Dabur Limited expected the following future cash fiows from the use of equipment End of Year 1 OMR 7500, End of Year 2 OMR 6500 End of Year 3 OMR 9200, End of year 4 OMR 8500. The discount rate was determined as 12% The equipment can be sold in the active market for OMR 27,000 with an agent's commission of OMR 2000.The recoverable amount of the equipment shall be

Dabur Limited expected the following future cash fiows from the use of equipment End of Year 1 OMR 7500, End of Year 2 OMR 6500 End of Year 3 OMR 9200, End of year 4 OMR 8500. The discount rate was determined as 12% The equipment can be sold in the active market for OMR 27,000 with an agent's commission of OMR 2000.The recoverable amount of the equipment shall be

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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Spanish Peaks Railroad Inc. is considering acquiring equipment at a cost of $68,000. The equipment has an estimated life of 10 years and no residual value. It is expected to provide yearly net cash flows of $34,000. The company's minimum desired rate of return for net present value analysis is 12%. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.353 2.991 6 4.917 4.355 4.111 3.785 3.326 7 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 Compute the following: a. The average rate of return, giving effect to straight-line depreciation on the investment. If required, round your answer to one decimal place. c. The net present value. Use the above table of the present value of an annuity of $1. Round to…
A project is estimated to cost $58,995 and provide annual net cash flows of $9,500 for 8 years. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.353 2.991 6 4.917 4.355 4.111 3.785 3.326 7 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 Determine the internal rate of return for this project, using the Present Value of an Annuity of $1 at Compound Interest table shown above._____%
2. If an asset costs $70,950 and is expected to have a salvage value of $949 at the end of five year life, and generates annual cash net cash inflows of $4,447 each year, the cash payback period rounding to two decimal places is
MKM International is seeking to purchase a new CNC machine in order to reduce costs. Two alternative machines are in consideration. Machine 1 costs $400,000, but yields a 15 percent savings over the current machine used. Machine 2 costs $950,000, but yields a 25 percent savings over the current machine used. In order to meet demand, the following forecasted cost information for the current machine is also provided. Year 1 2 23 3 4 5 Project Cost 1,000,000 1,350,000 1,400,000 1,450,000 2,500,000 a. Based on the NPV of the cash flows for these 5 years, which machine should MKM International purchase? Assume a discount rate of 11 percent. Assuming a discount rate of 11 percent, MKM International should purchase NPV of machine 1 is $ nearest whole number.) b. If MKM International lowered its required discount rate to 9 percent, what machine would it purchase? because the and the NPV of machine 2 is $. (Enter your responses rounded to the Assuming a discount rate of 9 percent, MKM…
Please answer only question B, because I sent already A in a separate question. Thank you! a) The following payments are agreed for the purchase of a property at the nominal annual interest rate of 0.8%:- 100,000 euros on 01.01.2022- 50,000 Euro on 01.07.2022- 200,000 euros on 01.03.2023 What is the value of these payments on the valuation date 01.01.2022 with1. linear interest calculation?2. monthly interest at the relative interest rate?3. relative mixed interest?4. continuous interest calculation? b) On 01.01.2022, EUR 347,942.42 is paid into an account at 0.8% annual interest. At On which date (day.month.year) in 2022, the year 2022 has 365 days, will the value of the interest rate, does the value of the deposit exceed 350,000 euros for the first time?
Consider the following cash flows of two mutually exclusive projects for Spartan Rubber Company. Assume the discount rate for both projects is 12 percent. Year Dry Prepreg Solvent Prepreg 0 –$ 1,750,000 –$ 775,000 1 1,105,000 400,000 2 910,000 650,000 3 755,000 400,000 a. What is the payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Payback period Dry Prepreg years Solvent Prepreg years b. What is the NPV for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) NPV Dry Prepreg $ Solvent Prepreg $ c. What is the IRR for each project? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) IRR Dry Prepreg % Solvent Prepreg % d. Calculate the incremental IRR for the cash flows. (Do not round…
MNO company is evaluating a proposal for purchase of equipment which will cost $180,000. The cash inflows from the use of equipment is given below: Year Cash flow $60,000 $40,000 S70,000 $125,000 $35,000 1 3 4 Payback period for the proposal is: а. 3 years b. 2 years c. 4 years d. 3.08 years
A company is considering an iron ore extraction project that requires an initial investment of $1,200,000 and will yield annual cash inflows of $534,283 for three years. The company's discount rate is 9%. Calculate IRR. Present value of ordinary annuity of $1: 10% 12% 14% 15% 16% 18% 20% 1 0.909 0.893 0.877 0.870 0.862 0.847 0.833 1.736 1.690 1.647 1.626 1.605 1.566 1.528 3 2.487 2.402 2.322 2.283 2.246 2.174 2.106 4 3.170 3.037 2.914 2.855 2.798 2.690 2.589 OA. 16% OB. 15% D OC. 14% O OD. 18%
P3.2 M&B Tooling Ltd. is assessing two available options for the purchase of new equipment with a negotiated cash price of $100,000. The manufacturer is willing to accept a down payment of 20% of the purchase price and an instalment note for the balance. The note would require quarterly fixed principal payments (plus interest) starting October 1, 2020, for a period of two years. M&B has a proposal from its bank for an instalment loan for two years that requires a fixed blended monthly payment (including both principal and interest) starting August 1, 2020. The loan would be for 80% of the equipment's purchase price. The current market rate of interest is 8%. Both contracts have an interest rate of 8% b. Calculate the amount of the payments required of M&B under each alternative. Use either a financial calculator or Excel functions in your calculation
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MNO company is evaluating a proposal for purchase of equipment which will cost $180,000. The cash inflows from the use of equipment is given below: Year Cash flow $60,000 $40,000 $70,000 $125,000 $35,000 4. Payback period for the proposal is: a. 3 years b. 2 years c. 4 years d. 3.08 years DELL 123 45