Perit Industries has $155,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternativesare:Cost of equipment requiredWorking capital investment requiredAnnual cash inflowsSalvage value of equipment in six yearsLife of the project$ 155,000Project A$ 0Project B$ 0$ 155,000$ 25,000$ 8,600$ 40,0006 years$ 06 yearsThe working capital needed for project B will be released at the end of six years for investment elsewhere. Perit Industries' discountrate is 14%.Click here to view Exhibit 12B-1 and Exhibit 12B-2. to determine the appropriate discount factor(s) using tables.Required:1. Compute the net present value of Project A. (Enter negative values with a minus sign. Round your final answer to the nearestwhole dollar amount.)2 Compute the net present value of Project B. (Enter negative values with a minus sign. Round your final answer to the nearestwhole dollar amount.)3. Which investment alternative (if either) would you recommend that the company accept?1. Net present value project A2. Net present value project B3. Which investment alternative (if either) would yourecommend that the company accept?

Evaluating Project A:Initial Investment: Project A requires a total of $155,000 in upfront equipment…

Answered: Perit Industries has $155,000 to…

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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Chapter 3: Adjusting Entries for Supplies Account and Unearned Revenue Account (Fee earned meaning Revenue)Q3-1. Western Company had $500 of store supplies available at the beginning of the current year. During the year Western Company purchased $2,750 worth of store supplies. On December 31 of this year $375 worth of store supplies remained. a. Calculate the amount of Western Company's store supplies expense for the current year. (Show your calculations.)b. Prepare the journal entry to adjust the supplies account. [Hint: Draw Supplies T-account first and enter the numbers on the T-account. You can calculate how much supplies were used during the year. Supplies remained meaning the ending balance of Supplies account.]
Melton Manufacturing Ltd is considering two alternative investment projects. The first project calls for a major renovation of the company's manufacturing facility. The second involves replacing just a few obsolete pieces of equipment in the facility. The company will choose one project or the other this year, but it will not do both. The cash flows associated with each project appear below and the firm discounts project cash flows at 10%. Year Renovate Replace -$4,000,000 -$1,300,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 1,000,000 700,000 300,000 2 3 150,000 150,фро 4 5 Assignment Calculate the payback period of each project and based on this criterion, indicate which project you would recommend for acceptance. • Calculate the net present value (NP) of each project and based on this criterion, indicate which project you would recommend for acceptance. • Calculate the internal rate of return (IRR) of each project and based on this criterion, indicate which project you would…
A project will cost $100,000 and will last 5 years with no salvage value: Revenues Sales Operating Expenses: Rent Expense Depreciation Expense Miscellaneous Expense Total Expenses Net Income $70,000 $30,000 10,000 8,000 48,000 $22,000 Instructions a. Calculate the expected annual rate of return on this project showing calculations to support your answer. b. Calculate the cash payback on this project showing calculations to support your answer.
Flounder Manufacturing Company is considering three new projects, each requiring an equipment investment of $23,800. Each project will last for 3 years and produce the following cash flows. Year 1 2 3 Total AA $7,600 $10,300 9,600 15,600 (a) $32,800 BB Payback period 10,300 Click here to view PV tables. 10,300 Most desirable $30,900 The salvage value for each of the projects is zero. Flounder uses straight-line depreciation. Flounder will not accept any project with a payback period over 2.2 years. Flounder's minimum required rate of return is 12%. Least desirable CC $11,600 10,600 9,600 Compute each project's payback period. (Round answers to 2 decimal places, e.g. 52.75.) $31,800 AA years BB Indicating the most desirable project and the least desirable project using this method. years CC years
Sheridan Company is considering three long-term capital investment proposals. Each investment has a useful life of 5 years. Relevant data on each project are as follows. Project Bono Project Edge Project Clayton Capital investment $172,000 $190,000 $214,000 Annual net income: Year 1 15,120 19,440 29,160 2 15,120 18,360 24,840 3 15,120 17,280 22,680 4 15,120 12,960 14,040 5 15,120 9,720 12,960 Total $75,600 $77,760 $103,680 Depreciation is computed by the straight-line method with no salvage value. The company's cost of capital is 15%. (Assume that cash flows occur evenly throughout the year.) Click here to view the factor table. (a) × Your answer is incorrect. Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.) Project Bono 11.38 years Project Edge 9.77 years Project Clayton 7.34 years
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Mike's landscaping is considering a new 4-year project. The necessary fixed assets will cost $157,000 and be depreciated on a 3-year MACRS and have no salvage value. The MACRS percentages each year are 33.33 percent, 44.45 percent, 14.81 percent, and 7.41 percent, respectively. The project will have annual sales of $98,000, variable costs of $27,400, and fixed costs of $12,000. The project will also require net working capital of $2,600 that will be returned at the end of the project. The company has a tax rate of 21 percent and the project's required return is 10 percent. What is the net present value of this project?
Please help me
Iggy Company is considering three capital expenditure projects. Relevant data for the projects are as follows. Project Investment AnnualIncome Life ofProject 22A $243,600 $17,130 6 years 23A 271,500 20,700 9 years 24A 280,600 15,700 7 years Annual income is constant over the life of the project. Each project is expected to have zero salvage value at the end of the project. Iggy Company uses the straight-line method of depreciation.(a) Determine the internal rate of return for each project. (Round answers 0 decimal places, e.g. 13%. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Project Internal Rate ofReturn 22A % 23A % 24A % If Iggy Company’s required rate of return is 11%, which projects are acceptable?
Vaughn Company is considering two capital investment proposals. Estimates regarding each project are provided below- Project Soup Project Nuts Initial investment $390870 $600000 Annual net income 27000 45100 Net annual cash 90900 142000 inflow Estimated useful 4 years 5 years life Salvage value The cash payback period for Project Soup is

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