Answered: California's current population is 36.5…

California's current population is 36.5 million people and its population is expected to grow by 2% annually. How long will it take for the population to double?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 20EA: Towson Industries is considering an investment of $256,950 that is expected to generate returns of...

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A company is considering two potential projects. Project Alpha requires an investment of 1,000,000 and will return 185,464.74 per year at the end of each of the next six years. It has an IRR of α%. Project Beta requires and investment of 860,725 and will return 300,000 at the end of year one and 600,000 at the end of year two. It has an IRR of β%. Calculate α-β.
Consider a project to supply 92 million postage stamps per year to the U.S. Postal Service for the next five years. You have an idle parcel of land available that cost $1, 665, 000 five years ago; if the land were sold today, it would net you $1, 740, 000 aftertax. The land can be sold for $1, 740, 000 after taxes in five years. You will need to install $4.95 million in new manufacturing plant and equipment to actually produce the stamps; this plant and equipment will be depreciated straight line to zero over the project's five year life. The equipment can be sold for $505, 000 at the end of the project. You will also need $535, 000 in initial net working capital for the project, and an additional investment of $42, 000 in every year thereafter. Your production costs are .40 cents per stamp, and you have fixed costs of $970, 000 per year. If your tax rate is 23 percent and your required return on this project is 10 percent, what bid price should you submit on the contract? (Do not…
Towson Industries is considering an investment of $256,950 that is expected to generate returns of $90,000 per year for each of the next four years. What is the investment’s internal rate of return?
Consider a project to supply 102 million postage stamps per year to the U.S. Postal Service for the next five years. You have an idle parcel of land available that cost $1,715,000 five years ago; if the land were sold today, it would net you $1,790,000 aftertax. The land can be sold for $1,750,000 after taxes in five years. You will need to install $5.45 million in new manufacturing plant and equipment to actually produce the stamps; this plant and equipment will be depreciated straight-line to zero over the project's five-year life. The equipment can be sold for $655,000 at the end of the project. You will also need $585,000 in initial net working capital for the project, and an additional investment of $52,000 in every year thereafter. Your production costs are .50 cents per stamp, and you have fixed costs of $1,070,000 per year. If your tax rate is 23 percent and your required return on this project is 8 percent, what bid price should you submit on the contract? Note: Do not round…
Towson Industries is considering an investment of $256,950 that is expected to generate returns of $90,000 per year for each of the next four years. What Is the Investments internal rate of return?
11) What is the rate of return (IRR) of a project that will generate revenues of $40,000 at the end of every year for 8 years, given the project will require an initial cash outlay today of $90,000 and another cash outlay of $80,000 in 6 years from today?
Consider a project to supply 103 million postage stamps per year to the U.S. Postal Service for the next five years. You have an idle parcel of land available that cost $1,720,000 five years ago; if the land were sold today, it would net you $1,795,000 aftertax. The land can be sold for $1,751,000 after taxes in five years. You will need to install $5.5 million in new manufacturing plant and equipment to actually produce the stamps; this plant and equipment will be depreciated straight-line to zero over the project's five-year life. The equipment can be sold for $670,000 at the end of the project. You will also need $590,000 in initial net working capital for the project, and an additional investment of $53,000 in every year thereafter. Your production costs are .51 cents per stamp, and you have fixed costs of $1,080,000 per year. If your tax rate is 24 percent and your required return on this project is 9 percent, what bid price should you submit on the contract? (Do not round…
Consider a project to supply 103 million postage stamps per year to the U.S. Postal Service for the next five years. You have an idle parcel of land available that cost $1,720,000 five years ago; if the land were sold today, it would net you $1,795,000 aftertax. The land can be sold for $1,751,000 after taxes in five years. You will need to install $5.5 million in new manufacturing plant and equipment to actually produce the stamps; this plant and equipment will be depreciated straight-line to zero over the project’s five-year life. The equipment can be sold for $670,000 at the end of the project. You will also need $590,000 in initial net working capital for the project, and an additional investment of $53,000 in every year thereafter. Your production costs are .51 cents per stamp, and you have fixed costs of $1,080,000 per year. If your tax rate is 24 percent and your required return on this project is 9 percent, what bid price should you submit on the contract?
We are examining a new project. We expect to sell 6,000 units per year at $74 net cash flow apiece for the next 10 years. In other words, the annual cash flow is projected to be $74 × 6,000 = $444,000. The relevant discount rate is 18 percent, and the initial investment required is $1,710,000. After the first year, the project can be dismantled and sold for $1,540,000. Suppose you think it is likely that expected sales will be revised upward to 9,000 units if the first year is a success and revised downward to 4,600 units if the first year is not a success. a. If success and failure are equally likely, what is the NPV of the project? Consider the possibility of abandonment in answering. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the value of the option to abandon? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
What is the internal rate of return (IRR) of a project that costs $20,070 if it is expected to generate $8,500 per year for three years?
If the annual cost of a given good rises 2.3% per year for the next 20 years, write an equation to model the approximate cost of the good during any year in the next 20. Determine how long it will take for the price of the good to double.
We are examining a new project. We expect to sell 6,100 units per year at $75 net cash flow apiece for the next 10 years. In other words, the annual cash flow is projected to be $75 × 6,100 = $457,500. The relevant discount rate is 18 percent, and the initial investment required is $1,720,000. After the first year, the project can be dismantled and sold for $1,550,000. Suppose you think it is likely that expected sales will be revised upward to 9,100 units if the first year is a success and revised downward to 4,700 units if the first year is not a success. Suppose the scale of the project can be doubled in one year in the sense that twice as many units can be produced and sold. Naturally, expansion would only be desirable if the project were a success. This implies that if the project is a success, projected sales after expansion will be 18,200. Note that abandonment is an option if the project is a failure. a. If success and failure are equally likely, what is the NPV of the project?…