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Given:
| n (end of the year) | Cashflow Amount | Project Balance |
| 0 | -1000 | -1000 |
| 1 | 100 | -1100 |
| 2 | 520 | -800 |
| 3 | 460 | -500 |
| 4 | 600 | 0 |
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Solved in 3 steps
- If a project costs $90,000 and is expected to return $24,500 annually, how long does it take to recover the initial investment? What would be the discounted payback period at i = 15% ? Assume that the cash flows occur continuously throughout the year. The payback period is years. (Round to one decimal place.)You are evaluating a project that will require an investment of $15 million that will be depreciated over a period of 19 years. You are concerned that the corporate tax rate will increase during the life of the project. Would this increase the accounting break-even point? Would it increase the NPV break-even point?Determine the payback period for a proposed investment as follows
- If that 30% return on investment (ROI) occurs over a decade, r = .55 and n = 10, so the annualized rate of return is 0.0653 0.02658 0.0554 0.0201A 50-kilowatt gas turbine has an investment cost of $35,000. It costs another $15,000 for shipping, insurance, site preparation, fuel lines, and fuel storage tanks. The operation and maintenance expense for this turbine is $500 per year. Additionally, the hourly fuel expense for running the turbine is $7.00 per hour, and the turbine is expected to operate 3,500 hours each year. The cost of dismantling and disposing of the turbine at the end of its 6-year life is $9,000. a. If the MARR is 16% per year, what is the annual equivalent life-cycle cost of the gas turbine? b. What percent of annual life-cycle cost is related to fuel? Click the icon to view the interest and annuity table for discrete compounding when the MARR is 16% per year. a. The annual equivalent life-cycle cost of the gas turbine is $ (Round to the nearest dollar.)Liberty Airways is considering an investment of$800,000 in ticket purchasing kiosks at selected airports.The kiosks (hardware and software) have an expectedlife of four years. Extra ticket sales are expected to be60,000 per year at a discount price of $40 per ticket.Fixed costs, excluding depreciation of the equipment,are $400,000 per year, and variable costs are $24 perticket. The kiosks will be depreciated over four years,using the SL method with a zero salvage value. Theonetime commitment of working capital is expected tobe 1/12 of annual sales dollars. The after-tax MARR is15% per year, and the company pays income tax at therate of 34%. What’s the after-tax PW of this proposedinvestment? Should the investment be made?
- Super Tennis Co is in the business of designing and manufacturing running shoes for long distance runners. They are considering a $500 million upgrade to their production line for the iPhone/iPad/ iWatch connected shoe that has Bluetooth connectivity. The potential cash flow is estimated at net revenues of $460 million per year for four years. Recently, they were advised of potential patent infringement and to eliminate this problem they are considering buying a license. YezzCo will sell a license that is good for four years of exclusive use of the patent and associated intellectual property. Super Tennis Co uses a corporate MARR of 14% and their risk-free alternatives are 6%. The VP of Engineering at Super Tennis Co estimates market volatility in demand is 40%. The VP of Marketing estimates market volatility in demand at 35%. 1.Since the VPAc€?cs trust you, they asked you to figure out the most they should pay for a license from YezzCo. 2. Super Tennis Co is known to be liberal in…A fixed capital investment of ₱9,000,000 is required for a proposed manufacturing plant and an estimated working capital of ₱2,000,000. Annual depreciation is estimated to be 10% of the fixed capital investment. Annual revenue is ₱2292,000. Determine the payback period (in years) of the proposed manufacturing plant.Quattro began operations in April of this year. It makes all sales on account, subject to the following collection pattern: 25% are collected in the month of sale; 55% are collected in the first month after sale: and 20% are collected in the second month after sale. If sales for April, May, and June were $64,000, S84,000, and S74,000, respectively, what were the firm's budgeted collections for June? $18,500. S56,200. S64,700. S77,500. Some other amount.
- Gg.107. John wants to have the financial ability to withdraw $80,000 per year forever beginning 30 years from now. If his retirement account earns 8% per year interest and dividends, what is the required balance in (a) year 29, and (b) year 0? please explain processA financial investor has an investment portfolio. A bond in her investment portfolio will mature next month and provide her $25,000 to reinvest. The choices for reinvestment have been narrowed to the following two options:Option 1: Reinvest in a foreign bond that will mature in one year. Thistransaction will entail a brokerage fee of $150. For simplicity, assume thatthe bond will provide interest over the one-year period of $2,450, $2,000, or $1,675 and that the probabilities of these occurrences are assessed to be 0.25, 0.45, and 0.30, respectively.Option 2: Reinvest in a $25,000 certificate with a savings and loan association.Assume that this certificate has an effective annual rate of 7.5%.Which form of reinvestment should the investor choose in order to maximize her expected financial gain?You are considering developing an 18-hole championship golf course thatrequires an investment of $20,000,000. This investment cost includes the course development, club house, and golf carts. Once constructed, you expect the maintenance cost for the golf course to be $650,000 in the first year, $700,000 in the second year and continue to increase by $50,000 in subsequent years. The net revenue generated from selling food and beverage will be about 15% of greens fees paid by the players. The cart fee per player is $15, and 40,000 rounds of golf are expected per year. You will own and operate the course complex for 10 years and expect to sell it for $25,000,000. What is the greens fee per round that will provide a return on investment of 15%'? Assume that the green fee will be increased at an annual rate of 5%.
