Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $268,000. Project 2 requires an initial investment of $170,000. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income (a) Compute each project's annual net cash flow. (b) Compute payback period for each investment. Project 1 $ 180,000 Project 2 $ 160,000 85,000 52,000 40,000 28,000 38,000 40,000 $ 27,000 $ 30,000 Complete this question by entering your answers in the tabs below. Required A Required B Compute each project's annual net cash flow. Annual Amounts Sales of new product Expenses Project 1 Project 2 Income Cash Flow Income Cash Flow $ 180,000 $ 160,000 Materials, labor, and overhead (except depreciation) 85,000 Depreciation-Machinery 40,000 Selling, general, and administrative expenses 28,000 Income $ 27,000 Net cash flow $ < Required A 52,000 38,000 40,000 $ 30,000 0 $ 0 Required >

Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $268,000. Project 2 requires an initial investment of $170,000. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income (a) Compute each project's annual net cash flow. (b) Compute payback period for each investment. Project 1 $ 180,000 Project 2 $ 160,000 85,000 52,000 40,000 28,000 38,000 40,000 $ 27,000 $ 30,000 Complete this question by entering your answers in the tabs below. Required A Required B Compute each project's annual net cash flow. Annual Amounts Sales of new product Expenses Project 1 Project 2 Income Cash Flow Income Cash Flow $ 180,000 $ 160,000 Materials, labor, and overhead (except depreciation) 85,000 Depreciation-Machinery 40,000 Selling, general, and administrative expenses 28,000 Income $ 27,000 Net cash flow $ < Required A 52,000 38,000 40,000 $ 30,000 0 $ 0 Required >

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 6MAD: Assume Home Garden Inc. in MAD 26-5 assigns the following probabilities to the estimated...

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Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $130,900. Project 2 requires an initial investment of $97,200. Assume the company requires a 10% rate of return on its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Project 1 Years 1-7 Initial investment Net present value Compute the net present value of each potential investment. Use 7 years for Project 1 and 5 years for Project 2. (Negative net present values should be indicated with a minus sign. Round your present value factor to 4 decimals. Round your answers to the nearest whole dollar.) Net Cash Flows X Answer is complete but not entirely correct. Present Value of Annuity at 10% 26,460 X Project 1 $ 105,300 X 70,200…
Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $133,000. Project 2 requires an initial investment of $99,900. Assume the company requires a 10% rate of return on its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery Selling, general, and administrative expenses Income Years 1-7 Project 1 Net present value Years 1-5 Compute the net present value of each potential investment. Use 7 years for Project 1 and 5 years for Project 2. (Negative net present values should be indicated with a minus sign. Round your present value factor to 4 decimals. Round your answers to the nearest whole dollar.) Project 2 Net present value Net Cash Flows Net Cash Flows X X Present Value of Annuity at 10% Present Value of Annuity at 10% = Project 1…
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
Company A has provided figures for two investment projects, only one of which may be chosen. These are the calculations based on the figures: Payback Period The Accounting Rate of Return / Return on Capital Employed Net Present Value Project A 2 years 4 months 27.08% £63,705 Project B 2 years 7 months 39.47% £74.971 Analyse and provide recommendations as to what project needs to be chosen based on the calculations above.
Project Y requires a $321,000 investment for new machinery with a four-year life and no salvage value. The project yields the following annual results. Cash flows occur evenly within each year. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Required: 1. Compute Project Y's annual net cash flows. Annual amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Net cash flow Project Y $ 380,000 170,240 80,250 27,000 $ 102,510 Income Cash Flow $ 380,000 170,240 80,250 27,000 102,510
Consider the following project-balance profiles for proposed investment projects, where the project-balance figures are rounded to the nearest dollar: (a) Compute the net present worth of each investment.(b) Determine the project balance at the end of period 2 for Project C ifA2 = $500.(c) Determine the cash flows for each project.(d) Identify the net future worth of each project.
This refers to the sum of project’s first cost and the present worth of all costs for replacement, operation and maintenance for a long time or forever. a. Rate of return on additional investment b. Annual cost c. Capitalized cost d. Present worth cost
n the design of a chemical plant, the following expenditures and revenues are estimated after the plant has achieved its desired production rate. Total capital investment (TCI) : $10 000 000 Working capital investment (WCI) : $1 000 000 Annual sales : $8 000 000 /year Annual expenditures : $2 000 000 /year Assuming straight-line depreciation over a 10-year project analysis period, determine a) The return on the investment after taxes b) The payback period
Project Y requires a $324,000 investment for new machinery with a six-year life and no salvage value. The project yields the following annual results. Cash flows occur evenly within each year. (PV of $1. EV of $1. PVA of $1, and EVA of $1) (Use appropriate factor(s) from the tables provided.) Annual Anounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and ar strative expenses Income Problem 24-2A (Algo) Part 1 Required: 1. Compute Project Y's annual net cash flows. Annual amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery Selling, general, and administrative expenses Income Net cash flow Income $ 370.000 $ 165,760 54,000 26,000 124,240 Project Y $ 370,000 165,760 54,000 26,000 $ 124,240 Cash Flow
Consider the cash flows for the following investment projects: (a) For Project A. find the value of X that makes the equivalent annual receiptsequal the equivalent annual disbursement at i = 13%.(b) Would you accept Project Bat i = 15% based on the AE criterion?