An 8-year project is estimated to cost $528,000 and have no residual value. If the straight-line depreciation method is used and the average rate return is 14%, determine the average annual income.
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![An 8-year project is estimated to cost $528,000 and have no residual value. If the straight-line depreciation method is used and the average rate of
return is 14%, determine the average annual income.
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- Wendy and Wayne are evaluating a project that requires an initial investment of $792,000 in fixed assets. The project will last for fourteen years, and the assets have no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 143,000 units per year. Price per unit is $43, variable cost per unit is $24, and fixed costs are $800,712 per year. The tax rate is 36 percent, and the required annual return on this project is 12 percent. The projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/- 15 percent. Required: (a)Calculate the best-case NPV. (Do not round your intermediate calculations.) (Click to select) (b)Calculate the worst-case NPV. (Do not round your intermediate calculations.) (Click to select) WConsider a four-year project with the following information: Initial fixed asset investment = $560,000; straight-line depreciation to zero over the four-year life; zero salvage value; price = $28; variable costs = $20; fixed costs = $200,000; quantity sold = 86,000 units; tax rate = 35 percent. How sensitive is OCF to changes in quantity sold? (Do not round intermediate calculations and round your answer to 2 decimal places,Cardinal Company is considering a five-year project that would require a $2,890,000 investment in equipment with a useful life of five years and no salvage value. The company's discount rate is 12%. The project would provide net operating income in each of five years as follows: Sales Variable expenses Contribution margin Fixed expenses: Advertising, salaries, and other fixed out-of-pocket costs Depreciation Total fixed expenses $2,739,000 1, 100, 000 1,639,000 $641,000 578,000 1, 219, 000 $ 420,000 Net operating income Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using table. 4. What is the project's net present value? (Round discount factor(s) to 3 decimal places and final answer to the nearest whole dollar amount.) Net present value
- We are evaluating a project that costs $953,000, has a life of ten years, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 134,000 units per year. Price per unit is $37, variable cost per unit is $23, and fixed costs are $957,765 per year. The tax rate is 24 percent, and we require a return of 17 percent on this project. The projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/- 14 percent. Calculate the best case npv and worst case npvWe are evaluating a project that costs $788,400, has a nine-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 75,000 units per year. Price per unit is $52, variable cost per unit is $36, and fixed costs are $750,000 per year. The tax rate is 21 percent, and we require a return of 12 percent on this project. Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within ±15 percent. Calculate the best-case and worst-case NPV figures. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Best-case Worst-caseMacrohard Software is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life, and the allowed depreciation rates for such property are 35 %, 43%, 17%, and 5% for Years 1 through 4. Revenues and other operating costs are expected to be constant over the project's 10-year expected life. Equipment cost (depreciable basis) P78,000 Sales revenues, each year 50,000 Operating costs (excl. depreciation) 25,000 Tax rate 25.0% The following are the questions/requirements for this data set. Fill-up the answers in the next 3 questions: (Round final answers to nearest peso) Year 1 Operating Cash Flow • Year 3 Operating Cash Flow Year 5 Operating Cash Flow
- A company is considering a new 6-year project that will have annual sales of $237,000 and costs of $148,000. The project will require fixed assets of $267,000, which will be depreciated on a 5-year MACRS schedule. The annual depreciation percentages are 20.00 percent, 32.00 percent, 19.20 percent, 11.52 percent, 11.52 percent, and 5.76 percent, respectively. The company has a tax rate of 22 percent. What is the operating cash flow for Year 2? Multiple Choice $79,210 $88,217 $76,187 $38,377 $80,698Bad Company has a new 4-year project that will have annual sales of 8,400 units. The price per unit is $19.90 and the variable cost per unit is $7.65. The project will require fixed assets of $94,000, which will be depreciated on a 3-year MACRS schedule. The annual depreciation percentages are 33.33 percent, 44.45 percent, 14.81 percent, and 7.41 percent, respectively. Fixed costs are $34,000 per year and the tax rate is 25 percent. What is the operating cash flow for Year 3? $20,705 $80,655 $57,550 $55,155 $60,744A proposed project requires an investment of $215,000 and will require an additional $25,000 for upgrades in year six. The income from the project is expected to be $64,000 in years one through five and $52,000 in years seven and eight. In year six, revenue equaled expenses (exclusive of the $25,000 spent for upgrades). There is no salvage value. If the external reinvestment rate (ε) of 6% is available, what is the rate of return for this project using the ERR method?
- An 8-year project is estimated to cost $528,000 and have no residual value. If the straight-line depreciation method is used and the average rate of return is 8%, determine the average annual income.Gateway Communications is considering a project with an initial fixed assets cost of $1.55 million that will be depreciated straight-line to a zero book value over the 9-year life of the project. At the end of the project the equipment will be sold for an estimated $ 240,000. The project will not change sales but will reduce operating costs by $399,000 per year. The tax rate is 21 percent and the required return is 11.5 percent. The project will require $52,000 in net working capital, which will be recouped when the project ends. What is the project's NPV?The Alabi corp is considering a project which requires an expenditure of $100,000 at t=0 intially, it will have additional revenue sales of $150k per year for the next to years (t=1 & t=2) with expenses of $30k per year for operating costs and general expenses attributed with the project but does not include depreciation of the intial expenditure of the $100k. The depreciation is straight line with zero salvage . Alabi weighted average cost of capital is 9.13% and taxed at 30%. What is the net present value for the project?
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