MC algo 9-6 Calculating AAR Mountain Frost is considering a new project with an initial cost of $185,000. The equipment will be depreciated on a straight-line basis to a zero book value over the four-year life of the project. The projected net income for each year is $19,600, $20,500, $24,600, and $16,500, respectively. What is the average accounting return? Multiple Choice 20.12% 21.95% 16.46% 10.97% 23.51%

MC algo 9-6 Calculating AAR Mountain Frost is considering a new project with an initial cost of $185,000. The equipment will be depreciated on a straight-line basis to a zero book value over the four-year life of the project. The projected net income for each year is $19,600, $20,500, $24,600, and $16,500, respectively. What is the average accounting return? Multiple Choice 20.12% 21.95% 16.46% 10.97% 23.51%

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter9: Capital Budgeting Techniques

Section: Chapter Questions

Problem 10PROB

See similar textbooks

MC algo 9-6 Calculating AAR

Mountain Frost is considering a new project with an initial cost of $185,000. The equipment will be depreciated on a straight-line basis to a zero book value over the four-year life of the project. The projected net income for each year is $19,600, $20,500, $24,600, and $16,500, respectively. What is the average accounting return?

Multiple Choice

20.12%
21.95%
16.46%
10.97%
23.51%

AI-Generated Solution

AI-generated content may present inaccurate or offensive content that does not represent bartleby’s views.

Unlock instant AI solutions

Tap the button
to generate a solution

Click the button to generate
a solution

SEE SOLUTION

Similar questions

Detemine thie Internal Rate ot Retun IRR alo know as ROR for the following Project
unc.4
A1
Required information Problem 24-2A (Algo) Payback period, accounting rate of return, net present value, and net cash flow calculation LO P1, P2, P3 [The following information applies to the questions displayed below.] Project Y requires a $331,500 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 eath year. (PV of $1. FV of $1. PVA of $1. and EVA 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 Problem 24-2A (Algo) Part 2 2. Determine Project Y's payback period. Project Y Numerator: initial investment $ Payback Period 1 331,500/ Denominator: Annual net cash flow Project Y $ 350,000 156,800 82,875 25,000 $ 85,325 Payback Period
Help Save & Exit Subm 16 Assume that a company is considering purchasing a machine for $50,000 that will have a five-year useful life and no salvage value. The machine will lower operating costs by $17,000 per year. The company's required rate of return is 18%. What is the net present value of this investment? Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using table. Multiple Choice $3,159 О $3,896 О О $3,796 $3,359
Required information Problem 24-2A (Algo) Payback period, accounting rate of return, net present value, and net cash flow calculation LO P1, P2, P3 [The following information applies to the questions displayed below) Project Y requires a $316,500 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 of $1. EV of $1 PVA of end EVA of Use appropriate factor(s) from the tables provided.) Sales of now product Екрепко Depreciation Machinery Project Problem 24-2A (Algo) Part 3 3. Compute Project Y's accounting rete of retum $137,35 Age of
Required information Problem 24-2A (Algo) Payback period, accounting rate of return, net present value, and net cash flow calculation LO P1, P2, P3 [The following information applies to the questions displayed below.] Project Y requires a $301,500 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 Problem 24-2A (Algo) Part 4 Years 1-4 4. Determine Project Y's net present value using 9% as the discount rate. (Do not round intermediate calculations. Round your present value factor to 4 decimals and final answers to the nearest whole dollar.) Initial investment Net present value Net Cash Flows X Present…
Year O 1 2 3 4 Project X - $20,000 13,330 5,960 5,960 1,920 Project Y - $20,000 The PI for project X is 6,470 6,470 6,470 6,470 The cost of capital for both projects is 10 percent. Calculate the profitability index (PI) for each project. (Do not round discount factors. Round intermediate calculations to 2 decimal places, e.g. 15.25 and final answers to 4 decimal places, e.g. 1.2527.) Which project, or projects, should be accepted if you have unlimited funds to invest? If you have unlimited funds you should invest in and the PI for project Y is Which project should be accepted if they are mutually exclusive? If they are mutually exclusive you should invest in
Year Operating Income 1 $ 61,400 2 51,400 36,400 26,400 (3,600) $172,000 3 4 5 Total Year 1 2 3 4 5 6 Warehouse 7 8 9 10 Required: Each project requires an investment of $368,000. Straight-line depreciation will be used, and no residual value is expected. The committee has selected a rate of 15% for purposes of the net present value analysis. Present Value of $1 at Compound Interest 6% 10% 0.943 0.890 0.840 0.751 0.592 0.558 0.909 Warehouse Warehouse Net Cash Flow Tracking Technology $135,000 125,000 110,000 100,000 70,000 $540,000 0.386 0.826 0.797 0.756 0.694 0.712 0.658 0.579 0.792 0.683 0.636 0.572 0.482 0.747 0.621 0.567 0.497 0.402 0.705 0.564 0.507 0.432 0.665 0.513 0.452 0.376 0.627 0.467 0.404 0.327 0.424 Technology Operating Income 12% $ 34,400 34,400 34,400 34,400 34,400 $172,000 15% 20% 0.893 0.870 0.833 0.335 0.279 0.233 0.361 0.284 0.194 0.322 0.247 Total present value of net cash flow $ Amount to be invested Net present value 2. The 1a. Compute the average rate of return…
8-9 Given the following information for projects X and Y, which one should be chosen and why? Project X Project Y Net present value $2,00,000 $3,000,000 Project life 5 years 8 years Required return 10% 10% Select one: a. Choose Project X, as it has a lower equivalent annual cost than Project Y. b. Choose Project Y, as it has a lower equivalent annual cost than Project X. c. Choose Project Y, as it has a higher equivalent annual benefit than Project X. d. Choose Project X, as it has a higher equivalent annual benefit than Project Y. e. Choose Project Y, as it has a higher net present value than Project X.
Question 1 Calculate the present worth of the project cost. $80/ft.² ($861/m²) 100,000 ft.² (9,290m²) Initial cost of building Building size Cost of real estate (not included) Interest rate 12% 20 years Life cycle Cost of maintenance, operations, etc. Average $6.00/ft.² ($64.58/m²) Design 4.5% Indirect construction costs 10% Alteration and replacement costs $1,500,000 every ten years
a7