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 $48,566.$41,566.$39,921.$42,921.

Now, let's calculate the present value of each annual net cash flow using the discount rate of…

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

See similar textbooks

Similar questions

Need help
What is the annual after-tax operating cash flow? Table 3 Initial Equipment Project Life Sales Variable Costs Fixed Costs Tax rate Cost of Capital Ending Book Value Sales Price at Year 3 Net Working Capital $24,700 O $13,300 $32,250 $19,300 $55,000 3 Years $50,000 $20,000 $10,000 35% 10% $1,000 $20,000 $10,000
I want to answer this question
From the given table find the net present value. Thank you!
See image for MACRS table 1) What is the Ending Book Value at the end of year 3 using MACRS: $ 2) What is the Net cash flow from salvage at the end of year 3? $
Below are two potential investment alternatives: Initial capital investment 180,000 Estimated useful life 3 years Estimated annual cash inflow each year 80,000 Desired rate of return 10% Assume straight-line depreciation in all computations, and ignore income taxes. The net-present value in this investment is _____. 18,948 (123,652) 75,000 186,518
The following are the cash flows of two projects: Project Project A B $(370) $(370) 200 270 270 270 Year 0 1 2 3 4 200 200 200 If the opportunity cost of capital is 10%, what is the profitability index for each project? (Do not round intermediate calculations. Round your answers to 4 decimal places.) Answer is complete but not entirely correct. Profitability Index Project A B 1.7134 1.4000
The Post Company is considering investing in two alternative projects: Investment Useful life (years) Estimated annual net cash inflows for useful life Residual value Depreciation method Required rate of return What is the accounting rate of return for Project 1? OA. 52.5% B. 20% OC. 30% OD. 7.5% Project 1 $200,000 4 $60,000 $20,000 Straight-line 15% Project 2 $260,000 8 $45,000 $16,000 Straight-line 10%
Based on the above after tax cash flows, what is the NPW of this project if the interest rate is 12%?
Spiritlight Ventures is considering the following investment: Investment $140,000 Annual revenues $ 96,000 Annual variable costs $ 32,000 Annual fixed out-of-pocket costs $ 20,000 Salvage value $ 12,000 Discount rate 12% Expected life of project 8 years Ignore income taxes. The present value of the annual cash flow (rounded) is a.$152,538. b.$136,822. c.$204,884. d.$218,592.
A project has annual depreciation of $17,100, costs of $89,300, and sales of $129,500. The applicable tax rate is 40 percent. What is the operating cash flow? Multiple Choice $22,920 $30,960 $84,540 $34,380 $24,120
An investment of Public Transport need $ 200 billions, Revenue $ 100 billions / year, Expenditure for operational and maintenances $ 40 billions / year, Residual value at the end of year 10 th $ 60 billions, Bank Interest 12 % / yaer Calculate : a. NPV b. IRR с. В/C d. What do you think about the project ?

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS