A financial analyst for zzz corporation is evaluating the cost of an investment in required pollution controlled equipment.. The npv was -5746639. When this is converted to its equivalent annual cost a value of-1,000,000 was found. Given this, what is the cost of capital and number of years were assigned to cover the npv to eac.

A financial analyst for zzz corporation is evaluating the cost of an investment in required pollution controlled equipment.. The npv was -5746639. When this is converted to its equivalent annual cost a value of-1,000,000 was found. Given this, what is the cost of capital and number of years were assigned to cover the npv to eac.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 1MAD: San Lucas Corporation is considering investment in robotic machinery based upon the following...

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San Lucas Corporation is considering investment in robotic machinery based upon the following estimates: a. Determine the net present value of the equipment, assuming a desired rate of return of 10% and annual net cash flows of 700,000. Use the present value tables appearing in Exhibits 2 and 5 of this chapter. b. Determine the net present value of the equipment, assuming a desired rate of return of 10% and annual net cash flows of 500,000, 700,000, and 900,000. Use the present value tables (Exhibits 2 and 5) provided in the chapter in determining your answer. c. Determine the minimum annual net cash flow necessary to generate a positive net present value, assuming a desired rate of return of 10%. Round to the nearest dollar. d. Interpret the results of parts (a), (b), and (c).
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ABC Company is looking to invest in some new machinery to replace its current malfunctioning one. The new machine, which costs P420,000, would increase annual revenue by P200,000 and annual cash expenses by P50,000. The machine is estimated to have a useful life of 12 years and P30,000 salvage value. Requirements: 1. Compute for the Accounting rate of return on initial investment 2. Compute for the Accounting rate of return on average investment.
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