A man invests in a project that requires a fixed capital of P 2.5 M with no salvage, and life of 12 years.  During its life an estimated maintenance cost of P 280, 000 will be spent each year.  Taxes and insurance will be 5 % of the first cost. The project will yield a uniform annual revenue of P 1M.  The company expects to earn 20% before income taxes.  Compute the pay out period.   Select one: a. 4.3 years b. 4.8 years c. 5.4 years d. 5.8 years

Q: A certain investment costs $3400. The investment produces income of $1500 at the end of the first…

A: Nothing is mentioned in this question with respect to the discount rates or finding the present…

Q: A house worth P1,000,000.00 was built within five months. In the 6th month, the house will be rented…

A: Worth of House = 1,000,000 Cash flows start in 6 month Cash inflow = 5000 N = Number of cash inflows…

Q: Determine the FW of the following engineering project when the MARR is 14% per year. Is the project…

A:

Q: A firm is trying to decide between two equipment for a production activity. The following…

A: for breakeven point, the difference in the initial investment should offset the additional cost…

Q: Determine Annual worth values

A: Annual worth (AW) method is for evaluating the alternatives or investment proposals. It is the…

Q: An investor invests £6,000,000 in a new factory, which takes a year to build. After construction…

A: Net present value refers to the method used for estimating the profitability of the project during…

Q: required 10% return on his money. A property had gross annual income of $110,000, a vancy rate of…

A: The property is long term investment and valuation of property is done based on the earning…

Q: A company purchase a piece of manufacturing equipment for an additional income. The expected income…

A: Given information,Purchase price: Useful life:  yearsExpected income:  per semesterExpenses:  per…

Q: An investor is considering two investment projects. Project A requires an initial payment of…

A: The crossover rate is the discount rate at which the net present value (NPV) of the cash flows of…

Q: Elearning Company would like to develop its technology process by purchasing a production equipment…

A: Net present value is the difference between the present value of cash inflows and present value of…

Q: A piece of machinery may be acquired by making an immediate payment of $250,000 and payments of…

A: Net present value is a capital budgeting metric used to evaluate the value of the net cash flows in…

Q: Calculate the time necessary to achieve an investment goal. Give your answer to the nearest day. Use…

A: In this we have to determine the daily interest rate and from that we can get time required to…

Q: Using the ERR method and a 17% MARR, determine the acceptability of a 10-year manufacturing project…

A: MARR = 17℅ REINVESTMENT RATE = 14℅ Year Time to Maturity Outflows Inflows 0 10 2,800,000   1…

Q: The maintenance costs of a new boiler are estimated as follows: P 600 per year for the first 3…

A: As per question , we are provided : Future value of all maintenance = P20000 Compounding rate = 6%…

Q: What is the IRR of an investment that costs $70,500 and pays $27,500 a year for 4 years?

A:

Q: An investor invests £10,000,000 in a new factory, which takes a year to build. After construction…

A: Yield of investment refers to the return earned by the project over the investment made initially…

Q: An equipment with an estimated lifespan of 10 years is to be bought for Php 1,500,000. It will…

A: The IRR is a useful tool for evaluating the profitability of an investment and for making informed…

Q: . Project 2 has a computed net present value of $26,300 over a 4-year life. Project 1 could be sold…

A: Net present value is one of the most important methods of capital budgeting based on the time value…

Q: The profitability index of a certain project is 1.2 with an investment of P 56,600. Cost of capital…

A: The profitability index (PI) is a financial tool to measure the profitability of a proposed…

Q: A company buys a printing machine for 21,000. It is expected for that machine to generate 3000…

A: Net present value refers to the difference between the cash inflows and outflows during the year.…

Q: ment of $3M can be made in a business that will produce uniform annual revenue of $1.2M for five…

A: The minimal rate of return that an investor believes should receive in exchange for taking on a…

Q: Calculate the annual cost of a project that has an initial cost of P 3,000,000 and an additional…

A: Present worth(Present value) It is the concept  that an amount of money received  today is  more…

Q: An investment will cost $10,000 today for equipment plus expenses for labor and materials at a…

A: Discounted payback refers to the method of capital budgeting in which time period taken to convert…

Q: An equipment is expected to cost 200,000$ to be used for 3 years, and to have an annual operating…

A: Annual worth of a project means the amount which is going to be generated by the project on an…

Q: Park Company is considering an investment of $38,000 that provides net cash flows of $13,800…

A: The payback period is a financial metric that measures the time it takes for an investment to…

Q: roject 1 requires an original investment of $54,000. The project will yield cash flows of $8,000 per…

A: Net present value is defined as the summation of the present value of cash inflows in each period…

Q: Charlie Corp. is purchasing new equipment with a cash cost of $100,000 for the assembly line. The…

A: Present value = $100,000Annuity = $22960Period = 6 years

Q: A project with a useful life of eight years requires an investment of $200,000 and yields after tax…

A: hence for the calculation of the Accounting rate of return:Investment= 200000/-Income tax= after…

Q: ch time its market value will be 5% of its purchased cost. The equipment rate an annual receipts…

A: Internal rate of return at which present value of cash flow is equal to initial investment.

Q: Calculate Internal Rate of Return to the investor based on a sale of the project at 12/31/26 using a…

A: Internal Rate of Return  is a financial metric that measures the potential profitability of an…

Q: You are responsible to manage an IS project with a 4-year horizon. The annal cost of the project is…

A: Return on investment is the income earned on an investment throughout the defined investment…

Q: For the following project, compute an EAA:   Project A requires you an upfront payment of $212872…

A: The equivalent annual annuity approach is the method of capital budgeting that evaluates the…

Q: An investor is considering two investment projects. Project A requires an initial payment of…

A: Step 1 The weighted average cost of capital, also known as the crossover rate, is the rate of return…

Q: An investor pays $275,000 for a mine that will produce level annual revenue for 18 years. What…

A: A "sinking fund" is money that is put aside specifically for a future expenditure of some kind. A…

Q: An investor is considering two investment projects. Project A requires an initial payment of…

A: The crossover rate is the discount rate at which the net present value (NPV) of the cash flows of…

Q: The capital cost of a certain project is $625,000 and the annual expenses are $33,000. If the study…

A: Capital Cost = -625,000 Annual Expenses = -33,000 Time Period (N) = 11 years Interest Rate = 7.25%…

Q: A project costs $880 today, yields $150 / year for three years and $400 for two years. Then there is…

A: Given information: Initial cost is $880 Cash flows for first three years is $150 Cash flows for next…

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.