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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- Vaughn Company is considering two capital investment proposals. Estimates regarding each project are provided below- Project Soup Project Nuts Initial investment $390870 $600000 Annual net income 27000 45100 Net annual cash 90900 142000 inflow Estimated useful 4 years 5 years life Salvage value The cash payback period for Project Soup isPerit Industries has $115,000 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 $ 115,000 $ 0 Working capital investment required $ 0 $ 115,000 Annual cash inflows $ 21,000 $ 69,000 Salvage value of equipment in six years $ 8,700 $ 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…A piece of equipment has a first cost of $75000, a maximum useful life of 4 years, and a market (salvage) value described by the relation Sk = 60000 – 10500k, where k is the number of years since it was purchased. The AOC series is estimated using AOC= 30000 + 4500k. The interest rate is 9% per year. When should the company replace this asset?
- Perit 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…T1.A cooling water pumping station at a manufacturing plant in N City cost $30,000,000 to construct, and it is projected to have a 25-year life with an estimated salvage value of 10% of the construction cost. If the cooling water pumping station will be book-depreciated to zero over a recovery period pf 30 years, calculate d_10 using the double declining balance method.
- I need the answer as soon as possiblePerit Industries has $125,000 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 $ 125,000 $ 0 Working capital investment required $ 0 $ 125,000 Annual cash inflows $ 20,000 $ 64,000 Salvage value of equipment in six years $ 8,000 $ 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 17%. Click here to view Exhibit 13B-1 and Exhibit 13B-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…Flounder Manufacturing Company is considering three new projects, each requiring an equipment investment of $23,800. Each project will last for 3 years and produce the following cash flows. Year 1 2 3 Total (a) AA BB $7,600 $10,300 $11,600 10,300 10,600 10,300 9,600 15,600 $32,800 Click here to view PV tables. The salvage value for each of the projects is zero. Flounder uses straight-line depreciation. Flounder will not accept any project with a payback period over 2.2 years. Flounder's minimum required rate of return is 12%. Payback period (b) Your answer is correct. Compute each project's payback period. (Round answers to 2 decimal places, e.g. 52.75.) Most desirable $30,900 $31,800 Least desirable CC Indicating the most desirable project and the least desirable project using this method. Project CC eTextbook and Media 9,600 Project AA Most desirable Net present value $ Least desirable AA 2.42 years AA BB Compute the net present value of each project. (Use the above table.) (Round…
- Hayden Company is considering the acquisition of a machine that costs $561,000. The machine is expected to have a useful life of 6 years, a negligible residual value, an annual net cash inflow of $100,000, and annual operating income of $85,000. The estimated cash payback period for the machine is (round to one decimal place) a.6.6 years b.5.6 years c.7.8 years d.1.2 yearsHeidi Company is considering the acquisition of a machine that costs $536,000. The machine is expected to have a useful life of 6 years, a negligible residual value, an annual net cash inflow of $104,000, and annual operating income of $84,095. The estimated cash payback period for the machine is (round to one decimal point)? Oa. 5.2 years Ob. 6.4 years Oc. 6.0 years Od. 6.5 yearsA 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.