Fossa Road Paving Corporation is considering an investment in a curb-forming machine. The machine will cost $240,000, will last 10 years, and will ha a $40,000 salvage value at the end of 10 years. The machine is expected to generate net cash inflows of $60,000 per year in each of the 10 years. Fossa's discount rate is 18%. The net present value of the proposed investment is closest to (Ignore income taxes.): Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using the tables provided. Multiple Choice $69,640 $37,280 $(48,780) $5,840 B

Fossa Road Paving Corporation is considering an investment in a curb-forming machine. The machine will cost $240,000, will last 10 years, and will ha a $40,000 salvage value at the end of 10 years. The machine is expected to generate net cash inflows of $60,000 per year in each of the 10 years. Fossa's discount rate is 18%. The net present value of the proposed investment is closest to (Ignore income taxes.): Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using the tables provided. Multiple Choice $69,640 $37,280 $(48,780) $5,840 B

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Almendarez Corporation is considering the purchase of a machine that would cost $150,000 and would last for 5 years. At the end of 5 years, the machine would have a salvage value of $18,000. By reducing labor and other operating costs, the machine would provide annual cost savings of $39,000. The company requires a minimum pretax return of 13% on all investment projects. (Ignore income taxes.) Click here to view Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using the tables provided. The net present value of the proposed project is closest to: (Round your intermediate calculations and final answer to the nearest whole dollar amount.) Multiple Choice $(45,000) Q Search (((( |個個

Bensington Glass Co. is considering the expansion of it spandrel glass business line. They plan to convert an unused space of their warehouse into additional manufacturing space. They estimate the initial investment will be $9,050,000 and expect the new production to create additional cash flows of $4,165,000 in year's one through ten. If Bensington Glass uses a discount rate of 19%, what is the project's discounted payback period? 3.14 2.08 3.00 3.07
A Corporation proposes to construct a new nuclear power plant to meet the increased demand for electricity. The plant will cost $2.2 billion to build. Cash flows provided by the plant will amount to $300 million per year for 15 years. At the end of year 15, the plant will be decommissioned. The cost of decommissioning is estimated to be $900 million. Calculate the project’s NPV if the discount rate is 5%.
Shelly's Boutique is evaluating a project which will increase annual sales by $70,000 and annual costs by $40,000. The project will initially require $100,000 in fixed assets which will be depreciated straight-line to a zero book value over the 5-year life of the project. The applicable tax rate is 34 percent. What is the operating cash flow for this project?
Tripp Industries is considering buying a new recycling system. The new recycling system would be purchased today for $7,700.00. It would be depreciated straight-line to $1,020.00 over 2 years. In 2 years, the recycling system would be sold and the after-tax cash flow from capital spending in year 2 would be $1,270.00. The recycling system is expected to reduce costs by $2,730.00 in year 1 and by $8,630.00 in year 2. If the tax rate is 52.00% and the cost of capital is 7.73%, what is the net present value of the new recycling system project? $106.43 (plus or minus $10) $191.35 (plus or minus $10) $1,288.60 (plus or minus $10) -$2,245.85 (plus or minus $10) None of the above is within $10 of the correct answer
Michael Scott Paper, Inc. is considering a new machine that requires an initial investment of $ 650,000, including installation costs, and has a useful life of ten years. The expected annual after - tax cash flows for the machine are $90, 000 during the first two years, $115, 000 during years three through six, and $85, 000 during the remaining years of its useful life. What is the net present value ( NPV) when the discount rate is 5% ?
"T.Z.Y. Life Fitness is considering installing a new process machine for the firm's manufacturing facility. The machine costs $457,000 installed, will generate additional revenue of $78,000 per year, and will save $67,000 per year in labor and material costs. The machine will be financed by a $180,000 bank loan repayable in three equal annual installments with a 4% interest rate. The machine will be depreciated using seven-year MACRS. The useful life of the machine is 10 years when the machine will be sold for $23,000. The marginal tax rate is 21%. Compute the IRR of the investment. Enter your answer as a percentage rounded to the nearest tenth of a percent (i.e., enter 8.3% as 8.3)" red swers 30.6 (with margin: 0.300000000000002)
IronZee Industries is adding a new product line that will require an investment of $1,268,000. It is estimated this investment will have a 10-year life and will generate net cash inflows of $296,000 the first year, $266,000 during the second year, and $235,000 each year thereafter for 8 years. The project will have $0.00 residual value. Compute the ARR for the investment. (Round your answers to two decimal places when needed and use rounded answers for all future calculations). IronZee Industries Total net cash inflows during operation life of expansion Less: Total depreciation during operating life of expansion Total operating income during operating life Divide by: expansions operating life in years Average annual operating income from expansion (Amount Invested + Residual Value) / 2 / 2 = = / Average amount Invested Average annual operating income / Average amount invested = = ARR (%)
Mattice Corporation is considering investing $790,000 in a project. The life of the project would be 6 years. The project would require additional working capital of $29,000, which would be released for use elsewhere at the end of the project. The annual net cash inflows would be $168,000. The salvage value of the assets used in the project would be $39,000. The company uses a discount rate of 13%. (Ignore income taxes.) Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. Required: Compute the net present value of the project. Note: Negative amount should be indicated by a minus sign. Round your intermediate calculations and final answer to the nearest whole dollar amount. Net present value ering... 23 Daan
A toy manufacturer is considering the installation of a new process machine for the toy manufacturing facility. The machine costs $350,000 installed. wi ll generate additional revenues of $120,000 per year and will save $50,000 per year in labor and material costs. The machine will be financed by a $250,000 bank loan repayable in three equal annual principal installments plus 9% interest on the outstanding balance. The machine will be depreciated by seven-year MACRS. The useful life of this processing machine is 10 years at which time it will be soldfor $20,000. The combined marginal tax rate is 40%.(a) Find the year-by-year after-tax cash flow for the project.(b) Compute the IRR for this investment.(c) At MARR= 18%, is this project economically justifiable?
Bill plans to open a service center. The equipment will cost $50,000. Bill expects the after-tax cash inflows to be $15,000 annually for 8 years, after which he plans to scrap the equipment and retire. Assume the required return is 10.00%. What is the project's Pl?
. The initial cost of a monument installation will be $110,000. The cost of maintaining a certain permanent monument in Washington, DC occurs as periodic outlays of $1200 every year. There will be an additional one- time cost of $5,000 in 2 years to add names of those who were missed initially. Calculate the total capitalized cost using an interest rate of 5% per year. Show your hand calculations and solve this question in excel. Show your cash flows in excel cash flow excel and hand calculations