An engineering enterprise can make profits of (500,000$, 700,000$, 680,000$, 810,000$, 440,000$) during five years of its life with probabilities of (0.2, 0.15, 0.2, 0.1, 0.25) respectively or takes a loss of 200,000 $ at the end of the life with a probability of (0.1). The expected cost acquired at the end of life of the .enterprise is (552,000 $) False O True

An engineering enterprise can make profits of (500,000$, 700,000$, 680,000$, 810,000$, 440,000$) during five years of its life with probabilities of (0.2, 0.15, 0.2, 0.1, 0.25) respectively or takes a loss of 200,000 $ at the end of the life with a probability of (0.1). The expected cost acquired at the end of life of the .enterprise is (552,000 $) False O True

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

XYZ Company has an opportunity to purchase and asset that will cost the company $60,000. The asset is expected to add $12,000 per year to the company’s net income. Assuming the asset has a 5-year useful life and a zero salvage value, the unadjusted rate of return will be?
A project with a life of 10 has an initial fixed asset investment of $25,620, an initial NWC investment of $2,440, and an annual OCF of −$39,040. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required return is 10 percent, what is the project's equivalent annual cost, or EAC? Show equations using excel.
Given the following information, what is the financial break-even point? Initial investment = $250,000; variable cost = $95; fixed cost = $58,000; price = $130; life = 6 years; required return = 12%; SL depreciation; before-tax salvage value of assets = $28,000; initial net working capital investment = $35,000, and tax rate is 21%. Do It correctly I'll rate
Suppose an asset has a purchase cost of $15,000, a life of five years, a salvage value of $3,000 at the end of five years, and a net annual before-tax revenue of $7,500. The firm's marginal tax rate is 35%. The asset will be depreciated by five-year MACRS.(a) Determine the cash flow after taxes, assuming that the purchase cost will be entirely financed by the equity funds.(b) Rework part (a), assuming that the entire investment would be financed by a bank loan at an interest rate of 9%.(c) Given a choice between paying the purchase cost up front from the firm's equity and using the financing method of part (b), show calculations to justify which is the better choice at an interest rate of 9%.
Determine the average rate of return for a project that is estimated to yield total income of $46,500 over 3 years, has a cost of $95,000, and has a $5,000 residual value.
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
Find the net present value (NPV) for a proposed project costing $22,960. Assume that the appropriate cost of capital for projects of this risk level, at this company is 9.58%, and the estimated cash flows for the life of the project are as follows: Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 $6,920 $5,329 $6,451 $9,655 $12,368 $4,319
5. The original investment in a project was $66,350. The project has a life of ten years and the company requires a 10% rate of return on all investments. The annual net income was $16,592.1. $ 7,930 was the depreciation expense. What is the project's profitability index rounded to two decimal places?
The expected average rate of return for a proposed investment of $6,720,000 in a fixed asset, using straight-line depreciation, a useful life of 20 years, no residual value, and an expected total income of $20,160,000 over the 20 years, is (round to two decimal places) a. 1.50% b. 30.00% c. 60.00% d. 15.00%
Given the following information about a possible average-risk, new product investment, calculate the investment's net present value. Initial Cost Expected Life Salvage Value Annual Depreciation Incremental Annual Sales Incremental Annual Production Costs $200,000 10yrs 0 $20,000 $200,000 $110,000 Incremental Annual Selling & Admin Costs Tax Rate Expected Inventory Turnover (calculated as production costs / 4 times ending inventory) Average Collection Period Cost of Equity Cost of Debt Target Debt to Equity Ratio $20,000 50% 45 days 13% 8.5% 130% Hint: Assume the company is on a 360-day year. Net Operating Working Capital investment is only necessary at the onset of the project (year O), it is recalled in period 10. Please ignore the Accounts Payables and Accruals in the calculation of NOWC
CII, Incorporated, Invests $700,000 in a project expected to earn a 9% annual rate of return. The earnings will be reinvested in the project each year until the entire Investment is liquidated 11 years later. What will the cash proceeds be when the project is liquidated? (PV of $1. FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round your "FV of a single amount" to 4 decimal places and final answer to the nearest whole dollar.) Present Value f (FV of a Single Amount) Future Value
3.) A project is estimated to cost $350,000, last 9 years, and have a salvage value of $90,000. The annual gross income is expected to average $54,000 and annual expenses excluding depreciation is $8,000. If capital is earning 15% before income taxes, determine if this is desirable investment using both PW and AW.