On 31 December 2013, the fair value of the asset less costs to sell was OMR 50,000 and the expected fur for the next five years. The current cost of capital is 10% and a five-year annuity of OMR 1 per annum at 3-79. What is the present value of future cash flow of the asset? O a. OMR 45,000. O b. OMR 50,000. O c. OMR 37,900.

On 31 December 2013, the fair value of the asset less costs to sell was OMR 50,000 and the expected fur for the next five years. The current cost of capital is 10% and a five-year annuity of OMR 1 per annum at 3-79. What is the present value of future cash flow of the asset? O a. OMR 45,000. O b. OMR 50,000. O c. OMR 37,900.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

2. The company "Bom investor, Lda" needs to replace a heavy vehicle for which it has two alternatives: rent or purchase. In the case of acquisition, the price of the vehicle is €140,000, depreciated on a straight-line basis at the rate of 25% per year. After 4 years, the company plans to sell the vehicle for €30,000. In return for the acquisition, the rental implies the payment of semi-annual installments in arrears, the first rent of €15,000 and the rest subject to an update of 10% per year. a) Assuming an 8% discount rate and a 21% tax rate, which of the two options is the most favorable - rent or purchase? b) If the company in question expected losses for the next four years, to what extent would that affect decision analysis?
Find the present value of an investment in plant and equipment if it is expected to provide annual earnings of $70000 for 15 years and to have a resale value of $130000 at the end of that period. Assume a 11% rate and earnings at year end. The present value of 1 at 11% for 15 periods is 0.20900. The present value of an ordinary annuity at 11% for 15 periods is 7.19087. The future value of 1 at 11% for 15 periods is 4.78459.
A Property is expected to have 5 Year NOI flow of $10,000, $12,000, $15,000, $18,000, and $10,000 and a final (year 5) sale price of $90,000. Using capitalization rate of 12% what is the estimated market value of the property? 97,354 104,664 87,641 100,919 90,724
Determine the payback period (in years, round-off to 3 decimal places) at an interest rate of 7% per year for an asset that initially cost S30,000 , has a scrap value of $1700 whenever it in sold, and generates cash flow of 3,100 per year
The management of River Corporation is considering the purchase of a new machine costing $380,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment: Year 1 2 O 10.5% O 5.5% O 25.5% Operating O 15.5% Income $20,000 20,000 20,000 20,000 20,000 Net Cash Flow $95,000 95,000 The average rate of return (rounded to one decimal place) for this investment is 95,000 95,000 95,000
Two mutually exclusive alternatives have the estimates shown below. Use annual worth analysis to determine which should be selected at an interest rate of 10% per year. Q $-44,000 R $-84,000 First Cost AOC per Year Salvage Value $-10,000 $-5,000 in year 1, increasing by $1,000 per year thereafter $4,000 $5,000 Life 2 years 4 years Alternative (Click to select) should be selected.
A company purchases an asset for P10,000 and plans to keep it for 20 years. If the salvage value is zero at the end of 20th year, what is the depreciation in the 3rd year? Use SYD method. With Cash flow diagram
XYZ Company has an opportunity to purchase and asset that will cost the company $60,000. The asset is expected to add $12,000 per year to the company’s net income. Assuming the asset has a 5-year useful life and a zero salvage value, the unadjusted rate of return will be?
Assume that property investor expects NOI to be $55 000, $64 000 and $67 000 for next 4 years with capitalisation rate of 11%, holding period expected to be 32 years with annual appreciation of 3% and sale commission of 6%. Would you buy the property if owners would like to sell it for $520 000?
4. ALDA Investments makes a sale of equipment for a value of L 250,000.00 where the cancellation is negotiated through 3 payments, which are paid 1, 2 and 3 months after the purchase, if a rate of 18% per year capitalizable per month is negotiated What is the value of the payments if: a)Each one is 15% larger than the previous one. b)The last two are equal to each other and the first is equal to the sum of the two.
Cross Ltd has bought an asset with a life span of 4 years. At the end of the 4 years, replacement of the asset will cost GH¢12,000. In this direction, the company has decided to provide for the future commitment by setting up a sinking fund account into which equal annual investment will be made at the end of each year. Interest rate on the investment will be 12% per annum. Required:i. Calculate the annual instalmentsii. Draw up the sinking fund schedule to show the growth fundiii. Assuming the first payments will be made now and 12 months thereafter, what are the annualpayments? You are required to draw up the sinking fund schedule .
5) ROT Ltd. is considering whether it should buy or lease equipment that costs 1.60 crores and has a post- tax salvage value of 16 lakh at the end of its life of 5 years. A finance company, CBK Ltd. has offered to lease the equipment for 5 years at annual lease payments of 40 lakh at the beginning of each year. CBK Ltd. will also maintain the equipment which would otherwise cost ROT Ltd. 2 lakh p.a. on an average. The owner of the equipment can claim depreciation on WDV basis at 25% each year. The company's tax rate is 30% and its cost of borrowing is 14.29% and the overall weighted average cost of capital is 15%. Should the company buy the asset or lease the equipment if the NPV of the equipment is - 12 lakh (negative)?