Information for two alternative projects involving machinery investments follows:Initial investmentProject 1$ (123,000)Project 2$ (93,000)Salvage value013,000Annual income14,14512,720a. Compute accounting rate of return for each project.b. Based on accounting rate of return, which project is preferred?Complete this question by entering your answers in the tabs below.Required A Required BCompute accounting rate of return for each project.Project 1Project 2Accounting Rate of ReturnDenominator:Numerator:1=Accounting rate of return00< Required ARequired B >

Step 1:Answer A.Computation of the accounting rate of return for each project:…

Answered: Information for two alternative…

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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Information for two alternative projects involving machinery investments follows: Project 1 Initial investment Salvage value Annual income $ (128,000) Ө Project 2 $ (98,000) 18,000 14,080 11,600 a. Compute accounting rate of return for each project. b. Based on accounting rate of return, which project is preferred? Complete this question by entering your answers in the tabs below. Required A Required B Compute accounting rate of return for each project. Project 1 Project 2 Numerator: Accounting Rate of Return Denominator: Required A Required B Based on accounting rate of return, which project is preferred? Based on accounting rate of return, is preferred. = Accounting rate of return
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The following table contains information about four potential investment projects that Castle Corporation is considering. Payback Period Required Investment $ 900,000 $ 1,150,000 $ 1,400,000 $ 1,900,000 Project B с D Project Life 5 Required 1 ARR 39.00% 21.00% 22.50% 22.20% Complete this question by entering your answers in the tabs below. 1st preferred 2nd preferred 3rd preferred 4th preferred 3.6 4.8 4.5 2.5 Required: 1. Rank the four projects in order of preference under each method indicated by the headers: 2. Which method is the best for evaluating the investments? Profitability Index 2.19 1.98 1.61 1.56
A techniques-Decision among mutually exclusive investments Pound Industries is attempting to select the best of three mutually exclusive projects. The initial investment and after-tax cash inflows associated with these projects are shown in the following table. Cash flows Initial investment (CF) Project A $60,000 Project B $100,000 Project C $90,000 Cash inflows (CF), t=1 to 5 $20,000 $31,500 $32,000 a. Calculate the payback period for each project. b. Calculate the net present value (NPV) of each project, assuming that the firm has a cost of capital equal to 12%. c. Calculate the internal rate of return (IRR) for each project. d. Indicate which project you would recommend. a. The payback period of project A is years. (Round to two decimal places.) % [7%
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Question content area top Part 1 (IRR calculation) Determine the IRR on the following projects: a. An initial outlay of $13,000 resulting in a single free cash flow of $17,165 after 9 years b. An initial outlay of $13,000 resulting in a single free cash flow of $46,394 after 15 years c. An initial outlay of $13,000 resulting in a single free cash flow of $105,001after 25 years d. An initial outlay of $13,000 resulting in a single free cash flow of $13,653 after 4 years
The assets and liabilities of Thompson Computer Services at March 31, 2014, and its revenue and expenses for the year are listed below. The capital of the owner was $180,000 at April 1, 2013. Mr. Thompson invested an additional $25,000 in the business during the year. Accounts Payable $2,000 Miscellaneous Expense $1,030 Accounts Receivable 10,340 Office Expense 1,240 Cash 21,420 Supplies 1,670 Fees Earned 73,450 Wages Expense 23,550 Land 47,000 Drawing 16,570 Building 157,630
How return on investment is calculated in this table?
Calculations to determine which – if any – additional investment opportunities should be undertaken. 1. If the projects are divisible 2. If the projects are not divisible .
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