)-based evaluation of the two alternatives below using a spreadsheet. The after-tax minimum acceptable rate of return (MARR) is 8% per year, Modified Accelerated Cost Recovery System (MACRS) depreciation applies, and Te=40%. The (GI -OE) estimate is made for the first 3 years; it is zero in year 4 when each asset is sold. Alternative First Cost, $ Salvage Value, Year 4, $ GI-OE, $ per Year Recovery Period, Years X -8,000 0 3,500 3 Y -13,000 2,000 5,000 3 The PW for alternative X is determined to be $ The PW for alternative Yis determined to be $ Alternative (Click to select) is selected.
Use the information provided to answer the questions.Use the information provided below to calculate the following. Where applicable, use the presentvalue tables provided in APPENDICES 1 and 2 that appear after QUESTION 5. QUESTION) Calculate the Accounting Rate of Return (on average investment) of Project B (expressed to twodecimal places). INFORMATION Zeda Enterprises has the option to invest in machinery in projects A and B but finance is only available to invest inone of them. You are given the following projected data:Project A Project BInitial cost R300 000 R300 000Scrap value R40 000 0Depreciation per year R52 000 R60 000Net profitYear 1 R20 000Year 2 R30 000Year 3 R50 000Year 4 R60 000Year 5 R10 000Net cash flowsYear 1 R90 000Year 2 R90 000Year 3 R90 000Year 4 R90 000Year 5 R90 000 Additional informationThe discount rate used by the company is 12%. Transcribed Image Text:Number of Periods 1 2 3 4 5 6 7 8 m 10 11 12 13 14 15 1% 2% 0.9901 0.9804 0.9709 3% 3.9020 3.8077…

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