An investment of P200,000 can be made in a project that will produce a uniform annual revenue of P145,000 for 5 years and then have a salvage value of 10% of the investment. Out-of-pocket costs for operation and maintenance will be P60,000 per year. Taxes and insurance will be 4% of the first cost per year. The company expects capital to earn not less than 22% before income taxes. Is this a desirable investment? What is the payback period of the investment? Compute the rate of return. What is the net annual profit using annual worth method? What is the net present worth of net cash flow? The rate of return is [Select ] The net annual profit is [ Select] The net present worth of net cash flow is [ Select ] Is this a desirable investment? [ Select ] The payback period is [ Select] years.
An investment of P200,000 can be made in a project that will produce a uniform annual revenue of P145,000 for 5 years and then have a salvage value of 10% of the investment. Out-of-pocket costs for operation and maintenance will be P60,000 per year. Taxes and insurance will be 4% of the first cost per year. The company expects capital to earn not less than 22% before income taxes. Is this a desirable investment? What is the payback period of the investment? Compute the rate of return. What is the net annual profit using annual worth method? What is the net present worth of net cash flow? The rate of return is [Select ] The net annual profit is [ Select] The net present worth of net cash flow is [ Select ] Is this a desirable investment? [ Select ] The payback period is [ Select] years.
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
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![An investment of P200,000 can be made in a project that will produce a uniform annual revenue of P145,000 for 5 years and then have a salvage value of 10% of the
investment. Out-of-pocket costs for operation and maintenance will be P60,000 per year. Taxes and insurance will be 4% of the first cost per year. The company
expects capital to earn not less than 22% before income taxes. Is this a desirable investment? What is the payback period of the investment? Compute the rate of
return. What is the net annual profit using annual worth method? What is the net present worth of net cash flow?
The rate of return is [Select]
The net annual profit is [Select]
The net present worth of net cash flow is [ Select]
Is this a desirable investment? [ Select ]
The payback period is [ Select]
years.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe6cc00c2-cf7a-4448-b2d2-be3de74df4b2%2F71d5a23a-dcf7-47c9-a071-1079a377ebd1%2Fbjg8gp9_processed.jpeg&w=3840&q=75)
Transcribed Image Text:An investment of P200,000 can be made in a project that will produce a uniform annual revenue of P145,000 for 5 years and then have a salvage value of 10% of the
investment. Out-of-pocket costs for operation and maintenance will be P60,000 per year. Taxes and insurance will be 4% of the first cost per year. The company
expects capital to earn not less than 22% before income taxes. Is this a desirable investment? What is the payback period of the investment? Compute the rate of
return. What is the net annual profit using annual worth method? What is the net present worth of net cash flow?
The rate of return is [Select]
The net annual profit is [Select]
The net present worth of net cash flow is [ Select]
Is this a desirable investment? [ Select ]
The payback period is [ Select]
years.
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