Consider the following information:Initial cost of equipment$108,000Sales tax and delivery costs$7,000Estimated life7 yearsSalvage value$11,000Annual cash inflows$31,000Estimated cost of capital10%Without considering the effect of income taxes, the net present value of the equipment is:O $39.921.

Step 1: Computation of net present value of equipment is as under: Formula table:Thus, NPV of the…

Answered: Consider the following information:…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Based on the above after tax cash flows, what is the NPW of this project if the interest rate is 12%?
This question is based on the following in formation: An investment is Machinery costing P 250,000 with a 4-year life and no salvage value is expected to produce the following net income after taxes of 30%: End of year 1 P 17,000 2 22,000 3 25,000 4 26,000 How much is the annual tax shield?How much is the annual tax shield?A. P 17,580B. P 17,850C. P 18,570D. P 18,750What is the ROI (using the cash income)? A. 6.3%B. 9%C. 31.3%D. 34%
1. Textron is considering a NEW project. The financial projections are as follows: Year 0 Year 1 24,000 7,000 Year 2 24,000 Year 3 Sales 24,000 Total Costs 7,000 7,000 Depreciation Capital Investment (or Cost of Equipment) Working Capital (Requirements/Levels) 10,000 10,000 10,000 40,000 2000 2500 1000 The Equipment will be sold at the end of Year 3 for 11,000. The relevant tax rate is 35%. Compute the cash flows for the project. Please select file(s) Select file(s)
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An anticipated purchase of equipment for $520,000, with a useful life of 8 years and no residual value, is expected to yield the following annual net incomes and net cash flows: Year 1 2 3 4 5 6 7 8 Net Income $60,000 50,000 50,000 40,000 40,000 40,000 40,000 40,000 What is the cash payback period? Oa. a. 6 years Ob. 3 years Oc. 5 years Od. 4 years Net Cash Flow $120,000 110,000 110,000 100,000 80,000 80,000 60,000 60,000
From the given table find the net present value. Thank you!
Consider the financial data for a project given in the table below. Initial investment Project life Salvage value Annual revenue $70,000 6 years $10,000 $26,000 Annual expenses $7,000 (a) What is i for this project? 18.1 % (Round to one decimal place.) (b) If the annual expense increases at a 7% rate over the previous year's expenses, but the annual income is unchanged, what is the new / - 16 % (Round to one decimal place.) (c) In part (b), at what annual rate will the annual income have to increase to maintain the same i obtained in part (a)? The annual income has to increase at% per year (Round to one decimal place.)
The capitalized cost (CC) of the given project whose Cash Flow diagram is given below is closest to: j= 12% per year 1 2 3 7 8 9 10 11 A= $2,000 A= $5,000 PO=S50,000 Capitalized Cost= ? O $-83,754 $-78,145 $-75,895 O $-85,500 O $-80,852
4. Capital expenditure of a new investment project is $ 120,000,000; the expected annualnet cash flows generated from the investment are given below. Supposethat the company's cost of capital is 10%, calculate and comment on the accounting rate of return, internal rate of return, and discounted payback period of the project. Cash flows($000) DE (10%) 40,000 42,000 50,000 Years 1. 0.909 2. 0.826 0.751 52,000 0.683 55,000 0.621 SV 60,000 0.565
1

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