An engineering firm invested capital of 6,000,000 dollars on equipment that ensures a revenue of 2,900,000  dollars each year for five his equipment, with a life of five years, will have a trade-in value of 600,000 dollars. The cost of operation and maintenance will be 1,200,000 dollars per year. Taxes and insurance will be 2% of the first cost per year. He expects his capital will earn not less than 15%. Is the investment justifiable? Solve by using the Future Worth Method.

Q: A firm has invested $700 in a new machine that is expected to last for the next 5 years. The machine…

A: Free cash flow is that amount which is earned by the investor from the project. It is the net amount…

Q: An investment with an initial cost of $6,000 produces cash flows of 3,000, −$500, -$2,800, −$100,…

A: Solution- (1)- IRRr of the project given by=-6000+3000/1+r-500/1+r2+2800/1+r3-100/1+r4+6000/1+r5=0

Q: Raas Hardware is adding a new product line that will require an investment of $1,476,000. Managers…

A: Payback period is the length of time required to recover the cost of Investment. It is calculated…

Q: Lauren Steel Company is considering investing in manufacturing equipment expected to cost $160,000.…

A: Net present value(NPV)  is the difference  between present value of all cash inflows and initial…

Q: How much money will be available for the project in  41/2 years?  (Round your answer to the nearest…

A: Time value of money (TVM) refers to the method used to measure the amount of money at different…

Q: I want to answer this question

A: Approach to solving the question: Detailed explanation:   Examples: Key references:

Q: Need answer the question

A: Step-by-Step Calculation:Step 1: Calculate Operating Income (EBIT) Operating Income…

Q: You are the CFO of a manufacturing company that is considering an investment in new production…

A: Capital budgeting is a method of determining the profitability and feasibility of projects. This…

Q: Your company is considering a new project that will require $2,000,000 of new equipment at the start…

A: To estimate the present value of the tax benefits from depreciation, calculate the annual tax shield…

Q: chester owns a tanning salon that is expected to produce annual cash flows forever. the tanning…

A: A perpetuity is a cash flow that goes on forever. In other words, the cash flows occur for an…

Q: Your future company has been presented with an opportunity to invest in a project with the following…

A: Rate of return is an expected profit on an investment by an investor. It is a rate at which investor…

Q: mpany purchases the machine, its cost of $276,000 will be financed with a loan at 14.8% interest for…

A: The equipment finance company pays the loan in equal installments which include the principal amount…

Q: Problem Solving. Solve the following problems completely. 4. Atty. Gacayan invested P280, 000 which…

A: Capital budgeting is a process to evaluate the profitability of the project by using various…

Q: orrisey Company is in the process of constructing a new plant at a cost of $25 million. It expects…

A: The payback period is the period required to recover the initial amount of investment and it…

Q: ASDF Inc. put up a business project with an initial investment of 105 million. The project is…

A: The payback period is the length of time it takes for cash inflows generated by a project to cover…

Q: ordan is considering purchasing an investment costing $42,000 that will save power costs of $14,000…

A: In this question, we have to calculate the cashflow after taxes each year.

Q: An investment of $875,000 in equipment will produce annual profits of $175,000 for eight years. The…

A: Investment amount = $ 875000 Annual profit = $ 175000 Residual value = $ 40000 Period = 8 Years

Q: You are considering investing $64,000 in new equipment. You estimate that the net cash flows will be…

A: Investing in new Equipment  $        64,000 Life of Equipment 8 year  Salvage Value  $…

Q: Your firm is looking at 3 projects, each costing $500,000: A is estimated to save $125,000 per year…

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: culate the capitalized cost of a project th: nitial cost of P3,000,000 and an additiona P1,000,000…

A: A capitalized cost refers to the cost which is summed up to the cost basis of a fixed asset of the…

Q: Answer each independent question, (a) through (e), below. a. Project D costs $10,000 and will…

A: book rate of return based on the average book value=Average net profit/Average investment…

Q: An oil well could produce a net income of P 15,000,000.00 per year for 25 years is being considered…

A: To determine the amount that has to be paid to the oil well, we need to use a formula that would…

Q: A project costs $800,000 plus $200,000 in shipping and installation. For the next five years the…

A: NPV is the concept of capital budgeting in which cost and benefit analysis of a project is done…

Q: Your firm is considering a project that would require purchasing $7.5 million worth of new…

A: When there is reduction in income and because of that there is a decrease in taxable income and…

Q: Ace Hardware is adding a new product line that will require an investment of $1,418,000. Managers…

A: Payback period :— It is the time period in years which is required to recover all the cash outflows…

Q: A new molding machine is expected to produce operating cash flows of $109,000 per year for 4 years.…

A: Net present value refers to the technique of capital budgeting used to evaluate the profitability…

Q: at is the expected net income (after tax) in Year 3 if the proposed investment is undertaken? Round…

A: Summary of the relevant information provided in the question : New Machine Cost = $ 303,000 Sales…

Q: A project requires an immediate investment of $10,000 for the purchase and installation of…

A: A discount rate at which the net present worth of an investment is equal to zero is term as an…

Q: Company ABC is introducing a new product to the market that is expected to bring $50k annual revenue…

A: A capital budgeting decision is a one-time investment that is expected to pay off over some time.…

Q: A capital investment of Php 508,000 on a project can produce an annual revenue of Php 383,000 for 5…

A: Capital Investment = 508,000 Annual Revenue = 383,000 Investment is mentioned as 508,000 Salvage…

Q: A new building project costs $40,000 and is expected to have positive cash inflows of $8,000 a year…

A: Formulas:

Q: We're Friends Corp. will invest $100,000 in a project that will not begin to produce returns until…

A: In case the NPV is positive, it indicates that the investment is expected to generate a profit and…

Q: A large profitable corporation is considering a capital investment of $50,000. The equipment has a…

A: Taxable income for the year 2 can be calculated by using this equation Taxable income for the year 2…

Q: The FernRod Motorcycle Company invested $150,000 at 4.5% compounded monthly to be used for the…

A: When amount is invested to earn compound interest for a certain period, it involves the computation…

Q: Mr. Joseph Ramos, owner of a GYM is planning to buy an equipment worth P150,000 in his business…

A: Initial cost =150,000 Discount rate = 0.14 or 14%     Net present value (NPV) is the difference…

Q: The FernRod Motorcycle Company invested $350,000 at 4.5% compounded monthly to be used for the…

A: Given information, Investment amount(P)=$350,000 Time(t)=5.5 years Compounded monthly (m)=12…

Q: The ABC Transportation estimates the cost of upgrading a highway to be $85 million now. Resurfacing…

A: 550000 each 3 years  interest rate =8% Future value FACTOR =(1.08)3- 1/0.08 Future value FACTOR…

Q: DO IT IN EXCEL, AND SHOW THE FORMULAS If the company purchases the machine, its cost of $276,000…

A: Principal is a value which is borrowed from external sources. It can be done in the form of cash or…

Q: The FernRod Motorcycle Company invested $150,000 at 4.5% compounded monthly to be used for the…

A: We know that the formula to calculate the future value of current investment amount is  Future Value…

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.