Initial cost Expected useful life Scrap value Expected annual profit Year 1 End of Year 2 Year 3 Year 4 Year 5 The company estimates that its cost of capital is 12%. Machine A R200 000 5 years 0 R Machine B R200 000 5 years 0 R 10 000 18 000 20 000 18 000 25 000 18 000 35 000 18 000 0 18 000
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- A B C D E F G H 1 Create a income statement and show net cashflow each year for the 4 years so you can use it for what-if analysis. 2 3 Base case Inputs: 4 5 6 4-year life of the project $26/unit Sales price of product 7 $13/unit Cost to produce the product 8 $1450/year operating costs 9 1250 units First-year production 16% Increase in production each year 1012345167819202123 24 25 26 14 Answer the following question for "what if analysis" 16 What is the IRR for the Base case? 17 $32,000 Initial investment depreciated with MACRS 3 year recovery 28% tax rate What is the IRR if the volume produced does not increase by 16%/year, but only increased 10%/yr.? What is the IRR if the sales price is only $24/unit? What is the IRR if the tax rate increases to 49%? 20 What is the IRR if the initial investment is $39,000? 18 19 22 Which analysis should your company be most concerned about? I J kA41 Jlgu übja 1 Flint Systems is considering investing in production- management software that costs $630,000, has $67,000 residual value, and leads to cost savings of $1,650,000 per year over its five-year life. Calculate the average amount invested in the asset that should be used for calculating the accounting rate of return $697,000 .A $348,500 .B O $67,000 .c O $630,000 .D
- ACG Manufacturing Ltd Statement of comprehensive income as year ended at 31/12/20X1 £*000 Total Unit % New project Sales(1000units) 250.000 250 100 VC 150.000 150 60 CM 100.000 100 40 FC 60.000 EBIT 40.000 Ex3: Prepare the I.S if: ACG decrease sales price by 6% Increase advertising fee by £10.000 Effects: Sales volume increase by 30% (214QUESTION 2 Machine A Machine B Initial cost R100 000 R110 000 Expected economic life 5 years 5 years Expected disposal/residual value R10 000 0 Expected net cash inflows R R End of: Year 1 34 000 33 000 Year 2 27 000 33 000 Year 3 32 000 33 000 Year 4 30 000 33 000 Year 5 26 000 33 000 Depreciation per year 18 000 22 000 The company estimates that its cost of capital is 14%. 2.1 Calculate the payback period for Machine A and B (answers must be expressed in years, months and days). 2.2 Calculate the accounting rate of return (on average investment) for Machine A. (answer rounded off to 2 decimal places).
- acc125 A machine costs R20 000. Depreciation will be written off at 20% per annum. Which one of the following amounts shows its carrying amount after 4 years if the reducing balance method is used? A. R9 030 B. R8 192 C. R8 256 D. R8 524$1,449,185 Sales $130,380 Operating Income Total Assets (investment) $544,102 Target Rate of Return (Cost of 15% Capital) What is return on investment? Input your answer to 1 decimal place. For example if you calculate.1892 enter 18.9.
- HQuestion Content Area Falkland, Inc., is considering the purchase of a patent that has a cost of $51,000 and an estimated revenue producing life of 4 years. Falkland has a cost of capital of 10%. The patent is expected to generate the following amounts of annual income and cash flows: Year 1 Year 2 Year 3 Year 4 Net income $5,100 $6,500 $6,300 $3,000 Operating cash flows 16,900 18,200 18,450 14,800 (Click here to see present value and future value tables) A. What is the NPV of the investment? Round your present value factor to three decimal places and final answer to the nearest dollar. $fill in the blank 1 B. What happens if the required rate of return increases? If the required rate of return increases, . Please round off please?2. A company is considering two types of equipment for its manufacturing plant. Capital is at least 16%. ? Use (a) ROR (b) AWM (c) PWM (d) EUAC ΤΥΡΕ Α ΤΥΡΕ Β First cost 8,000 Salvage value Annualoperation 14,000 2,000 2,400 3,000 Annualmaintenance 1,200 1,000 3% Taxes and insurance 3% Life, years 10 15
