****Only answer this question if you are sure about the correct answer**** ***Return on investment Question* ** 1. You want to fix a car. But you are not sure if this is a good investment. a. You can get a used engine that will cost $400 and will need $200 parts to fix it. b. The transmission will cost $1,250 from the store. c. Car interior with will cost $300 in supplies. d. Need $950 for tires. e. Need a new paint will cost $650. f. You think that you can resell the car at $40,000. g. The car now is posted for $25,000. 1. What is the ROI % (......... 2. Yes or no, based on ROI is this a good investment (........

**Only answer this question if you are sure about the correct answer Return on investment Question ** 1. You want to fix a car. But you are not sure if this is a good investment. a. You can get a used engine that will cost $400 and will need $200 parts to fix it. b. The transmission will cost $1,250 from the store. c. Car interior with will cost $300 in supplies. d. Need $950 for tires. e. Need a new paint will cost $650. f. You think that you can resell the car at $40,000. g. The car now is posted for $25,000. 1. What is the ROI % (......... 2. Yes or no, based on ROI is this a good investment (........

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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3. Your favorite neighbor Poindexter learns you are pursuing an MBA and seeks your advice on how to finance his next vehicle. He has gathered information about each option but is not sure how to compare the alternatives. Purchasing a new vehicle will cost $26,500, and he expects to spend about $500 per year in maintenance costs. He would keep the vehicle for five years and estimates that the salvage value will be $10,500. Alternatively, Poindexter could lease the same vehicle for five years at a cost of $5,000 per year, including all maintenance. The lease payments are made at the beginning of each year. Assume a discount rate of 10%. o Provide an analysis for Poindexter at 10%. o Provide the same analysis for good old Poindexter assuming a rate of 5%. At what rate will he be indifferent? o
Refer to the data provided in Table 11.3 below to answer the following question(s). Table 11.3 Project New computer for sales staff Remodel for distribution center On-site day care center Employee fitness center Total Investment (dollars) $250,000 $200,000 $100,000 $50,000 Expected Rate of Return (percentage) 11 9 5 4 Refer to Table 11.3. If the interest rate is 2.5%, Blackstar Drone Manufacturing should O not fund any of the projects. fund all of the projects. fund all of the projects except for the employee fitness center. O fund only the employee fitness center.
Lease versus Buy Big Sky Mining Company must install $1.5 million of new machinery in its Nevada mine. It can obtain a bank loan for 100% of the purchase price, or it can lease the machinery. Assume that the following facts apply: The machinery falls into the MACRS 3-year class. (The depreciation rates for Year 1 through Year 4 are equal to 0.3333, 0.4445, 0.1481, and 0.0741.) Under either the lease or the purchase, Big Sky must pay for insurance, property taxes, and maintenance. The firm's tax rate is 25%. The loan would have an interest rate of 10%. It would be nonamortizing, with only interest paid at the end of each year for four years and the principal repaid at Year 4. i. The lease terms call for $400,000 payments at the end of each of the next 4 years. Big Sky Mining has no use for the machine beyond the expiration of the lease, and the machine has an estimated residual value of $200,000 at the end of the 4th year.
Assume you currently work for the city of Edmonton in their traffic safety department. It is estimated that you could reduce fatality risk by 3% at a particular intersection if you upgrade the traffic lights to use new high visibility LEDs. The cost of this upgrade is estimated to be $400,000. If we assume a human life is worth 10 million, should you spend the money to upgrade the traffic lights? (Hint: to multiply 1% by 200 you follow this process: 0.01 x 200 = 2). a No, since the expected benefit ($300,000) is lower than the cost. b Yes, since the expected benefit ($400,000) is equal to the cost. c Yes, since the expected benefit ($200,000) is greater than the cost. d No, since the expected benefit ($100,000) is lower than the cost.
