Beacon Associates expects an average net profit of RO 65,000 per year in the future. The average capital employed in the business is RO 380,000. The normal rate of return on capital employed in a similar business is 14%. Calculate the goodwill of the firm using: Super Profit Method (on the basis of four-year purchase).
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- The following details relate to M/s XYZ, a firm: Average profit of last four years = $7,00,000 Average capital employed by the firm: $55,00,000 Normal rate of return :10% Present value of annuity of $1 for 4 years @ 10% : 3.1699 Determine the value of goodwill on the basis of annuity of super profit.Calculate a firm's free cash flow if it has net operating profit after taxes of P60,000, depreciation expense of P7,000, an interest expense of P1,000, a net fixed asset investment of P30,000, a net current asset requirement of P15,000 and a tax rate of 30%.PT. Sentosa Raya uses its own capital and debt capital. The agreed cost of debt is 10% and the interest to be paid on the debt is Rp. 3,000,000. The company earned an operating profit of Rp. 24,000,000 per year. The expected return is 30% per year. With these data, determine the value of the company and the company's cost of capital!
- A firm, whose cost of capital is 8 percent, may acquire equipment for $146,825 and rent it to someone for a period of five years. Note: Although payment of rent is typically considered to be an annuity due, treat it as an ordinary annuity when completing this problem in a spreadsheet or when using present value factors. If the firm charges $38,730 annually to rent the equipment, what are the net present value and the internal rate of return on the investment? Use Appendix D to answer the questions. Use a minus sign to enter negative values, if any. Round your answers for the net present value to the nearest dollar and for the internal rate of return to the nearest whole number. NPV: $ IRR: % Should the firm acquire the equipment? The firm acquire the equipment as the net present value is , and the internal rate of return the firm's cost of capital. If the equipment has no estimated residual value, what must be the minimum annual rental charge for the firm to earn the required 8…1LMN Corporation has projected that their performance for the next five years will result to the following (see table below). The corporation owns a property originally acquired at P5 million with useful life of 10 years. The terminal value was assumed based on the growth rate of the cash flows. Capital investment is needed on Year 1 amounting to P1 million. Income tax rate is at 30%. The required rate of return for this business is 12%. Calculate the maximum price at which an investor will purchase 40% of LMN Corporation (round the growth rate to four decimal point).Calculate Internal Rate of Return to the investor based on a sale of the project at 12/31/26 using a 6.75% Cap Rate as sale value and 2% closing costs. Assume minimum $10,000 working capital at end of every year. All other cash flow is Distributable to investor.
- A firm has a liability cash flow of 100 at the end of year two and a second liability cash flow of 200 at the end of year three. The firm also has asset cash flows of X at the end of years one and five. Using an annual effective interest rate of 10%, calculate the absolute value of the difference between the Macaulay durations of the asset and liability cash flows.Beyer Company is considering the purchase of an asset for $205,000. It is expected to produce the following net cash flows. The cash flows occur evenly within each year. Assume that Beyer requires a 9% return on its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Year 1 Year 2 Year 3 Year 4 Year 5 Total Net cash flows $ 74,000 $ 59,000 $ 100,000 $ 166,000 $ 54,000 $ 453,000 a. Compute the net present value of this investment.b. Should Beyer accept the investment? Compute the net present value of this investment. (Round your answers to the nearest whole dollar.)A company is considering a $150,000 investment in machinery with the following net cash flows. The company requires a 10% return on its investments. (PV of $1. EV of $1. PVA of $1, and EVA of $1) (Use appropriate factor(s) from the tables provided.) Year Year 1 $10,000 Year 1 Year 2 Year 3 Year 4 Year 5 Net cash flows (a) Compute the net present value of this investment. (b) Should the machinery be purchased? Complete this question by entering your answers in the tabs below. Totals Initial investment Net present value Year 2 $25,000 Year 3 $50,000 Required A Required B Compute the net present value of this investment. (Round your present value factor to 4 decimals. Round your final answers to the nearest whole dollar) Net Cash Flows Year 4 $37,500 Present Value Present Value of Factor Net Cash Flows
- A project capitalized for P 50,000 in depreciable assets will earn a uniform annual income of P 19,849 in 10 yrs. The costs for operation and maintenance total P 9,000 each year. If the company expects its capital to earn 12% before income taxes, is the investment worthwhile? Use ROR, annual worth and present worth methods in justifying the investment.Please help me to solve this problemFalkland, Inc., is considering the purchase of a patent that has a cost of $50,000 and an estimated revenue producing life of 4 years. Falkland has a cost of capital of 8%. The patent is expected to generate the following amounts of annual income and cash flows: A. What is the NPV of the investment? B. What happens if the required rate of return increases?