Allegience Insurance Company's management is considering an advertising program that would require an initial expenditure of $182,050 and bring in additional sales over the next five years. The projected additional sales revenue in year 1 is $85,000, with associated expenses of $30,000. The additional sales revenue and expenses from the advertising program are projected to increase by 10 percent each year. Allegience's tax rate is 30 percent. (Hint: The $182,050 advertising cost is an expense.) Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.) Required: 1. Compute the payback period for the advertising program. 2. Calculate the advertising program's net present value, assuming an after-tax hurdle rate of 10 percent. (Round your intermediate calculations and final answer to the nearest whole dollar.)

Allegience Insurance Company's management is considering an advertising program that would require an initial expenditure of $182,050 and bring in additional sales over the next five years. The projected additional sales revenue in year 1 is $85,000, with associated expenses of $30,000. The additional sales revenue and expenses from the advertising program are projected to increase by 10 percent each year. Allegience's tax rate is 30 percent. (Hint: The $182,050 advertising cost is an expense.) Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.) Required: 1. Compute the payback period for the advertising program. 2. Calculate the advertising program's net present value, assuming an after-tax hurdle rate of 10 percent. (Round your intermediate calculations and final answer to the nearest whole dollar.)

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

See similar textbooks

Related questions

Q: Define closing entries and their purpose.

A: Closing Entries: Closing entries are those journal entries which are passed to transfer the balances…

Q: hank you for the explanation. Could you also help with option 4-

A: As per our guidelines, we are supposed to answer only 3 sub-parts (if there are multiple sub-parts…

Q: Student ID Day 63638034 Monday 23957096 Thursday 28080825 Monday Exam Score 61 70 1. How many…

A: =COUNTIF is used to count the cells satisfying the given criteria in the given range.

Q: Describe about the full disclosure principle. Also tell the different ways in which information is…

A: Full disclosure principle: According to the principle of full disclosure, all the events occurred in…

Q: 5. Research and list 3 examples the BAS related services that a registered BAS agent is authorised…

A: BAS stands for Business Activity Statement, which is a tax reporting requirement for businesses in…

Q: remaining questions.

A: Family Budget A household budget is a plan for the money coming into and going out of your home over…

Q: Recording transations in the general journal. I have a specific homework assignment.

A: The process of recording business transactions in the books of accounts for the first time is…

Q: Briefly discuss the main provisions of the SOX, and then explain Section 404 in detail.

A: SOX stands for Sarbanes-Oxley Act and it established protocols related to the assessment of internal…

Q: I need all blanks filled please and thank you with the blue arrow

A: Income statement is prepared by the business organizations so as to know how much amount of Gross…

Q: Please also help on part 4 and 5.

A: I have answered only part 4 and part 5, i took some required information from previously answered…

Q: The scope of coverage under Section I is greatest with an [HO-1|HO-5] policy. Question 98…

A: Insurance coverage is provided based on the types of policy chosen by the policyholder. Some policy…

Q: I need all blanks filled with the blue arrow pleaee and thank you.

A: Balance sheet include all assets and liabilities. Value of both side that is asset and equity should…

Q: A document that (given the required elements) provides direction and allows another to make…

A: The correct option is B The living will is advance directive will which allows other persons…

Q: 1. Calculate the amounts to be reported on each employee's Wage and Tax Statement (Form W-2) for…

Q: want to know how to do the last two part.. thankssssss!

A: Prepare a statement of retained earnings for the year ended December 31, 2018 assuming net profit…

Q: Please help on part 4 while showing work

A: As per Bartleby honor code, when a particular part is asked, the expert is required only to solve…

Q: to prepare the closing entries and statements? question c a

A: In this question, we will do parts C, D, and E as per the ask we will post the closing entries,…

Q: Schedule Z-If your filing status is Head of household If your taxable income is: The tax is: of the…

A: Taxable income: It is the gross total income on which the taxes are imposed by the government for a…

Q: Please explain distinction and connection of draft, promissory and check.

A: Draft Normally in Draft there are involved three parties one is Drawer another is Drawee and third…

Q: Kindly answer the 8 and 9 thank you

A: Answer 8: Correct Option is B P600,000.

Q: answer for #4 as well

A: Sales Mix Variance = Budgeted price * (Actual quantity - Revised actual quantity)Sales Quantity…

Q: Adjusting Entries Selected accounts of Ideal Properties Inc., a real estate management firm, are…

A: Insurance expense for the month of January =$7,200 / 36 months = $200

Question

Please explain and answer ALL questions. A,B, and C. Thank you.

Allegience Insurance Company's management is considering an advertising program that would require an initial expenditure of
$182,050 and bring in additional sales over the next five years. The projected additional sales revenue in year 1 is $85,000, with
associated expenses of $30,000. The additional sales revenue and expenses from the advertising program are projected to increase
by 10 percent each year. Allegience's tax rate is 30 percent. (Hint: The $182,050 advertising cost is an expense.)
Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.)
Required:
1. Compute the payback period for the advertising program.
2. Calculate the advertising program's net present value, assuming an after-tax hurdle rate of 10 percent. (Round your intermediate
calculations and final answer to the nearest whole dollar.)
1.
2.
> Answer is complete but not entirely correct.
Payback period
Net present value
3✔ years
$ 49,209 X

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

Step 1: Calculate Payback Period

VIEW

Step 2: Calculate NPV

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 3 images

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, finance and related others by exploring similar questions and additional content below.