Question 4: You have a opportunity to make a investment that has $10.000,000 landing, 1.500.000 machine, outsourcing 500.000 and finance cost 1.000.000. Machines have no scrap value at end of 4th year. You will pay interest payment at the end of 4rd year, that is $500.000. If you make this investment now, you will receive $4.500,000 one year from today, $3.000,000, $5.000,000 and $ 4.000,000 respectively. The appropriate discount rate for this investment is 14 percent. Tax rate is % 30. Should you make the investment? Why?
Chris LeBlanc estimates that if he does 4.5 hours of research using data that will cost $175.00, there is a good chance that he can improve his expected return on a $10,000, 1-year investment from 6.2% to 9.2%. Chris feels that he must earn at least $30.00 per hour on the time he devotes to his research. a. Find the cost of Chris's research. b. By how much (in dollars) will Chris's return increase as a result of the research? c. On a strict economic basis, should Chris perform the proposed research?
You are trying to pick the least-expensive car for your new delivery service. You have two choices: the Scion xA, which will cost $23,500 to purchase and which will have OCF of −$3,100 annually throughout the vehicle’s expected life of three years as a delivery vehicle; and the Toyota Prius, which will cost $32,000 to purchase and which will have OCF of −$1,600 annually throughout that vehicle’s expected 4-year life. Both cars will be worthless at the end of their life. You intend to replace whichever type of car you choose with the same thing when its life runs out, again and again out into the foreseeable future. If the business has a cost of capital of 11 percent, calculate the EAC. (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.) Scion EAC_____? Toyota EAC____?
Keith Bowie is trying to determine the amount to set aside so that he will have enough money on hand in 2 years to overhaul the engine on his vintage used car. While there is some uncertainty about the cost of engine overhauls in 2 years, by conducting some research online, Keith has developed the following estimates. Engine OverhaulEstimated Cash Outflow ProbabilityAssessment $200 10% 450 30% 600 50% 750 10% Click here to view factor tables (Image attached)How much should Keith Bowie deposit today in an account earning 6%, compounded annually, so that he will have enough money on hand in 2 years to pay for the overhaul? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) Deposit amount? $
You are trying to pick the least expensive car for your new delivery service. You have two choices: the Scion xA, which will cost $19,000 to purchase and which will have OCF of - $2,200 annually throughout the vehicle's expected life of three years as a delivery vehicle; and the Toyota Prius, which will cost $29,000 to purchase and which will have OCF of -$1,150 annually throughout that vehicle's expected 4 - year life. Both cars will be worthless at the end of their life. You intend to replace whichever type of car you choose with the same thing when its life runs out, again and again out into the foreseeable future. If the business has a cost of capital of 11 percent, calculate the EAC. (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.) Which one should you choose? multiple choice Scion xA Toyota Prius
Intro The local franchise of Jiffy Lube is thinking of buying a new lift for $80,000 that would make it easier to access the oil filter in customers' cars and save labor. The savings would increase over the project's 3-year life, in line with the projected growth of the business: A Part 1 What is the project cash flow in year 3? 0+ decimals Submit Part 2 What is the NPV? 1 Year 2 Cost savings 0+ decimals Submit B The machine is to be linearly depreciated to zero and will have no resale value after 3 years. The company uses a discount rate of 11% and has a tax rate of 21%. 1 20,000 с 2 22,000 D 3 26,400 BAttempt 1/5 BAttempt 1/5
You are the CFO for Play Now sports and you have 2 different machines to consider for purchase. The machines will be used to fabricate large size rubber balls that will sell for $30 each. The first machine will cost $45,000 and it will last for a period of 6 years. It will allow you to save $15,000 in year 1, $14,000 in year 2, $13,000 in year 3, $12,000 in year 4, $11,000 in year 5 and $10,000 in year 6. Using this machine will generate variable costs of products sold of $15 each. The other option is a machine that will last for only 5 years. It will cost $30,000 and it will save $8,000 each year. Variable costs, using this machine will be $18 each. Kruger has total fixed costs of $120,000 per year. a. Calculate the PAYBACK PERIOD for each machine for the 2 machines. b. Calculate the Return on investment for each machine. c. Calculate the break-even point for each machine. d. Which machine should Play Now pick and why ?