Project BonoProject EdgeProject ClaytonCapital investment$160,000$190,000$206,000Annual net income:Year 115,12019,44029,160215,12018,36024,840315,12017,28022,680415,12012,96014,040515,1209,72012,960Total$75,600$77,760$103,680Depreciation is computed by the straight-line method with no salvage value. The company's cost of capital is 15%. (Assume that cashflows occur evenly throughout the year.)Click here to view PV table.(a)Your AnswerCorrect Answer (Used)Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.)(b)Project Bono3.40yearsProject Edge3.41yearsProject Clayton3.10years* Your answer is incorrect.Compute the net present value for each project. (Round answers to O decimal places, e.g. 125. If the net present value is negative, useeither a negative sign preceding the number eg -45 or parentheses eg (45). For calculation purposes, use 5 decimal places as displayed inthe factor table provided.)Project Edge-109322$-135616Project BonoNet present value$Project Clayton-132451

The problem involves the different capital budgeting techniques used by investors to assess the…

Answered: Project Bono Project Edge Project…

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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Initial Equipment Cost, $M 12.0 Depreciation, % 75.00% Current Equipment Value, $M 4.0 Marginal Tax Rate 40.00% Current Book Value, $M ? Profit/Loss On Sale, $M ? Taxes Owed (Saved) On Sale, $M ? After-Tax Net Salvage Value, $M ?
This year, Industrial Consolidated reported depreciation expense of $85,000 on its income statement while reporting Net Fixed Assets of $1,200,000 on its balance sheet. Last year, it reported depreciation expense of $110,000 and net fixed assets of $1,350,000. What was Net Capital Spending this year? Question 6 options: ($40,000) $70,000 $45,000 $260,000 ($65,000)
Problem An asset used in a four-year project falls in the five-year MACRS class for tax purposes. The asset has an acquisition cost of $6,100,000 and will be sold for $1,300,000 at the end of the project. If the tax rate is 27%, what is the after-tax salvage value of the asset? MACRS Depreciation: 2 3 4 5 6 7 8 3 year class 33.33% 44.45% 14.81% 7.41% 5 year class 20.00% 32.00% 19.20% 11.52% 11.52% 5.76% 7 year class 14.29% 24.49% 17.49% 12.49% 8.93% 8.92% 8.93% 4.46%
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Net Present Value—Unequal Lives Bunker Hill Mining Company has two competing proposals: a processing mill and an electric shovel. Both pieces of equipment have an initial investment of $724,991. The net cash flows estimated for the two proposals are as follows: Net Cash Flow Year Processing Mill Electric Shovel 1 $221,000 $276,000 2 197,000 256,000 3 197,000 236,000 4 157,000 243,000 5 119,000 6 99,000 7 86,000 8 86,000 The estimated residual value of the processing mill at the end of Year 4 is $280,000. Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279 8 0.627 0.467 0.404 0.327 0.233 9 0.592 0.424 0.361 0.284 0.194 10 0.558 0.386 0.322 0.247 0.162…
Agape Mining Inc. is evaluating a project with the following cash flows: Year 0 1 2 3 4 5 6 7 8 Cashflow -$380,000,000.00 $79,000,000.00 $82,000,000.00 -$53,000,000.00 $175,000,000.00 $195,000,000.00 -$40,000,000.00 $188,000,000.00 $71,000,000.00 Construct a spreadsheet and calculate the following (the required rate of return is 11%): o Payback period o Discounted payback period o Internal rate of return (IRR) Modified IRR o . The discounting approach The reinvestment approach The combination approach o Net present value (NPV) Based on your analysis, should the company take the project? Why?
The amount of the average investment for a proposed investment of $147,000 in a fixed asset with a useful life of 4 years, straight-line depreciation, no residual value, and an expected total net income of $30,400 for the 4 years is Oa. S7,600 Ob. S30,400 Oc. $36,750 Od, S73,500
Input area: Initial investment Pretax salvage value Cost savings per year Cost savings per year $ Working capital reduction Annual depreciation charge Aftertax salvage value 69 69 69 SA SA SA SA $ 535,000 $ 30,000 $ 150,000 100,000 $ 60,000 $ 107,000 $ 22,800 Tax rate Required return *Depreciation straight-line over life 24% 11% 5 Output area: NPV 150,000 cost savings $ 100,000 Year Cash flow Year 0 $ (475,000) 0 $ 1 139,680 1 2 139,680 234L 139,680 139,680 5 102,480 Accept/Reject Required pretax cost savings: NPV w/o OCF Required OCF OCF less dep. tax shield Cost savings $ 69 69 69 $ (497,076.39) $ 134,494.11 108,814.11 2345 cost savings Cash flow (475,000) 101,680 101,680 101,680 101,680 64,480
Suppose the subject's net operating income is $100,000, the direct capitalization rate of the land is 3.5%, the direct capitalization rate of the improvements is 6.0%, and the value of the improvements is $750,000. What is the overall value of the subject property (round to the nearest thousand)? A. $2,321,000 ⒸB. $2,036,000 OC. $1,571,000 OD.$1,286,000
Capitalized cost and Amortization Question: Conduits made of steel First cost - 88550 Estimated life - 36 years Scrap value - none Annual maintenance - 215 Interest - 0.062 What is the capitalized cost?

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