a) Use Repeatability Assumption to compare between three alternatives X, Y and Z at (MARR=18% per year). Project Investment cost Production rate per year | 20,000 Price per unit Annual expenses Salvage value Useful life (years) A В C $90,000 $50,000 $35,000 24,000 18,000 $6 $2.8 $4 $6,000 $5,000 $4,000 $10,000 $18,000 2 3 6

a) Use Repeatability Assumption to compare between three alternatives X, Y and Z at (MARR=18% per year). Project Investment cost Production rate per year | 20,000 Price per unit Annual expenses Salvage value Useful life (years) A В C $90,000 $50,000 $35,000 24,000 18,000 $6 $2.8 $4 $6,000 $5,000 $4,000 $10,000 $18,000 2 3 6

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: View Policies Current Attempt in Progress A project that cost $63000 has a useful life of 5 years…

Q: Average Rate of Return The following data are accumulated by Watershed Inc. in evaluating two…

A: Average investment :— It is calculated by dividing sum of initial investment and residual value by…

Q: A project requires a $834,000 initial investment for equipment. The equipment is estimated to have…

A: Data given Initial investment=$834,000 Useful life=8 year Salvage value=$74000 Average annual…

Q: Average rate of return The following data are accumulated by Patterson Inc. in evaluating two…

A: AVERAGE RATE OF RETURN The average rate of return refers to the average amount of profit that is…

Q: Required information A company that manufactures magnetic flow meters expects to undertake a project…

A: Equivalent annual cost (EAC) is a financial metric used to evaluate the cost of an investment,…

Q: Average Rate of Return The following data are accumulated by Watershed Inc. in evaluating two…

Q: A project with a life of 10 has an initial fixed asset investment of $31,920, an initial NWC…

A: Equivalent annual cost is the cost of operating and maintaining an asset annually. It is also called…

Q: Calculate the Rate of Return of the project. Explain, how and why?

A: Calculate the rate of return of a project by dividing the NPV of the project which is RMB…

Q: Project x... Useful life 9years Initial cost : 286000 Annual revenues : 125000 Annual O&M cost:…

A: Cash flow diagram: Project X The cash flow diagram of Project X is as follows:

Q: Average Rate of Return The following data are accumulated by Watershed Inc. in evaluating two…

A: It is also known with the name of the accounting rate of return. We can evaluate by dividing net…

Q: Prove that it is feasible using 1. ANNUAL WORTH METHOD 2. PAYBACK METHOD Rate of interest = 10%

A: Cash flow diagram

Q: You are given the following forecasted data about a project: Project life = 3 years Required…

A: NPV means PV of net benefit which will arises from the project in the coming years. It is equal to…

Q: A project has an initial cost of $40,000, expected net cash inflows of $8,000 per year for 11 years,…

A: Initial cost (PV) = $ 40,000 Annual cash inflow (P) = $ 8000 Number of annual cash inflows (n) = 11…

Q: ANO Ltd. is providing the following information: Annual cost of saving Useful life Salvage value…

A: When a project has a zero net present value (NPV), the projected cash inflows precisely balance the…

Q: Compute Project A's accounting rate of return.

A: The accounting rate of return (ARR) formula is helpful in determining the annual percentage rate of…

Q: What is the Delta IRR of the difference between the cashflow of the machine with the higher initial…

A: Delta IRR, also known as the Incremental Internal Rate of Return, is a financial metric used to…

Q: Average Rate of Return The following data are accumulated by Watershed Inc. in evaluating two…

A: Average rate of return:-It is the average annual return (profit) from an investment. The ARR is…

Concept explainers

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.

Question

a) Use Repeatability Assumption to compare between three alternatives X, Y and Z at
(MARR=18% per year).
Project
Investment cost
Production rate per year 20,000
Price per unit
Annual expenses
Salvage value
Useful life (years)
A
В
C
$90,000 $50,000 $35,000
24,000
18,000
$6
$2.8
$4
$6,000
$5,000
$4,000
$10,000
$18,000
3

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Introduction

VIEW

Computation of annual operating income

VIEW

Computation of EUAW

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

None
The following information regarding an investment project is available. Initial investment is £125,000 Scrap Value £10,000 at the end of 5 years Year Inflow 1 £60,000 2 £50,000 3 £10,000 4 £10,000 5 £50,000 A). What is the ARR using the Average Investment formula? Choose one from the following: A. 15% B. 17% C. 19% D. 21%
Year 0 Cash Flow = +$25,000 (assume only 1 change in signs) Project IRR = 4.5% Project DR = 6.0% %3D Should the project be accepted without reviewing NPV? Why or why not? Explain
_please help
24
The equivalent annual worth of alternative A over an infinite time period is closest to:a. $-25,000b. $-27,200c. $-31,600d. $-37,100
a- At 10%, find PW for the following Table Warehouse cost equipment cost Installation cost Annual maintenance costs Annual Revenues Salvage Machine life 0 1 2 3 -90,000 b- A project with an IRR = 20%, it has the following NCF (S) X X 4000 (SUS) 50,000 46.000 Find X? 6,500 8,000 45,000 15,000 15 years
Two investment opportunities are as follows: A B First cost $150 $115 Uniform annual benefit $26 $20 End-of-useful-life salvage value $O SO Useful life, in years 10 10 If the MARR is 13%, which alternative should be selected?
Harris Corporation has provided the following data concerning an investment project that it is considering: Initial investment Annual cash flow Salvage value at the end of the project Expected life of the project Discount rate $ 160,000 $ 54,000 $ 11,000 O $67,000 O $160,516 O $516 O $(5,776) 4 15 per year years % Use Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using the tables provided. The net present value of the project is closest to:
Urgently need
You are considering the following project. What is the NPV of the project? WACC of the project: 0.10 Revenue growth rate: 0.05 Tax rate: 0.40 Revenue for year 1: 13,000 Fixed costs for year 1: 3,000 variable costs (% of revenue): 0.30 project life: 3 years Economic life of equipment: 3 years Cost of equipment: 20,000 Salvage value of equipment: 4,000 Initial investment in net working capital: 2,000
2. Data for two alternatives are as follows: Alternative A Investment P 35,000 Annual Benefits 20,000 Annual Operations and Maintenance 6,450 Estimated Life, Years 4 Net Salvage Value 3500 Using an interest rate of 20%, which alternative should be considered? Alternative B P50,000 25,000 13,830 8 0