Similar questions

Allegience Insurance Company's management is considering an advertising program that would require an initial expenditure of $182,050 and bring in additional sales over the next five years. The projected additional sales revenue in year 1 is $85,000, with associated expenses of $30,000. The additional sales revenue and expenses from the advertising program are projected to increase by 10 percent each year. Allegience's tax rate is 30 percent. (Hint: The $182,050 advertising cost is an expense.) Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.) Required: 1. Compute the payback period for the advertising program. 2. Calculate the advertising program's net present value, assuming an after-tax hurdle rate of 10 percent. (Round your intermediate calculations and final answer to the nearest whole dollar.) 1. 2. > Answer is complete but not entirely correct. Payback period Net present value 3✔ years $ 49,209 X
Allegience Insurance Company's management is considering an advertising program that would require an initial expenditure of $196,945 and bring in additional sales over the next five years. The projected additional sales revenue in year 1 is $94,000, with associated expenses of $34,500. The additional sales revenue and expenses from the advertising program are projected to increase by 10 percent each year. Allegience's tax rate is 30 percent. (Hint: The $196,945 advertising cost is an expense.) Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.) Required: 1. Compute the payback period for the advertising program. 2. Calculate the advertising program's net present value, assuming an after-tax hurdle rate of 10 percent. (Round your intermediate calculations and final answer to the nearest whole dollar.) 1. Payback period 2. Net present value years
ss
am. 115.
Monroe Corporation is considering the purchase of new equipment. The equipment will cost $35,000 today. However, due to its greater operating capacity, Monroe expects the new equipment to earn additional revenues of $5,000 by the end of each year for the next 10 years. Assuming a discount rate of 10% compounded annually, determine whether Monroe should make the purchase.
Kelly, Inc. management is considering purchasing a new machine at a cost of $4,133,250. They expect this equipment to produce cash flows of $814,322, $863,275, $937,250, $1,017,112, $1,212,960, and $1,225,000 over the next six years. If the appropriate discount rate is 15 percent, compute the NPV of this investment and explain how the tax imposition would affect your NPV.
Acompany is evaluating the addition of equipment to its presentoperations. They need to purchase equipment for $160,000. The five year MACRS GDS Recovery Method is appropriate forthe investment and the total tax rate (federal plus state) is 40%. Gross revenue is expected to be $30,000/year while maintenance costs are expected to be $5,000/year. It is expected that the operation will be shut down at the end of the fourth year with a salvage value of $20,000. 2-Draw a BTCFD
Acompany is evaluating the addition of equipment to its presentoperations. They need to purchase equipment for $160,000. The five year MACRS GDS Recovery Method is appropriate forthe investment and the total tax rate (federal plus state) is 40%. Gross revenue is expected to be $30,000/year while maintenance costs are expected to be $5,000/year. It is expected that the operation will be shut down at the end of the fourth year with a salvage value of $20,000.1-Prepare a table showing your development of the ATCF's.
Concrete Corp plans on buying a new mixture at a cost of $150,000. The after tax benefit from this investment will be $23,000 each year for the next 12 years. What is the internal rate of investment? (Round to one decibmal place and do not enter the % sign in your answer)
Corgi, Inc. plans to update its equipment at a total cost of $99,000. Management anticipates making a $19,000 down payment and borrowing the remainder from a local commercial bank at 14 percent interest. The first option provides for five equal, annual payments to be made at the end of the year. The second option requires five equal, annual payments plus a balloon payment of $19,000 at the end of the fifth year. What are the annual payments required by each option? Use Appendix B and Appendix D to answer the question. Round your answers to the nearest cent. The annual payment under the first option: $ The annual payment under the second option: $
Roche Brothers is considering a capacity expansion of its supermarket. The landowner will build the addition to suit in return for $225,000 upon completion and a five-year lease. The increase in rent for the addition is $10,000 per month. The annual sales projected through year 5 follow. The current effective capacity is equivalent to 500,000 customers per year. Assume a 2 percent pretax profit on sales. Click the icon to view the annual sales projections. a. If Roche expands its capacity to serve 700,000 customers per year now (end of year 0), what are the projected annuall incremental pretax cash flows attributable to this expansion? The projected annual incremental pretax cash flows attributable to this expansion in year 0 are $-225,000 (Enter your response as an integer.) The projected annual incremental pretax cash flows attributable to this expansion in year 1 are $. (Enter your response as an integer.) kamp Data Table Customers Average Sales per Customer Print 560,000 600,000…
The Portland Stallions professional football team is looking at its future revenue stream from ticket sales. Currently, a season package costs $425 per seat. The season ticket holders have been promised this same rate for the next five years. Six years from now the organization will raise season ticket prices based on the estimated inflation rate of 3.5%. What will the season tickets sell for in six years?

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS