A project has an initial cost of $72,000 and will produce positive net income for four years. The project will use straight-line depreciation over the life of the project. The averageaccounting return of this project can be computed asMultiple Choicea) (Sum of all net income/2)/($72,000/2)b) (Sum of all net income/4)/$72,000c) ($72,000/4)/(Sum of all net income/4)d) ($72,000/2)/(Sum of all net income/2)e) (Sum of all net income/4)/($72,000/2)

The Average Accounting Return (AAR) is typically calculated as the average net income divided by the…

Answered: A project has an initial cost of…

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 1BE: Average rate of return Determine the average rate of return for a project that is estimated to yield...

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Determine the average rate of return for a project that is estimated to yield total income of $269,760 over four years, cost $511,000, and has a $51,000 residual value. fill in the blank %
1.) A project is estimated to cost P100,000, lasts 8 years and have a P10,000 salvage value. The annual gross income is expected to average P24,000, and annual expenses, excluding depreciation will total P6,000. If capital is earning 10% before income tax, determine if this is a desirable investment using A.) Rate of Return Method and B.) Annual Cost or Worth Method. II. Gradients (Shows solutions manually): 2.) The year-end operating and maintenance costs of a certain machine are estimated to be P12,000 the first year and to increase by P2,500 each year during its 4-year life. If capital is worth 12%, determine the equivalent uniform year-end costs. 3.) Annual maintenance costs for an equipment are P1,500 this year and are estimated to increase 10% each year every year. What is the present worth of maintenance cost for six years if i = 12%
Determine the Rate of Return (ROR) for the following project. Initial Capital Investment (P) = $2,942,825 Project Life (n) = 10 years Salvage Value at the end of year 10 $50,000 Equal Annual Revenues = $1,100,000 Equal Annual Operations and Maintenance Costs (AOC) = $400,000 Minimum Acceptable Rate of Return (MARR) = 22% ycy %3D %3D %3D That is the ROR of the project (to the nearest 1%)?
Project A requires a $315,000 initial investment for new machinery with a five-year life and a salvage value of $35,500. Project A is expected to yield annual income of $23,900 per year and net cash flow of $78,750 per year for the next five years.Compute Project A’s accounting rate of return. *please help correct the answer
A PROJECT IS ESTIMATED TO COST P 100,000.00, LASTS 8 YEARS, AND HAVE A P 10,000.00 SALVAGE VALUE. THEANNUAL GROSS INCOME IS EXPECTED TO AVERAGE P 24,000.00 AND ANNUAL EXPENSES, EXCLUDINGDEPRECIATION, WILL TOTAL P 6,000.00. IF CAPITAL IS EARNING 10% BEFORE INCOME TAXES, DETERMINE IFTHIS IS A DESIRABLE INVESTMENT USING:A.) RATE-OF-RETURN METHODB.) ANNUAL COST METHODC.) PRESENT-WORTH COST METHOD
Determine the average rate of return for a project that is estimated to yield total income of $276,080 over 4 years, cost $433,000, and has a $43,000 residual value.? %
In year 1, what net income should Northeast Bottlers use in its analysis of the Bristol project, which involves expanding into Bristol, if depreciation would be $130000; expenses would be $310000; revenues would be $300000; and the tax rate would be 30%? Assume that the aforementioned depreciation, expenses, and revenues would be $0 without the Bristol project. Give typing answer with explanation and conclusion
A project with the following costs are under consideration to determine its profitability. Using the IRR comparison, and an annual MARR of 10% compounded semiannually, determine if the project should be executed. First cost Semiannual operating cost Semiannual income Salvage value Life in years a. IRR = 18.7% semiannual O b. IRR = 15.3% semiannual Oc. IRR = 16.9% semiannual Od. IRR = 17% semiannual : $45,000 : $10,000 : $20,000 : $20,,000 : 4 years
Determine the average rate of return for a project that is estimated to yield total income of $258,480 over 4 years, costs $653,000, and has a(n) $65,000 residual value.fill in the blank 1 of 1%
Given the following attributes of an investment project with a five-year life: investment outlay, year0, $5,000; after-tax cash inflows, year 1, $800; year 2, $900; year 3, $1,500; year 4, $1,800; and year5, $3,200. (a) Use the built-in NPV function of Excel to estimate the NPV of this project. Roundyour answer to the nearest whole dollar. Assume an after-tax discount rate of 12.0%. (b) Estimatethe payback period, in years, for this project under the assumption that cash inflows occur evenlythroughout the year. Round your answer to one 1 decimal place.
Suppose that a project has an immediate cost of $10 million and running costs of $1 million per year beginning at the end of a one-year construction period. At the end of this year, annual gross revenue from the project of $1.5 million per year is generated in perpetuity. (You may assume that the running costs and revenues accrue at the end of each year.) (a) Is the project profitable in a net present-value sense if the interest rate is 8%? (b) For what range of interest rates (nonnegative) is the present value of net revenues (including the immediate cost of $10 million) positive?
A project has the following net profit after tax set out below. The average book value of the assets in the project is 131,028. What is the accounting rate of return of this project? Enter your final answer in decimals to four decimal places (e.g., if your answer is 5.55%, then enter 0.0555). Year Net Profit After Tax 1 5,097 2 7,365 3 8,627 4 10,946

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