Baird Rentals can purchase a van that costs $110,000; it has an expected useful life of five years and no salvage value. Baird usesstraight-line depreciation. Expected revenue is $40,425 per year. Assume that depreciation is the only expense associated with thisInvestment.Requireda. Determine the payback period.Note: Round your answer to 1 decimal place.b. Determine the unadjusted rate of return based on the average cost of the investment.Note: Round your answer to 1 decimal place. (l.e., .234 should be entered as 23.4).a. Payback periodb. Unadjusted rate of returnyears%

Payback period= Purchase cost / Expected revenue per year

Answered: Baird Rentals can purchase a van that…

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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A profitable company making earth-moving equipment is considering an investment of $100,000 on equipment, which will have a 5-year useful life and, no salvage value. If money is worth 10%, which one of the following three methods of depreciation would be preferable? a. Straight line method b. SOYD method c. Two and half declining balance d. MACRS method
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
A machine costs $600,000 and is expected to yield an after-tax net income of $23,000 each year. Management predicts this machine has a 12-year service life and a $120,000 salvage value, and it uses straight-line depreciation. Compute this machine's accounting rate of return. Choose Numerator: Annual after-tax net income $ 1 23,000 / Accounting Rate of Return Choose Denominator: Annual average investment $ = 360,000 = Insert
2. Super Apparel wants to replace an old machine with a new one. The new machine would increase annual revenue by $200,000 and annual operating expenses by $80,000. The new machine would cost $400,000. The estimated useful life of the machine is 10 years with zero salvage value. i. Compute Accounting Rate of Return (ARR) of the machine using above information. ii. Should Super Apparel purchase the machine if management wants an Accounting Rate of Return of 19% on all capital investments? Hint: Use Average Income or Profit after deducting tax, depreciation, and operating expenses.
NPV; PI; payback; IRR Pete's Paving provides custom paving of sidewalks and driveways. One of the most labor-intensive aspects of the paving operation is preparing and mixing materials. Sharon Guillon, corporate engineer, has found new computerized equipment to mix (and monitor the mixing of) materials. According to information received by Guillon, the equipment's cost is $580,000 and has an expected life of eight years. If purchased, the new equipment would replace manually operated equipment. Data relating to the existing and replacement mixing equipment follow. Original cost Present book value Existing Equipment $56,000 $32,000 Annual cash operating costs $180,000 Fair value $12,000 Fair value in eight years Remaining useful life $0 8 years Replacement Equipment $580,000 $36,000 Cost Annual cash operating costs Fair value in eight years Useful life $0 8 years a. Assume that the company's cost of capital is 10 percent, which is to be used in discounted cash flow analysis. (1) Compute…
Sheridan Company is considering a long-term investment project called ZIP. ZIP will require an investment of $123,200. It will have a useful life of 4 years and no salvage value. Annual revenues would increase by $79.240, and annual expenses (excluding depreciation) would increase by $39,200. Sheridan uses the straight-line method to compute depreciation expense. The company's required rate of return is 12%. Compute the annual rate of return. Annual rate of return Determine whether the project is acceptable? the project. eTextbook and Media Save for Later Attempts: 0 of 3 used Submit Answer
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Nguyen Company has an opportunity to purchase an asset that will cost company $59,000. The asset is expected to add $23,000 per year to the company’s net income. Assuming the asset has a five-year useful life and zero salvage value, the unadjusted rate of return based on the average investment will be ?
(1) Compute the payback period. 1b) Compute the accounting rate of return for this equipment.
Penny and Daughter’s construction business is considering purchasing a new Bobcat. The equipment will cost $230,000 and is expected to last 14 years. The Bobcat has a salvage vale of $16,000. Calculate the depreciation AND book value for each year. You can create one table for a-d or you can create different tables for each. This problem will need to be done in excel. (30 points)a. Use straight-line depreciation. (5 points)b. Use declining-balance depreciation with a depreciation rate that ensures the book value equals the salvage vale in the last year of the life of the equipment. c. Use double declining balance depreciation. d. Use MACRS depreciation where the Bobcat is considered a 10 year property. e. Graph the Book values of each methods on a single graph. The graph should have points at each year for each BV and a line of each method. You will have 4 lines on your graph. You should include year 0 on your graph so that all four lines start at the same point. Each method should be…
Provide step by step manual solution, given, and depreciation table for below mentioned problem. Make sure yet that your answer is the same as the given answer before sending your solution. An asset costing P50,000 has a life expectancy of 6 years and an estimated salvage value of P8,000. Calculate the depreciation charge at the end of the fourth period using fixed-percentage method. Answer. P5,263.87
Assume that a company is considering purchasing a machine for $100,000 that will have a seven-year useful life and no salvage value. The machine will lower operating costs by $18,000 per year. The company also expects this investment to provide qualitative benefits that it is struggling to incorporate into its financial analysis. Assuming the company's required rate of return is 17% and the net present value of the investment before considering the qualitative benefits is $(29,404), the minimum dollar value per year that must be provided by the machine's qualitative benefits to justify the $100,000 investment is closest to: Multiple Choice O O о O $7,787. $8,247. $7,497. $8,067.

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