Company AMP wants to determine the net present value of one of its systems when cost of capital is 10%. The initial cost of the system is $300,000 with an annual cash inflow are $110,000 and has salvage value of $19,500 at the end of its life i.e. 4 years.
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![Company AMP wants to determine the net present value of one of its systems when cost of capital is 10%. The initial cost of the system is
$300,000 with an annual cash inflow are $110,000 and has salvage value of S19,500 at the end of its life i.e. 4 years.
$62,003
$63,500
S78,000
$75,000
O O](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F82a72922-41c0-4a38-b0ba-043bb2e60525%2F3ad69ea4-9422-4e34-8331-7b00577e0e9e%2Fsj6eh9j_processed.jpeg&w=3840&q=75)
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- A new robot has a first cost of $380,000, and an annual operating cost of $88,000 in years 1 and 2, increasing by $10000 per year thereafter. The salvage value of the system is $25,000 regardless of when the system is retired within its maximum useful life of 5 years. Using a MARR of 14% per year, determine the ESL and the respective AW value of the system ESL: a) 1 year b) 4 years c) 5 years d) 3 years AW value of system: a) $204,860 b) $336,284 c) $97,953 d) $496,200A firm is considering an investment in new equipment that has the following information. Purchase Cost: $132,793 Salvage Value in five years time: $18,337 Useful life is 5 years and depreciation is determined using the straightline method. Expected increased annual cash flows are $52,651 What is the payback period in years? Calculate to 2 decimal placesPerit Industries has $210,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are: Project A Project B Cost of equipment required $ 210,000 $0 Working capital investment required $0 $ 210,000 Annual cash inflows $ 30,000 $ 52,000 Salvage value of equipment in six years $ 9, 100 $ 0 Life of the project 6 years 6 years The working capital needed for project B will be released at the end of six years for investment elsewhere. Perit Industries' discount rate is 15%. Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables. Required: 1. Compute the net present value of Project A. (Enter negative values with a minus sign. Round your final answer to the nearest whole dollar amount.) 2. Compute the net present value of Project B. (Enter negative values with a minus sign. Round your final answer to the nearest whole dollar amount.) 3. Which investment alternative (if either) would you…
- Briar Corporation is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net cash flow of $204,000. The equipment will have an initial cost of $1,204,000 and an 8-year useful life. The salvage value of the equipment is estimated to be $204,000. Briar's cost of capital is 8%. (Future Value of $1. Present Value of $1, Future Value Annuity of $1. Present Value Annuity of $1) Note: Use appropriate factor from the PV tables. Required: a. What is the accounting rate of return? b. What is the payback period? c. What is the net present value? d. What would the net present value be with a 14% cost of capital? e. Based on the NPV calculations, what would be the equipment's internal rate of return? Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D What is the accounting rate of return? Required E Note: Do not round intermediate calculations. Round your final…Project A requires a $315,000 initial investment for new machinery with a five-year life and a salvage value of $35,500. Project A is expected to yield annual income of $23,900 per year and net cash flow of $78,750 per year for the next five years.Compute Project A’s accounting rate of return. *please help correct the answerByron Corporation is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net cash flow of $130,000. The equipment will have an initial cost of $475,000, a 5-year useful life, and an estimated salvage value of $84,000. If the company's cost of capital is 11%, what is the approximate net present value? (Future Value of $1. Present Value of $1. Future Value Annuity of $1. Present Value Annuity of $1) Note: Use the appropriate factors from the PV tables. Multiple Choice $(5,467) $214,000 $130,000 $55,321
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- An investment of $20,000 for a new condenser is being considered. Estimated salvage value of the condenser is $5,000 at the end of an estimated life of 6 years. Annual income each year for the 6 years is $8,500. Annual operating expenses are $2,300. Assume money is worth 15% compounded annually. Determine the external rate of return and whether or not the condenser should be purchased.a. A new operating system for an existing machine is expected to cost $630,000 and have a useful life of six years. The system yields an incremental after-tax income of $195,000 each year after deducting its straight line depreciation. The predicted salvage value of the system is $26,200 b. A machine costs $540,000, has a $35,000 salvage value, is expected to last eight years, and will generate an after tax income of $82,000 per year after streight-line depreciation Assume the company requires a 12% rate of return on its investments. Compute the net present value of each potential investment (PV of 5), EV of S1, PVA of 31 and EVA of 50 (Use appropriate factor(s) from the tables provided) Complete this question by entering your answers in the tabs below. Required A Required A new operating system for an existing machine is expected to cost $630,000 and have a useful life of six years. The system vieles an incremental after-tax income of $195,000 each year after deducting its…A company is evaluating a capital investment with the following projections: Initial Investment = $75,000 Salvage value = $15,000 Project life = 10 years Capital budgeting assumptions: Old Machine is fully depreciated Old machine annual operating cost: 40,000 Old machine annual maintenance cost: 10,000 New machine annual operating cost: 20,000 New machine annual maintenance cost: 9,000 Discount rate: 10% Tax rate: 20% What is the project's internal rate of return (IRR)?Answer as a whole number. 5% would be answered as 5.
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