Merrill Corp. has the following information available about a potential capital investment: $1,200,000 $ 120,000 8 years Initial investment Annual net income T Expected life Salvage value Merrill's cost of capital 130,000 10% Assume straight line depreciation method is used. Gi о Required: 1. Calculate the project's net present value. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Do not round intermediate calculations. Round the final answer to nearest whole dollar.) Net Present Value TAT RR) is m or less than 10 percent. 2. Without making any calculations, determine whether the internal rate of return Greater than 10 Percent Less than 10 Percent 3. Calculate the net present value using a 13 percent discount rate. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Do not round intermediate calculations. Round the final answer to nearest whole dollar.) Net Present Value

Merrill Corp. has the following information available about a potential capital investment: $1,200,000 $ 120,000 8 years Initial investment Annual net income T Expected life Salvage value Merrill's cost of capital 130,000 10% Assume straight line depreciation method is used. Gi о Required: 1. Calculate the project's net present value. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Do not round intermediate calculations. Round the final answer to nearest whole dollar.) Net Present Value TAT RR) is m or less than 10 percent. 2. Without making any calculations, determine whether the internal rate of return Greater than 10 Percent Less than 10 Percent 3. Calculate the net present value using a 13 percent discount rate. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Do not round intermediate calculations. Round the final answer to nearest whole dollar.) Net Present Value

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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You are given the following data for a project that is to be evaluated using the APV method. Year EBIT CAPEX 0 O $201.765 O $193,822 O $185,617 O $222,872 O $213,918 1 $127.000 $60,000 2 Depreciation Increase in NWC Year-end net debt $80,000 Cost of net debt = 8% Unlevered cost of capital = 11.8% Corporate tax rate = 30% Calculate the total value of the project at t = 0. using the APV method. $72,000 $50,000 $100,000 $133,000 $40,000 $80,000 $60,000 $140,000 3 $138.500 $10,000 $84,000 $30,000 $140,000
Merrill Corp. has the following information available about a potential capital investment
Merrill Corporation has the following information available about a potential capital investment: $ 1,200,000 $ 120,000 Initial investment Annual net income Expected life Salvage value 8 years. $ 130,000 10 Merrill's cost of capital Assume straight line depreciation method is used. Required: 1. Calculate the project's net present value. (Future Value of $1.Present Value of $1. Future Value Annuity of $1. Present Value Annuity of $1.) Note: Use appropriate factor(s) from the tables provided. 2. Without making any calculations, determine whether the internal rate of return (IRR) is more or less than 10 percent. 3. Calculate the net present value using a 13 percent discount rate. (Future Value of $1. Present Value of $1. Future Value Annuity of $1. Present Value Annuity of $1.) Note: Use appropriate factor(s) from the tables provided. 4. Without making any calculations, determine whether the internal rate of return (IRR) is more or less than 13 percent.
Merill Corp has the following info available about a possible capitol investment. Initial Investment- $1,200,000 Annual Net Income- $120,000 Expected Life- 8 years Salvage Value- $130,000 Merril's cost of Capitol- 10% Assume Strait line depreciation method is used. 1. Calculate the projects net present value. (Future value $1, Present value $1, Future Value Annuity $1, Present Vaule Annuity $1) Do not round intermediate calculations, round final answer to nearest whole dollar 2. Calculate nthe net present value using a 13% discpount rate. (Future value $1, Present value $1, Future Value Annuity $1, Present Vaule Annuity $1) Do not round intermediate calculations, round final answer to nearest whole dollar
Merrill Corp. has the following information available about a potential capital investment: $1,100,000 Initial investment Annual net income Expected life $ 110,000 8 years Salvage value $ 120,000 Merrill's cost of capital 79 Assume straight line depreciation method is used. Required: 1. Calculate the project's net present value. 2. Without making any calculations, determine whether the internal rate of return (IRR) is more or less than 7 percent.
You are given the following data for a project that is to be evaluated using the APV method. Year EBIT CAPEX Depreciation Increase in NWC Year-end net debt $80,000 O $201.765 O $185,617 O $193,822 0 O$222,872 Cost of net debt-8% Unlevered cost of capital = 11.8% Corporate tax rate = 30% Calculate the total value of the project at t = 0, using the APV method. O $213,918 1 $127,000 $60,000 $72,000 $50,000 $100,000 2 $133,000 $40,000 $80,000 $60,000 $140,000 3 $138,500 $10,000 $84,000 $30,000 $140,000
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Consider the following financial data for an investment project:• Required capital investment al n = 0: $ 100,000• Project service life: I 0 yea rs• Salvage value at N = I 0: $15,000• Annual revenue: $150.000• Annual O&M costs (not including depreciation): $50.000• Depreciation method for tax purpose: seven-year MACRS• Income tax rate: 40%.Determine the project cash flow at the end of year lO.(a) $69.000(b) $73.000(c) $66.000(d) $67.000
Merrill Corporation has the following information available about a potential capital investment: Initial investment Annual net income Expected life Salvage value Merrill's cost of capital Assume straight line depreciation method is used. Required: 1. Calculate the project's net present value. (Future Value of $1,Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) Note: Use appropriate factor(s) from the tables provided. 2. Without making any calculations, determine whether the internal rate of return (IRR) is more or less than 7 percent. 3. Calculate the net present value using a 9 percent discount rate. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) $ 2,500,000 $ 160,000 Req 1 and 2 Req 3 and 4 8 years $ 170,000 Note: Use appropriate factor(s) from the tables provided. 4. Without making any calculations, determine whether the internal rate of return (IRR) is more or less than 9 percent. 7 Complete this…
See image for MACRS table 1) What is the Ending Book Value at the end of year 3 using MACRS: $ 2) What is the Net cash flow from salvage at the end of year 3? $
Vaughn Company has the following information about a potential capital investment: Initial investment $ 280,000 Annual cash inflow $ 74,000 6 years 13% Expected life: Cost of capital 1. Calculate the net present value of this project. (Future Value of $1. Present Value of $1. Euture Value Annuity of $1. Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Round the final answer to nearest whole dollar.) Net Present Value