Required information[The following information applies to the questions displayed below.)Falcon Crest Aces (FCA), Incorporated, is considering the purchase of a small plane to use in its wing-walkingdemonstrations and aerial tour business. Various information about the proposed investment follows:Initial investmentUseful lifeSalvage valueAnnual net income generatedPCA's cost of capital.Assume straight line depreciation method is used.Help FCA evaluate this project by calculating each of the following:Required:2. Payback period.Note: Round your answer to 2 decimal places.Payback Periodyears$ 180,00010 years$20,000$ 4,20068

Payback period defines the time period the investment takes to recover.Usually, the shorter the…

Falcon Crest Aces (FCA), Incorporated, is considering the purchase of a small plane to use in its wing-walking demonstrations and aerial tour business. Various information about the proposed investment follows: Initial investment Useful life. Required: 2. Payback period. Note: Round your answer to 2 decimal places. Salvage value Annual net income generated FCA's cost of capital Assume straight line depreciation method is used. Help FCA evaluate this project by calculating each of the following: Payback Period $ 180,000 years 10 years $20,000 $ 4,200 68

Falcon Crest Aces (FCA), Incorporated, is considering the purchase of a small plane to use in its wing-walking demonstrations and aerial tour business. Various information about the proposed investment follows: Initial investment Useful life. Required: 2. Payback period. Note: Round your answer to 2 decimal places. Salvage value Annual net income generated FCA's cost of capital Assume straight line depreciation method is used. Help FCA evaluate this project by calculating each of the following: Payback Period $ 180,000 years 10 years $20,000 $ 4,200 68

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Its required to select one of the two machines, if you know that the firms MARR-12% and if the costs are shown below: Project A Project B Initial cost, $ 7650 12900 Maintenance cost, S/year 1200 900 Salvage value, $ 2000 Economic life, year 4 Compare the two-alternative using: 1-Equavlent Annual worth comparison. 2- Present worth comparison
Harris Corporation has provided the following data concerning an investment project that it is considering: Initial investment Annual cash flow Salvage value at the end of the project Expected life of the project Discount rate $ 160,000 $ 54,000 $ 11,000 O $67,000 O $160,516 O $516 O $(5,776) 4 15 per year years % Use Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using the tables provided. The net present value of the project is closest to:
Balloons By Sunset (BBS) is considering the purchase of two new hot air balloons so that it can expand its desert sunset tours. Various information about the proposed investment follows: (Future Value of $1. Present Value of $1. Future Value Annuity of $1. Present Value Annuity of $1.) Note: Use appropriate factor(s) from the tables provided. Initial investment (for two hot air balloons) Useful life Salvage value Annual net income generated BBS's cost of capital Assume straight line depreciation method is used. Required: Help BBS evaluate this project by calculating each of the following: 1. Accounting rate of return. Note: Round your answer to 2 decimal places. 2. Payback period. $ 423,000 9 years $ 45,000 $ 38,493 98 Note: Round your answer to 2 decimal places. 3. Net present value (NPV). Note: Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round the final answer to nearest whole dollar. 4, Recalculate the NPV assuming BBS's cost of…
MAIN PROJECT lums University is considering investing in an online book ordering and information service, which will be managed by 2 employees. The following estimates relate to the costs of starting the service and the subsequent revenues from it. The initial investment needed to start the service, including the installation of additional phone lines and computer equipment, will be $1,000,000. These investments are expected to have a life of 4 years with 0 salvage value.The investments will be depreciated straight line over the four-year life.The revenues in the first year are expected to be $1500,000, growing 20% in year 2, and 10% in the two years following.The salaries and other benefits for the employees are estimated to be $150,000 in year 1, and grow 10% a year for the following three years.The cost of the books is assumed to be “0.60” of the revenues in each of the four years.The non-cash working capital, which includes the inventory of books needed for the service and the…
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Balloons By Sunset (BBS) is considering the purchase of two new hot air balloons so that it can expand its desert sunset tours. Various information about the proposed investment follows: (Future Value of $1, Present Value of $1, Future Value Annulty of $1, Present Value Annuity of $1.) Note: Use appropriate factor(s) from the tables provided. Initial investment (for two hot air balloons) Useful life Salvage value Annual net income generated BBS's cost of capital Assume straight line depreciation method is used. Required: Help BBS evaluate this project by calculating each of the following: 1. Accounting rate of return. Note: Round your answer to 2 decimal places. $ 319,000 6 years $ 55,000 $ 25,839 8%
Example: It is proposed to construct a self-financing road tunnel. The criterion is that the toll paid by the vehicles over the life of the project must be sufficient to cover both the initial capital and the other costs which will be incurred over the project's life. Determine a suitable charge on each vehicle passing through the tunnel using the following estimated figures based on 1996 prices. 1. Capital cost Construction cost Land cost Professional fees 2. Annual OMR cost 3. Annual administration cost 4. Replacement cost of autopay ticket machine 5. Estimated annual traffic flow 6. Life of project 7. Required rate of return (real) 8. Estimated inflation rate in the next 20 years $100,000,000 $2,500,000 $5,000,000 $1,000,000 every 5 years 10,000 vehicles per day in the first five years; the growth rate of traffic flow is 30% every 5 years 20 years 12% 10% p.a. (average)
Oo.95. Subject :Account
Balloons By Sunset (BBS) is considering the purchase of two new hot air balloons so that it can expand its desert sunset tours. Various information about the proposed investment follows: (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) Note: Use appropriate factor(s) from the tables provided. Initial investment (for two hot air balloons) Useful life Salvage value Annual net income generated BBS's cost of capital Assume straight line depreciation method is used. Required: Help BBS evaluate this project by calculating each of the following: 1. Accounting rate of return. Note: Round your answer to 2 decimal places. 2. Payback period. Note: Round your answer to 2 decimal places. 3. Net present value (NPV). $ 533,000 9 years $ 56,000 $ 47,970 7% Note: Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round the final answer to nearest whole dollar. 4. Recalculate the NPV assuming BBS's cost of…
2
Sheridan Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the company to bid on jobs that it currently isn't equipped to do. Estimates regarding each machine are provided here. Original cost Estimated life Salvage value Estimated annual cash inflows Estimated annual cash outflows Net present value Machine A $78,200 8 years Profitability index 0 $19,800 $5,130 Click here to view the factor table. Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. (If the net present value is negative, use either a negative sign preceding the number eg-45 or parentheses eg (45). Round answer for present value to 0 decimal places, e.g. 125 and profitability index to 2 decimal places, eg. 10.50. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Machine A Machine B $182,000 8 years $39,600 $10,180 Machine B

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