F2 DSSS CorporationDSSS Corporation is considering a new project to manufacture widgets. The cost of themanufacturing equipment is $115,000. The cost of shipping and installation is an additional$17,000. The asset will fall into the 3-year MACRS class. The year 1-4 MACRS percentagesare 33.33%, 44.45%, 14.81%, and 7.41%, respectively. Sales are expected to be $220,000 peryear. Cost of goods sold will be 60% of sales. The project will require an increase in net workingcapital of $17,000. At the end of three years, DSSS plans on ending the project and selling themanufacturing equipment for $30,000. The marginal tax rate is 40% and DSSS Corporation'sappropriate discount rate is 10%. The fixed expenses is $12,000.Refer to DSSS Corporation. What is the NPV of the project?$39,030$34,906$37,423-$34,906

Certainly! Let's break down the calculation of the Net Present Value (NPV) for the DSSS…

Answered: DSSS Corporation DSSS Corporation is…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 17EA: Gardner Denver Company is considering the purchase of a new piece of factory equipment that will...

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Gardner Denver Company is considering the purchase of a new piece of factory equipment that will cost $420,000 and will generate $95,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further Instructions on internal rate of return in Excel, see Appendix C.
Caduceus Company is considering the purchase of a new piece of factory equipment that will cost $565,000 and will generate $135,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return In Excel, see Appendix C.
Consolidated Aluminum is considering the purchase of a new machine that will cost $308,000 and provide the following cash flows over the next five years: $88,000, 92,000, $91,000, $72,000, and $71,000. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return in Excel, see Appendix C.
Elearning Company would like to develop its technology process by purchasing a production equipment for 11.2 million HUF. The equipment is expected to have a useful life of 5 years, and will be sold at the end of 5 years for 2.5 million HUF. The annual operating costs are predicted to be 1.5 million HUF. The estimated revenues are in yearly sequence ( HUF) 5.2 million; 5.5 million; 6.1million; 7 million; 7.5 million. The company's required rate of return is 12 percent. You can see the way of the economic efficiency calculation in the table. Some of the data are missing. Enter the missing data in the table. Perform further calculations and explain the results obtained. Data Year O Year 1 Year 2 Year 3 Year 4 Year 5 Pt (M HUF) 5.2 5.5 6.1 7 kt (M HUF) 1.5 1.5 1.5 1.5 1.5 Et (M HUF) 11.2 CFt (M HUF) -11.2 3.7 4 4.6 5.5 8.5 Dt 1 0.89286 0.79719 0.63552 0.56743 CFt*Dt (M HUF) -11.20 3.30 3.19 3.27 4.82 ECF**Dt (M HUF) -11.20 -7.90 -4.71 -1.43 2.06 The NPV of the project is million HUF.
Coast-to-Coast Inc. is considering the purchase of an additional delivery vehicle for $38,000 on January 1, 20Y1. The truck is expected to have a 5-year life with an expected residual value of $7,000 at the end of 5 years. The expected additional revenues from the added delivery capacity are anticipated to be $66,000 per year for each of the next 5 years. A driver will cost $46,000 in 20Y1, with an expected annual salary increase of $4,000 for each year thereafter. The annual operating costs for the truck are estimated to be $2,000 per year. Year 1 2 3 4 5 6 7 8 9 10 20Y1 20Y2 20Y3 20Y4 Present Value of $1 at Compound Interest 6% 10% 12% 20Y5 0.943 0.890 0.840 Investment 0.792 0.747 0.705 0.665 0.627 0.592 0.558 0.909 0.826 0.751 0.683 0.621 Net present value 0.564 0.513 0.467 0.424 0.386 $ 0.893 0.797 0.712 0.636 $ $ 0.567 0.507 $ 0.452 Annual Net Cash Flow 0.404 0.361 0.322 15% 0.870 0.756 0.658 a. Determine the expected annual net cash flows from the delivery truck investment for…
Coast-to-Coast Inc. is considering the purchase of an additional delivery vehicle for $70,000 onJanuary 1, 20Y1. The truck is expected to have a five-year life with an expected residual valueof $15,000 at the end of five years. The expected additional revenues from the added deliverycapacity are anticipated to be $65,000 per year for each of the next five years. A driver will cost$40,000 in 20Y1, with an expected annual salary increase of $2,000 for each year thereafter. The annual operating costs for the truck are estimated to be $6,000 per year.a. Determine the expected annual net cash flows from the delivery truck investment for 20Y1–20Y5.b. Compute the net present value of the investment, assuming that the minimum desired rate of returnis 12%. Use the present value table appearing in Exhibit 2 of this chapter.c. Is the additional truck a good investment based on your analysis? Explain.
