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

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Similar questions

N1.
If a copy center is considering the purchase of a new copy machine with an initial investment cost of $145,800 and the center expects an annual net cash flow of $18,000 per year, what is the payback period? years
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 $241,666 $181,884 Net cash flows anticipated: Year 1 81,000 36,000 Year 2 59,000 55,000 Year 3 93,000 73,000 Year 4 80,000 68,000 Year 5 75,000 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.
A 7-year project is expected to provide annual sales of $221,000 with costs of $97,500. The equipment necessary for the project will cost $360,000 and will be depreciated on a straight-line method over the life of the project. You feel that both sales and costs are accurate to +/-15 percent. The tax rate is 21 percent. What is the annual operating cash flow for the worst-case scenario? es Multiple Choice $77,946 $44,504 0 $70,623 $129,329 $49.221
Should Tangshan Mining company accept a new project if its maximum payback is 3.5 years and its initial after-tax cost is R15 000 000 and it is expected to provide after-tax operating cash inflows of R5 400 000 in year 1, R5 700 000 in year 2, R2 100 000 in year 3 and R5 400 000 in year 4? A. Yes. B. No. C. It depends. D. None of the above.
1. what amount should be used as the initial cash flow for this project and why?? 2. What is the after-tax salvage value for the spectrometer? 3. What is the MPV of the project? Should the firm accept or reject this project?
4 What is counter party risk? Which financial contracts does it apply to?
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
B2b Co. Is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment costs $360,000 and hasa 12-year life and no salvage value. The expected annual income for each year from thos equipment follows. Compute the (a) annual net cash flow, (b) payback period, and (c) accounting rate of return for this equipment. $225,000 ,120,000, 30,000, 38,250, Income 36,750?
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.
Can you please write the calculations step by step including the formulas. How did you calculate the Cash flow in order to calculate the cumulative cash flow after that?
Vijay

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