Please correct answer and don't used hand raiting InstructionsConsider the following investment: Initial cost = $150,000.Salvage value = $0.Annual revenue = $50,000, Annual expenses = $15,000, 40%Bonus depreciation.Depreciation life = 5 Years. MARR = 11%. Tax Rate = 21%.Depreciation method: MACRS.Hint: Set up a Cash Flow Table and solve the problem to get theIRR for both Before and After Tax Cash Flow.

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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

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Doak Corp. is evaluating a project with the following cash flows: Year Cash Flow 0 -15,300 1 6,400 2 7,600 3 7,200 4 6,000 5 -3,400 The company uses an interest rate of 9 percent on all its projects. Calculate the MIRR of the project using all three methods. Discounting approach ____________% Reinvestment approach ___________% Combination approach ____________%
Dock Company is considering a capital investment in machinery: E (Click the icon to view the data.) 8. Calculate the payback. 9. Calculate the ARR. Round the percentage to two decimal places. 10. Based on your answers to the above questions, should Dock invest in the machinery? 8. Calculate the payback. Payback years - X Data Table Initial investment $ 1,500,000 Residual value 350,000 Expected annual net cash inflows 500,000 Expected useful life 4 years Required rate of return 9% Print Done
The cash flows and Net salvage value of Project Y is given the following table: Year Cash flows Salvage Value 0 -5,800 5,800 1 2,100 3,000 2 1,400 2,200 3 1,600 1,900 4 1,800 300 Given the cost of capital is 10%, Calculate the NPV for its Economic Life and determine what are its economic life and physical life of Project Y?(Please show your work)
Welch Corporation is planning an investment with the following characteristics (Ignore income taxes.): Useful life 11 years Yearly net cash inflow $40,000 Salvage value $ Internal rate of return 13% Required rate of return 9% Click here to view Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using the tables provided. The initial cost of the equipment is closest to:
Consider two air-conditioning systems with the cash flow estimates as given below. Use AW analysis to determine the sensitivity of the economic decision to MARR values of 4%, 6%, and 8% per year. Air-Conditioning System 1 System First cost, $ AOC, $ per year Salvage value, $ New compressor and motor cost at midlife, $ Life, years -10,000 -500 -100 -1,850 8 The annual worth of air-conditioning system 1 when the MARR is 4% is $ The annual worth of air-conditioning system 2 when the MARR is 4% is $ The annual worth of air-conditioning system 1 when the MARR is 6% is $ The annual worth of air-conditioning system 2 when the MARR is 6% is $ The annual worth of air-conditioning system 1 when the MARR is 8% is $ The annual worth of air-conditioning system 2 when the MARR is 8% is $ Air-Conditioning System 2 -14,000 -85 -300 -2,540 12
Osler Company is considering an investment with the following data: Initial cost $200,000 Annual net cash inflows $25,000 Expected life 10 years Salvage value none Depreciation will be taken on a straight-line basis over the expected life of the investment.What is the accounting rate of return for the investment? a.12.5% b.2.5% c.20% d.25% e.10%
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Bella Ltd wishes to invest in either project X or project Y, and has provided you with the following information. Project X Project Y Initial Investment Shs. 20,000 Shs. 30,000 Estimated Life 5 years 5 years Scrap Value Shs. 1,000 Shs. 2,000 The profits before depreciation and after taxation (cash flows) are as follows: Year 1 Year 2 Year 3 Year 4 Year 5 Project x Shs. Shs. Shs. Shs. Shs. 5,000 10,000 10,000 3,000 2,000 Project y 20,000 10,000 5,000 3,000 2,000…
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