Newport Corporation is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase) in net cash flow of $200,000 The equipment will have an initial cost of $900,000 and a 6-year useful life with no expected salvage value. What is the accounting rate of return? Multiple Choice 16.67% 22.22% 5.56% 44.44%

Newport Corporation is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase) in net cash flow of $200,000 The equipment will have an initial cost of $900,000 and a 6-year useful life with no expected salvage value. What is the accounting rate of return? Multiple Choice 16.67% 22.22% 5.56% 44.44%

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A machine costs $500,000 and is expected to yield an after-tax net income of $19,000 each year. Management predicts this machine has a 8-year service life and a $100,000 salvage value, and it uses straight-line depreciation. Compute this machine's accounting rate of return. Accounting Rate of Return Choose Numerator: Choose Denominator: Accounting Rate of Return %3D Accounting rate of return
W:48)
Question 1. The management of Fine Electronics Company is considering to purchase an equipment to be attached with the main manufacturing machine. The equipment will cost Gh¢6,000 and will increase annual cash inflow by Gh¢2,200. The useful life of the equipment is 6 years. After 6 years it will have no salvage value. The management wants a 20% return on all investments. a. Compute net present value (NPV) of this investment project. b. Should the equipment be purchased according to NPV analysis?
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%
Note: Just answer the letter d) PROFITABILITY INDEX
Belmont Corporation is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual A in net operating income of $210,000. The equipment will have an initial cost of $1,000,000 and an 8-year useful ife, if there is no salvage value of the equipment, what is the accounting rate of return? Multiple Choice O O 21.0% 16.0% O 42.0% O 13.5%
both parts of the question please
Your Company is interest in buying a new project that will last for 8 years. The projects internal rate of return is 5%. The project will generate annual operating cash inflows of $20,000. What is the most the company should pay for the equipment needed for this project? It will have no salvage value. Group of answer choices $128,000 $129,260 $13,540 $135,723 $122,797
The following present value factors are provided for use in this problem. Periods 1 2 3 4 Present Value of $1 at 8% 0.9259 0.8573 0.7938 0.7350 Xavier Co. wants to purchase a machine for $37,800 with a four year life and a $1,200 salvage value. Xavier requires an 8% return on investment. The expected year-end net cash flows are $12,800 in each of the four years. What is the machine's net present value? Multiple Choice O O $4,595. $(5,477). $(4,595). Present Value of an Annuity of $1 at 8% 0.9259 1.7833 2.5771 3.3121 $43,277.
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
A new project has an initial cost of $250,000. The equipment will be depreciated on a straight-line basis to a zero book value over the five-year life of the project. The projected net income each year is $13,250, $18,000, $20,240, $15,150, and $11,900, respectively. What is the average accounting return? Multiple Choice 11.52% 8.95% 13.46% 12.57% 5.33%
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