he required investment cost of a new, large shopping center is $52 million. The salvage value of the project is estimated to be $18 millon (the value of the land) The projects life is 18 years and the annual operating expenses a estimated to be $13 million. The MARR for such projects is 22% per year. What must the minimum annual revenue be to make the shopping center a worthwhile venture? Click the icon to view the interest and annuity table for discrete compounding when the MARR is 22% per year To make the shopping center a worthwhile venture, the minimum annual revenue must be S milion per year (Round to three decimal places)

he required investment cost of a new, large shopping center is $52 million. The salvage value of the project is estimated to be $18 millon (the value of the land) The projects life is 18 years and the annual operating expenses a estimated to be $13 million. The MARR for such projects is 22% per year. What must the minimum annual revenue be to make the shopping center a worthwhile venture? Click the icon to view the interest and annuity table for discrete compounding when the MARR is 22% per year To make the shopping center a worthwhile venture, the minimum annual revenue must be S milion per year (Round to three decimal places)

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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Project A requires a $315,000 initial investment for new machinery with a five-year life and a salvage value of $35,500. Project A is expected to yield annual income of $23,900 per year and net cash flow of $78,750 per year for the next five years.Compute Project A’s accounting rate of return. *please help correct the answer
Central Mass Ambulance Service can purchase a new ambulance for $200,000 that will provide an annual net cash flow of $50,000 per year for five years. The salvage value of the ambulance will be $25,000. Assume the ambulance is sold at the end of year 5. Calculate the NPV of the ambulance if the required rate of return is 9%. (Round your answer to the nearest $1.) A) $(10,731) B) $10,731 C) $(5,517) D) $5,517
Boseman Department Store is considering the purchase of a new machine at a cost of $22,802. The machine will provide $3,500 per year in cash flow for nine years. Boseman has a cost of capital of 10%. (Round discount factor to five decimal places.) Based on the internal control method, should this project be undertaken? A partial table of the present value of an annuity of $1 in arrears is as follows: Year 1% 3% 5% 7% 9% 11% 13% 15% 9 8.56602 7.78611 7.10782 6.51523 5.99525 5.5370 5.1317 4.7716 What is the internal rate of return for this investment? (Round discount factor to five decimal places.)
The management of Wyoming Corporation is considering the purchase of a new machine costing $375,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment: Year 1 2 $18,750 18,750 18,750 18,750 18,750 The average rate of return for this investment 3 4 Operating Income 5 Net Cash Flow $93,750 93,750 93,750 93,750 93,750
A project requires an initial investment of $322,990 and its expected life is 7 years. Net operating income from the project is expected to be $28,100 each year, including depreciation of $42,270. The salvage value of the assets is expected to be $27,100 at the end of the life of the project. Ignoring income taxes, the payback period is: (Round your answer to 2 decimal places.) Payback period years
Acme Company is considering an investment in a project that requires an initial investment of $64,650, generates annual net cash inflows of $8,500, and has an economic life of 15 years and no salvage value. Use the present value of an annuity table to determine the internal rate of return of this investment. 8% 10% 12% 14%
Poe Company is considering the purchase of new equipment costing $85,500. The projected annual cash inflows are $35,700, to be received at the end of each year. The machine has a useful life of 4 years and no salvage value. Poe requires a 10% return on its investments. The present value of an annuity of 1 and present value of an annuity for different periods is presented below. Compute the net present value of the machine. Periods Present Value of 1 at 10% Present Value of an Annuity of 1 at 10% 1 0.9091 0.9091 2 0.8264 1.7355 3 0.7513 2.4869 4 0.6830 3.1699 $45,409. $14,857. $27,665. $(14,857). $(27,665).
net present value method -annuity Briggs Excavation Company is planning an investment of $132,000 for a bulldozer. The bulldozer is expected to operate for 1,500 hours per year for five years. Customers will be charged $110 per hour for bulldozer work. The bulldozer operator costs $28 per hour in wages and benefits. The bulldozer is expected to require annual maintenance costing $8,000. The bulldozer uses fuel that is expected to cost $46 per hour of bulldozer operation. Determine the number of operating hours such that the present value of cash flows equals the amount to be invested. (Round interim calculations and final answer to the nearest whole number.)
The company has a project with a 5-year life that requires an initial investment of $200,000, and is expected to yield annual cash flows of $62,500. What is the net present value of the project if the required rate of return is set at 8%? Calculation Steps Present Value of an Annuity of $1 at Compound Interest. Net Present Value = ( $fill in the blank x fill in the blank ) – $fill in the blank Note: Round your answer to the nearest whole dollar. What NPV does the previous calculation yield? $fill in the blank
A real estate development company is considering the purchase of a new piece parcel of land in manhattan that will cost $34,000,000. The land will generate $6,500,000 of rent each year for the next 20 years. what is the IRR for this new investment? NOTE: enter amount to two decimal (e.g., 78.76 or 40.00) IRR= ______ %
Geo-Star Manufacturing Company is considering a new investment in a punch-press machine that will cost $96,000 and has an annual maintenance cost of $10,800. There is also an additional overhauling cost of $23,000 for the equipment once every four years. Assuming that this equipment will last infinitely under these conditions, what is the capitalized equivalent cost of this investment at an interest rate of 15%? Click the icon to view the interest factors for discrete compounding when i=15% per year. The capitalized equivalent cost of this investment is $ thousand. (Round to the nearest whole number.) More Info Single Payment Compound Amount Factor Equal Payment Series Sinking Present Fund Compound Amount Factor (F/A, i, N) Capital Recovery Worth Factor Factor Factor N (F/P, i, N) (A/F, i, N) (P/A, i, N) (A/P, i, N) 1 1.1500 1.0000 1.0000 0.8696 1.1500 2 1.3225 2.1500 0.4651 1.6257 0.6151 3 1.5209 3.4725 0.2880 2.2832 0.4380 4 1.7490 4.9934 0.2003 2.8550 0.3503 5 2.0114 6.7424 0.1483…
Gammaro Games is considering an equipment investment that will cost $960,000. Projected net cash inflows over the equipment's three-year life are as follows: Year 1: $488,000; Year 2: $396,000; and Year 3: $282,000. Gammaro wants to know the equipment's IRR. (Click the icon to view the present value annuity table.) (Click the icon to view the future value annuity table.) (Click the icon to view the present value factor table.) (Click the icon to view the future value factor table.) Requirement Use trial and error to find the IRR within a 2% range. (Hint: Use Gammaro's hurdle rate of 8% to begin the trial-and-error process.) Use a business calculator or spreadsheet to compute the exact IRR. Begin by calculating the NPV at three rates: 8%, 10%, and 12%. (Round your answers to the nearest whole dollar. Use parentheses or a minus sign for negative net present values.) The NPV at 8% is

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