10. Tam Co. is negotiating for the purchase of equipment that would cost PI00,000 with the expectationthat P20,000 per year could be saved in after-tax cash costs if the equipment were acquired. Theequipment's estimated useful life is 10 years, with no residual value and would be depreciated by thestraight-line method. Tam's predetermined minimum desired rate of return is 12%.Net present value isa. P5,760b. Рб,440c. P12,200 d. P13,000e. None of these; answer is11. Refer to no. 10. Payback perlod isa. 4.0 years b. 4.4 years c. 4.5 years d. 5.0 yearse. None of these; answer is12. Refer to no. 10. Accrual accounting rate of return based on initial investment isd. 10%a 30%b, 20%с. 12%e. None of these; answer is13. Refer to no. 10. In estimating the internal rate of retum, the factors in the table of present values ofan annuity should be taken from the columns closest toc. 5.00e. None of these; answer isa 0.65b. 1.30d. 5.65

Please refer to the image below. Note : only 3 subpart will be answered as per policy.

P20,000 per year could be saved in after-tax cash costs if the equipment were acquired. The pment's estimated useful life is 10 years, with no residual value and would be depreciated by the ght-line method. Tam's predetermined minimum desired rate of return is 12. present value is 5,760 b. P6,440 c. P12,200 a. PI3,000 . None of these; answer is Refer to no. 10. Payback period is O years b. 4.4 years e. 4.5 years d. 5.0 years e. None of these; answer is Refer to no. 10. Accnual accounting rate of return based on initial investment is a. 10% b, 20% e. None of these; answer is e. 12% Refer to no. 10. In estimating the internal rate of retum, the faciors in the table of present values of anuity should be taken from the columns closest to 65 b. 1.30 e 5.00 d. 5.65 e None of these; answer is

P20,000 per year could be saved in after-tax cash costs if the equipment were acquired. The pment's estimated useful life is 10 years, with no residual value and would be depreciated by the ght-line method. Tam's predetermined minimum desired rate of return is 12. present value is 5,760 b. P6,440 c. P12,200 a. PI3,000 . None of these; answer is Refer to no. 10. Payback period is O years b. 4.4 years e. 4.5 years d. 5.0 years e. None of these; answer is Refer to no. 10. Accnual accounting rate of return based on initial investment is a. 10% b, 20% e. None of these; answer is e. 12% Refer to no. 10. In estimating the internal rate of retum, the faciors in the table of present values of anuity should be taken from the columns closest to 65 b. 1.30 e 5.00 d. 5.65 e None of these; answer is

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

See similar textbooks

Similar questions

Please solve it as soon as possible! . Consider an asset with an initial cost of $100,000 and no salvage value. Compute the difference in the present value of the tax shields if CCA is calculated at 20% declining balance compared to if CCA is calculated using a five-year, straight line write off. For your calculation use 30% as the tax rate and 16% as the required return. (The half-year rule applies.) The difference, to the nearest dollar, is A S1.724 B $4,129 C S4.483 d. 59,517 e.$49,969
5. Does your company want to purchase this machine that will provide cost savings of $100,000 annually for its useful life (8 years)? The cost is $250,000; tax rate is 36% and discount rate is 14%. Compute straight-line depreciation for 8 years with zero salvage value. Calculate the cash flows and determine the NPV and IRR. Does your company want to buy this machine?
Consider a project with the following information: Initial fixed asset investment = $550,000; straight-line depreciation to zero over the 4-year life; zero salvage value; price $54; variable costs = $35; fixed costs = $228,000, quantity sold = 116,000 units; tax rate = 23 percent. How sensitive is OCF to changes in quantity sold? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) AOCFIAQ 9.24
A project requires initial asset investment of $1 million. The asset will last for 8 years, and will be depreciated for tax purposes at the CCA rate of 30%. The required return on this project is 16%, and the marginal corporate tax rate is 36%. Assuming that the asset will have a salvage value of $50,000 at the end of Year 8. what is the present value of the CCA tax shields from this project? Multiple Choice 204111.57 $215.009.97 $218.59071 $234.782.61
A project will increase sales by $184,500 and cash expenses by $88,900. The project will require investment in equipment of $53,000 and be depreciated using straight line depreciation to a zero book value over the four-year life of the project. The company has a marginal tax rate of 21 percent. What is the operating cash flow of the project? $108,552.25 None of these options are correct o $78,306.50 $75,524.00 o $95,600.00
National Integrated Systems (NIS), a global provider of heating and air conditioning is planning a project whose data is provided below. The project’s equipment has a 3 year tax life after which its salvage value will be zero. The machinery will be depreciated on a straight line basis over three years. Revenues and other operating costs are expected to be constant over the project’s life. What is the project’s cash flow in Year 1? Equipment Cost = $130,000Depreciation rate = 33.33%Annual Sales Revenue= $120,000Operating Costs (ex Depreciation) = $50,000 Tax Rate = 35%
It is estimated that an investment alternative with an initial investment cost of 250000 TL will generate annual revenues of 85000 TL and annual expenses of 20000 TL. It is expected to have a scrap value of 95000 TL at the end of its 7-year life. Find out how sensitive the investment decision of this investment alternative is to its revenues. (MARR: %10) Select one: a. 0.32294 b. 0.48225 c. 0.05634 d. 0.27838 e. 0.082902 f. 0.1719 g. 0.52003 h. 0.37235
4.
Generro Company is considering the purchase of equipment that would cost$60,000and offer annual cash inflows of$16,300over its useful life of 5 years. Assuming a desired rate of return of10%, is the project acceptable? (PV of \$1 and PVA of \$1) (Use appropriate factor(s) from the tables provided.) Mitiple Choice The answer cannot be detergined. No, since the negative net present value indicates the investmeot will yield a fate of retum below the desred tate of return. Yes, since the investment will generate$81.500in future cosh flows, which is gremer than the purchase cont of$60,000Yes, since the positve net present valse ind cates the investment will eam a rate of return greater than10 h.
Hh2. Account
You are considering the following project. What is the NPV of the project? WACC of the project: 0.10 Revenue growth rate: 0.05 Tax rate: 0.40 Revenue for year 1: 13,000 Fixed costs for year 1: 3,000 variable costs (% of revenue): 0.30 project life: 3 years Economic life of equipment: 3 years Cost of equipment: 20,000 Salvage value of equipment: 4,000 Initial investment in net working capital: 2,000
Pitt Company is considering two alternative investments. The company requires a 12% return from its investments. Neither option has a salvage value. Project X Project Y Initial investment $244,049 $180,396 Net cash flows anticipated: Year 1 83,000 35,000 Year 2 59,000 56,000 Year 3 91,000 71,000 Year 4 82,000 68,000 Year 5 77,000 27,000 A. Compute the IRR for both projects using the IRR spreadsheet function. Project X fill in the blank 1% Project Y fill in the blank 2% B. Which project should be recommended.

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS