One division of the Marvin Educational Enterprises has depreciable assets costing $5,600,000. The cash flows from these assets for the pastthree years have been:Year Cash flows123The current (.e., replacement) costs of these assets were expected to increase 20% each year. Marvin used the straight-line depreciationmethod and the assets had an estimated useful life of 10-years with no salvage value. For return on investment (ROI) calculations, Marvin usesend-of-year balances.What is the ROI using historical cost and gross book value?A.B.$ 1,680,000$ 1,960,000$ 2,128,000C.D.Year 120.0825.0818.0%30.0%Year 225.0%28.0926.5835.0%Year 328.0%29.5%25.5%38.0% Multiple ChoiceOOOOption AOption BOption COption D

The return on investment using the historical cost and its gross book value can be found by uisng…

Answered: One division of the Marvin Educational…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 6CE

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Quary Company is considering an investment in machinery with the following information. Initial investment Useful life Materials, labor, and overhead (except depreciation) Depreciation-Machinery $ 254,000 9 years Salvage value Expected sales per year $ 20,000 12,700 units Selling, general, and administrative expenses Selling price per unit $ 57,150 26,000 6,350 $ 10 (a) Compute the investment's annual income and annual net cash flow. (b) Compute the investment's payback period. Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Compute the investment's annual income and annual net cash flow. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Selling, general, and administrative expenses Depreciation-Machinery Income Net cash flow Income Cash Flow $ 127,000 (57,150) (6,350) (26,000) $ 89,500 $ 127,000
Can you please check my work
Can you please check my work
Can you please check my work
A division is considering the acquisition of a new asset that will cost $2,960,000 and have a cash flow of $790,000 per year for each of the four years of its life. Depreciation is computed on a straight-line basis with no salvage value. Ignore taxes. Required: a. & b. What is the ROI for each year of the asset's life if the division uses beginning-of-year asset balances and net book value for the computation? What is the residual income each year if the cost of capital is 8 percent? (Enter "ROI" answers as a percentage rounded to 1 decimal place (i.e., 32.1). Negative amounts should be indicated by a minus sign.) Year Investment Base ROI Residual Income 1 $2,960,000 % 2 % 3 % 4 %
A division is considering the acquisition of a new asset that will cost $2,520,000 and have a cash flow of $790,000 per year for each of the four years of its life. Depreciation is computed on a straight-line basis with no salvage value. Ignore taxes. Required: a. & b. What is the ROI for each year of the asset's life if the division uses beginning-of-year asset balances and net book value for the computation? What is the residual income each year if the cost of capital is 8 percent? (Enter "ROI" answers as a percentage rounded to 1 decimal place (i.e., 32.1). Negative amounts should be indicated by a minus sign.) Investment Residual Income Year ROI Base $ 2,520,000 1 % 2 % 3 % 4 %

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