Exercise 4: A financial analyst states that the cost associated with the upgrading of software is $75 (now). This cost will be $100 for the five next years, and then the cost will increase by $1 per quarter during 8 years. At an interest rate of 6.25% per year, determine the present worth. i=6.25% per year year 10 11 12 13 6. $100 $116" $75 3,78 N% increase 1-

Exercise 4: A financial analyst states that the cost associated with the upgrading of software is $75 (now). This cost will be $100 for the five next years, and then the cost will increase by $1 per quarter during 8 years. At an interest rate of 6.25% per year, determine the present worth. i=6.25% per year year 10 11 12 13 6. $100 $116" $75 3,78 N% increase 1-

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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3 10 points Book PYM Reference A new computer system will require an initial outlay of $16.250, but it will increase the firm's cash flows by $3,900 a year for each of the next 6 years a. Calculate the NPV and decide if the system is worth installing if the required rate of return is 8%. Note: Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places. Net present value Worth instaling Yes b. Calculate the NPV and decide if the system is worth installing if the required rate of return is 13% Note: Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places. Net present value Worth inslaring No
1 Which formula property calculates the future value of monthly deposits of $800 left on 2 deposit for 10 years at an annual return of 8%? Assume an initial deposit of $20,000. Your formula must return a positive value. 4 Number of years 5 Payments per year 6 Monthly deposit 7 Annual return 8 Initial deposit 10 12 $800 8% $20,000 Multiple Choice =FV(B7/B5,B4 B5,B6,B8) =-FV(B7/85,84-85,B6,B8) -FV(B7.85,84-85,B6) =-FVB7.84-85.B6.B8)
4. Develop ATCF table for Problem 3, if 50% of the initial investment is borrowed at 5% interest rate per year to be paid back in 4 equal installments. (No need to calculate PW) 3. An investment of $500,000 generates an annual income of$150,000 over the next4 years with a salvage value of$200,000. At MARR-10% is this a good investment (by computing P.W. factor)? The effective tax rate is 40% and MACRS depreciation with depreciation life of 3 years is employed.
Question 4: You have a opportunity to make a investment that has $10.000,000 landing, 1.500.000 machine, outsourcing 500.000 and finance cost 1.000.000. Machines have no scrap value at end of 4th year. You will pay interest payment at the end of 4rd year, that is $500.000. If you make this investment now, you will receive $4.500,000 one year from today, $3.000,000, $5.000,000 and $ 4.000,000 respectively. The appropriate discount rate for this investment is 14 percent. Tax rate is % 30. Should you make the investment? Why?
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QUESTION 109 If $200 is invested at the end of each year for 8 years at a rate of 12% what will the ending value of the investment be? TRUE OR FALSE
2
Problem 1: An investment in some rental property in Jubail is worth $12,000 with 10% residual value at the end of 10 years. Based on the data gathered relating to this investment (refer to the table below), the rental revenue will increase each year, but so will the maintenance expenses. If your MARR=12% per year and expect to recover the initial cost in not more than 3 years with an annual profit of not less than $900, do you accept or reject this investment opportunity? Justify your decision. Year Revenue 6,000 6,200 6,300 6,400 6,500 6,600 6,700 6,800 6,900 8,200 Expenses 12,000 3,100 3,300 3,500 3,700 3,900 6,100 4,300 4,500 4,700 4,900 1 2 3 4 5 6. 7 8 9. 10
What annual rate of return is earned on a $10,000 investment when it grows to $15,000 in 10 years? Multiple Choice 5.00 percent О 1.50 percent О 3.97 percent О 4.14 percent
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