The engineering team at Manueľ's Manufacturing, Ic., is planning to purchase an enterprise resource planning (ERP) system. The software and installation from Vendor A costs $ 425,000 initially and is expected to increase revenue $ 105,000 per year every year. The software and installation from Vendor B costs $ 235,000 and is expected to increase revenue $ 105,000 per year. Manuel's uses a 4-year planning horizon and a 13.0 % per year MARR. Part a What is the present worth of each investment? Vendor A: $ Vendor B: $
The engineering team at Manuel's Manufacturing, Inc., is planning to purchase an enterprise resource planning (ERP) system. The software and installation from Vendor Acost $380,000 initially and is expected to increase revenue by $125,000 per year every year. The software and installation from Vendor B cost $280,000 and is expected to increase revenue by $95,000 per year. Manuel's uses a 4-year planning horizon and a 10 percent per year MARR. a) What is the discounted payback period of each investment? b) Which ERP system should Manuel purchase if his decision rule is to select the system with the shortest DPBP? A firm with a 9.5 percent cost of capital is considering a project for this year's budget. The project's expected after-taxcash flows are as follows: Year: 0 1 Cash flow: -$9,000 $3,800 2 3 $4,200 4 $4,300 $4,200. Calculate the project's discounted payback period:
The engineering team at Manuel's Manufacturing, Inc., is planning to purchase an enterprise resource planning (ERP) system. The software and installation from Vendor A costs $410,000 initially and is expected to increase revenue $110,000 per year every year. The software and installation from Vendor B costs $290,000 and is expected to increase revenue $95,000 per year. Manuel's uses a 4- year planning horizon and a 12.0% per year MARR. Part a 8 Your answer is incorrect. What is the present worth of each investment? Vendor A: $ Vendor B: $ Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is ±20.
A company plans to spend $ 156244 to install a new machine. Annual maintenance cost is $ 13178. Estimated annual income is $ 34918 starting in the first year. This revenue begin increasing by $ 1078 per year at the end of 2nd year and continue increasing through the end of 15 years. The market value of the machine is $ 20234 at the end of study period of 15 years. Determine the annual worth if the minimum attractive rate of return is 9% per year. Answer:
Judson Industries is considering a new project. The project will initially require $749,000 for new fixed assets, $238,000 for additional inventory, and $25,000 for additional accounts receivable. Accounts payable is expected to increase by $70,000. The fixed assets will belong in a 30% CCA class. At the end of the project, in four years' time, the fixed assets can be sold for 40% of their original cost. The net working capital will return to its original level at the end of the project. The project is expected to generate annual sales of $944,000 with related cash expenses of $620,000. The tax rate is 35% and the required rate of return is 14%. What is the amount of the present value of the CCA tax shield for this project?(Use the AllP rule when calculating the CCA Tax Shield. I.E use 1.5 instead of 0.5) O a. $104,860 Ob. $112,290 Oc. $125,432 O d. $147,383 Oe. $199,600
The engineering team at Manuel's Manufacturing, Inc., is planning to purchase an enterprise resource planning (ERP) system. The software and installation from Vendor A costs $380,000 initially and is expected to increase revenue P125,000 per year every year. The software and installation from Vendor B costs $280,000 and is expected to increase revenue P95,000 per year. Manuel's uses a 4-year planning horizon and a 10% per year MARR. What is the present worth of investment from Vendor A (rounded to the nearest peso)? A) P15,742 B) P20,847 C) P16,233 D $18,901 Continuo

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