Hi expert please give me answer general accounting Largo Freightlines plans to build a new garage inthree (3) years to have more space for repairing itstrucks. The garage will cost $400,000. What lump-sum amount should the company invest now to havethe $400,000 available at the end of the three-yearperiod? Assume that the company can invest moneyat eight percent.

Step 1: Define Present Value of InvestmentThe equivalent value of an expected cash flow in today's…

Answered: Largo Freightlines plans to build a new…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 10PA: The Ham and Egg Restaurant is considering an investment in a new oven that has a cost of $60,000,...

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Gardner Denver Company is considering the purchase of a new piece of factory equipment that will cost $420,000 and will generate $95,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further Instructions on internal rate of return in Excel, see Appendix C.
Conestoga Plumbing plans to invest in a new pump that is anticipated to provide annual savings for 10 years of $50,000. The pump can be sold at the end of the period for $100,000. What is the present value of the investment in the pump at a 9% interest rate given that savings are realized at year end?
Manzer Enterprises is considering two independent investments: A new automated materials handling system that costs 900,000 and will produce net cash inflows of 300,000 at the end of each year for the next four years. A computer-aided manufacturing system that costs 775,000 and will produce labor savings of 400,000 and 500,000 at the end of the first year and second year, respectively. Manzer has a cost of capital of 8 percent. Required: 1. Calculate the IRR for the first investment and determine if it is acceptable or not. 2. Calculate the IRR of the second investment and comment on its acceptability. Use 12 percent as the first guess. 3. What if the cash flows for the first investment are 250,000 instead of 300,000?
Fraser Company will need a new warehouse in seven years. The warehouse will cost $350,000 to build. Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables. Required: What lump-sum amount should the company invest now to have the $350,000 available at the end of the seven-year period? Assume that the company can invest money at: (Round your final answer to the nearest whole dollar amount.) Present Value 1. Ten percent 2. Seven percent
Central Mass Ambulance Service can purchase a new ambulance for $200,000 that will provide an annual net cash flow of $50,000 per year for five years. The salvage value of the ambulance will be $25,000. Assume the ambulance is sold at the end of year 5. Calculate the NPV of the ambulance if the required rate of return is 9%. (Round your answer to the nearest $1.) A) $(10,731) B) $10,731 C) $(5,517) D) $5,517
Foster Incorporated is trying to decide whether to lease or purchase a piece of equipment needed for the next 10 years. The equipment would cost $50,000 to purchase, and maintenance costs would be $5,000 per year. After 10 years, Foster estimates it could sell the equipment for $21,000. If Foster leases the equipment, it would pay $19,000 each year, which would include all maintenance costs. If Foster's cost of capital is 9%, Foster should: (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1) Note: Use the appropriate factors from the PV tables. Multiple Choice lease the equipment, as the net present value of the cost is about $45,000 less. buy the equipment, as the net present value of the cost is about $48,700 less. lease the equipment, as the net present value of the cost is about $48,700 less. buy the equipment, as the net present value of the cost is about $50,000 less.
Foster Incorporated is trying to decide whether to lease or purchase a piece of equipment needed for the next 10 years. The equipment would cost $53,000 to purchase, and maintenance costs would be $5,200 per year. After 10 years, Foster estimates it could sell the equipment for $25,000. If Foster leases the equipment, it would pay $15,000 each year, which would include all maintenance costs. If Foster's cost of capital is 12%, Foster should: (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1) Note: Use the appropriate factors from the PV tables. Multiple Choice buy the equipment, as the net present value of the cost is about $53,000 less. lease the equipment, as the net present value of the cost is about $10,400 less. buy the equipment, as the net present value of the cost is about $10,400 less. О lease the equipment, as the net present value of the cost is about $6,700 less.
Your organization is planning to purchase a new office building four years from now. The building will cost $8,000,000, have a useful life of 30 years, and have no salvage value. If your organization currently has put aside $1,500,000 in an investment account with an annual interest rate of 4.8%, how much additional money must your organization deposit into the account each month in order to be able to purchase the building in four years? (select one)
Castillo’s Warehouse will need to purchase a new forklift for its warehouse operations three years from now, when its new warehouse facility becomes operational. If the price of the new forklift is $38,000 and Castillo's can invest its money at 7.25% compounded monthly, how much should it put aside today to achieve its goal?
A subdivision developer must construct a sewage treatment plant and deposit sufficient money in a perpetual trust fund to pay the $5000 per year operating cost and to replace the treatment plant every 40 years. The plant and future replacement plants will cost $150,000 each. If the trust fund earns 8% interest, what is the developer’s capitalized cost?
MAG Industrial needs 1000 square meters of storage space. Purchasing land for $80,000 and then erecting a temporary metal building at $70 persquare meter is one option. The president hopes to sell the land for $100,000 and the building for $20,000 after 3 years. Another option is to lease space for $30 per square meter per year payable at the beginning of each year. The MARR is 20%. Perform a present worth analysis of the building and leasing alternatives to determine the sensitivity of the decision if the construction cost decreases by 10% to $63 per square meter and the lease cost remainsat $30 per square meter per year.
A business set up a sinking fund so they will have a 62,000.00 to pay for a replacement piece of equipment in 11 years when the current equipment will be sold for scrap. If they make deposit at the end of every 2 months for 11 years in the investment that pays 7.4% compounded every 2 months, what size should each payment be?

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