Ivanhoe Corporation is involved in the business of injection molding of plastics. It is considering the purchase of a new computer-aideddesign and manufacturing machine for $435,400, The company believes that with this new machine it will improve productivity andincrease quality, resulting in an increase in net annual cash flows of $105,900 for the next 6 years. Management requires a 10% rate ofreturn on all new investments. Click here to view the factor table.Calculate the internal rate of return on this new machine. (Round answer to O decimal places, eg. 13%. For calculation purposes, use 5decimal places as displayed in the factor table provided.)Internal rate of returnShould the investment be accepted?The investmentv be accepted.

Answer) Calculation of Internal rate of return Internal rate of return is the rate at which the…

Ivanhoe Corporation is involved in the business of injection molding of plastics, It is considering the purchase of a new computer aided design and manufacturing machine for $435,400, The company believes that with this new machìne it will improve productivity and increase quality, resulting in an increase in net annual cash flows of $105,900 for the net 6 years. Management requires a 10% rate of return on all new investments. Click here to view the factor table Calculate the internal rate of return on this new machine. (Round answer to O decimal places, eg 13%. For calculation purposes, use 5 decimal places as displayed in the factor table provided) Internal rate of return Should the investment be accepted? The investment be accepted.

Ivanhoe Corporation is involved in the business of injection molding of plastics, It is considering the purchase of a new computer aided design and manufacturing machine for $435,400, The company believes that with this new machìne it will improve productivity and increase quality, resulting in an increase in net annual cash flows of $105,900 for the net 6 years. Management requires a 10% rate of return on all new investments. Click here to view the factor table Calculate the internal rate of return on this new machine. (Round answer to O decimal places, eg 13%. For calculation purposes, use 5 decimal places as displayed in the factor table provided) Internal rate of return Should the investment be accepted? The investment be accepted.

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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Assume that a company is considering purchasing a machine for $100,000 that will have a seven-year useful life and a $16,500 salvage value. The machine will lower operating costs by $18,000 per year and increase sales volume by 1,000 units per year. The company earns a contribution margin of $3.00 per unit. The company also expects this investment to provide qualitative benefits that it is struggling to incorporate into its financial analysis. Assuming the company’s required rate of return is 17%, the minimum dollar value per year that must be provided by the machine’s qualitative benefits to justify the $100,000 investment is closest to: Click here to view Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using the tables provided.
Cullumber Specialties just purchased inventory-management computer software at a cost of $1,440,950. Cost savings from the investment over the next six years will produce the following cash flow stream: $128,340, $258,240, $432,600, $435,250, $794,320, and $649,740. What is the payback period on this investment? - Payback period is years?
After analysing the financial data of Q-Constructions, you notice that they are trending in the right direction. A new 12-month construction proposal has come to the company worth $1,000,000 and an important question is whether it will be financially viable. They want you to analyse the proposal, in particular, the recommended cash flow schedule and to understand the key financial points during the construction project. The following cash flow schedule is summarised below. To ensure that all upfront and on-going outlay costs are covered in advance, Q-Constructions incur an initial start-up cost of $200,000. The proposal states that they will receive a deposit from the client of 10% of the total project price at the beginning. They then receive four equal instalment payments of 20% of the total project price associated to project milestones from the client at the end of the 2nd, 6th, 8th and 10th month. Finally, they receive the last 10% project milestone on lock-up which occurs at the…
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Raytronics wishes to use an automated environmental chamber in the manufacture of electronic components. The chamber is to be used for rigorous reliability testing and burn-in. It is installed for $1.4 million and will have a salvage value of $200,000 after 8 years. Its use will create an opportunity to increase sales by $650,000 per year and will have operating expenses of $250,000 per year. Corporate income-tax rate is 25%. Develop tables using a spreadsheet to determine the ATCF for each year and the after-tax PW, AW, IRR, and ERR if the chamber is kept for 8 years. After-tax MARR is 10%. Use MACRS-GDS(5) with 100% bonus depreciation.
Crane Corporation is involved in the business of injection molding of plastics. It is considering the purchase of a new computer-aided design and manufacturing machine for $434,000. The company believes that with this new machine it will improve productivity and increase quality, resulting in an increase in net annual cash flows of $102,587 for the next 6 years. Management requires a 10% rate of return on all new investments. Click here to view PV table. Calculate the internal rate of return on this new machine. (Round answer to O decimal places, e.g. 13%. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Internal rate of return Should the investment be accepted? The investment be accepted. %
After analysing the financial data of Q-Constructions, you notice that they are trending in the right direction. A new 12-month construction proposal has come to the company worth $1,000,000 and an important question is whether it will be financially viable. They want you to analyse the proposal, in particular, the recommended cash flow schedule and to understand the key financial points during the construction project. The following cash flow schedule is summarised below. To ensure that all upfront and on-going outlay costs are covered in advance, Q-Constructions incur an initial start-up cost of $200,000. The proposal states that they will receive a deposit from the client of 10% of the total project price at the beginning. They then receive four equal instalment payments of 20% of the total project price associated to project milestones from the client at the end of the 2nd, 6th, 8th and 10th month. Finally, they receive the last 10% project milestone on lock-up which occurs at the…
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Rogers Inc.is considering investing $320,000 in hardware and software to develop a business-to-business (B2B) portal. The company expects the portal to save $40,000 each year for seven years of its useful life. Please figure out the payback period. b) AND its accounting rate return