Gardner Denver Company is considering the purchase of a new piece of factory equipment that will cost $360,500 and will generate $100,000 per year for 5 years. Calculate the IRR for this piece of equipment.(Click here to see present value and future value tables)fill in the blank 1% Present Value of $1 Table1Factor =(1 + i)"Rate (i)1%2%3%5%8%10%12%15%20%10.9900.9800.9710.9520.9260.9090.8930.8700.83320.9800.9610.9430.9070.8570.8260.7970.7560.6940.9710.9420.9150.8640.7940.7510.7120.6580.57940.9610.9240.8880.8230.7350.6830.6360.5720.4820.9520.9060.8630.7840.6810.6210.5670.4970.4026.0.9420.8880.8370.7460.6300.5640.5070.4320.33570.9330.8710.8130.7110.5830.5130.4520.3760.2798.0.9240.8530.7890.6770.5400.4670.4040.3270.2339.0.9140.8370.7660.6450.5000.4240.3610.2840.194100.9050.8200.7440.6140.4630.3860.3220.2470.162110.8960.8040.7220.5850.4290.3500.2870.2150.135120.8880.7880.7010.5570.3970.3190.2570.1870.112130.8790.7730.6810.5300.3680.2900.2290.1630.093140.8610.7580.6610.5050.3400.2630.2050.1410.078150.8610.7430.6420.4810.3150.2390.1830.1230.065160.8530.7280.6230.4580.2920.2180.1630.1070.054170.8440.7140.6050.4360.2700.1980.1460.0930.045180.8360.7000.5870.4160.2500.1800.1300.0810.038190.8280.6860.5700.3960.2320.1640.1160.0700.031200.8200.6730.5540.3770.2150.1490.1040.0610.026Present Value of $1 Table.Period (n) Gardner Denver Company is considering the purchase of a new piece of factory equipment that will cost $360,500 and will generate $100,000 per year for 5 years.Calculate the IRR for this piece of equipment.(Click here to see present value and future value tables)%

Present value of annuity factor: = $360,500 / $100,000 = 3.605 In present value of annuity table at…

r Denver Company is considering the purchase of a new piece of factory equipment that will cost $360,500 and will generate $100,000 per year for 5 years. Calculate the IRR for this piece of equipment. (Click here to see present value and f

r Denver Company is considering the purchase of a new piece of factory equipment that will cost $360,500 and will generate $100,000 per year for 5 years. Calculate the IRR for this piece of equipment. (Click here to see present value and f

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Concord is contemplating a capital project costing $32838. The project will provide annual cost…

A: Net present value is the difference between the present value of the initial cash outflow and the…

Q: Trek Industries purchases new machinery to replace some of its old machinery. The new machinery…

A: Simple rate of return is calculated by dividing the Net operating income by the initial investment.…

Q: Mini Inc. is contemplating a capital project costing $49,631. The project will provide annual cost…

A: Net Present Value (NPV) is a vital financial metric employed to gauge the profitability of an…

Q: BAK Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it…

A: NPV means Net present value.It is computed by deducting initial investment from present value of…

Q: Nelson Corporation is considering the purchase of a new piece of equipment. The cost savings from…

A: Cost of equipment$500,000Less: Salvage Value$130,000Depreciable Value ($500,000 -…

Q: Blossom Manufacturing, Inc., needs to purchase a new central air-conditioning system for a plant.…

A: Equivalent annual cost = (Cost of system*Cost of capital)/[1-(1+cost of capital)^-time period]…

Q: Newport Corporation is considering the purchase of a new piece of equipment. The cost savings from…

A: Cash Flow = cf = $210,000Initial Cost = i = $890,000Time = t = 6 YearsCost of Capital = r = 9%

Q: The management of a manufacturing company is planning to buy a new milling machine. The investment…

A: ERR is rate at which PV of cash outflows is equal to FV of cash inflows. In other words, rate at…

Q: Get the Correct option with calculation and explanation

A: The problem requires the determination of the after-tax cash flows of the sale of machinery. In…

Q: 1. A machine costs $250,000 to purchase and will provide $60,000 a year in benefits. The company…

A: Net present worth is the difference between the present value of the cash inflows and cash outflows.…

Q: A company is considering the purchase of a new machine for $61000. Management predicts that the…

A: Payback period of the machine means in how much years or period the initial investment amount can be…

Q: We can continue to use an existing machine at a cost of $22,500 annually (after-tax cash basis,…

A: A financial statistic called net present value (NPV) compares the present value of projected cash…

Q: A company is considering purchasing a machine for P210,000. The machine will generate an after-tax…

A: Annual cash inflow = after-tax net income + Annual depreciation expense = P20,000 + 15,000 = P35,000

Q: You are considering a manufacturing equipment that has a cost of $100,000. The equipment is expected…

A: Equivalent Savings per hour refers to amount of saving adjusted with time value factor is saved by…

Q: Need answers ASAP... A $2500 computer system can be leased for $79 per month for 3 years. After 3…

A: Monthly Interest rate = r Present Value (PV) = $2,500 Monthly lease payment = $79 Time Period = 3…

Q: The purchasing price of the second-hand bulldozer is $100,000. It will have 8 years service life…

A: The present value of all costs is divided by the present value annuity factor.

Q: The plant manager of Jurassic Industries is considering the purchase of new automated assembly…

A: Jurassic Industries purchased a new automated assembly equipment in $120,000. Expected savings is $…

Q: A machine costing $24,000 to buy and $3,500 per year to operate will save mainly labor expenses in…

A: NPV = -Initial Cost + PV (Annual Savings) Where, PV is the present value factor, and it depends on…

Q: The present value index for this investment is Oa. 0.95 Ob. 1.00 Oc. 1.05 Od. 1.25

A: Present Value Index (PVI) is the ratio of the net present value to the initial expenditure required…

Q: Mini Inc. is contemplating a capital project costing $47,019. The project will provide annual cost…

A: Net Present Value = (Annual cost savings x present value of annuity at 10%, 3 year) + (salvage value…

Q: A company plans to invest $12,000 dollars on new equipment with an 8 year life to reduce operating…

A: The NPV of a project is used to measure its profitability. It discounts the cash flows to the…

Q: Acme Company plans to replace some obsolete equipment with new equipment that costs $232,000 and has…

A: To calculate the simple rate of return (SRR) on the investment in the new equipment for Acme…

Q: QUESTION 1 A new machine is to be purchased for $200,000. The company believes it will generate…

A: Net present value (NPV) is the value of all the cash flow of the investment (positive and negative)…

Q: A manufacturing company plans to buy a new piece of equipment for $70,000 which is expected to last…

A: The present value is the value of the sum received at time 0. It is the current value of the sum…

Question

Gardner Denver Company is considering the purchase of a new piece of factory equipment that will cost $360,500 and will generate $100,000 per year for 5 years. Calculate the IRR for this piece of equipment.

(Click here to see present value and future value tables)

fill in the blank 1%

Present Value of $1 Table
1
Factor =
(1 + i)"
Rate (i)
1%
2%
3%
5%
8%
10%
12%
15%
20%
1
0.990
0.980
0.971
0.952
0.926
0.909
0.893
0.870
0.833
2
0.980
0.961
0.943
0.907
0.857
0.826
0.797
0.756
0.694
0.971
0.942
0.915
0.864
0.794
0.751
0.712
0.658
0.579
4
0.961
0.924
0.888
0.823
0.735
0.683
0.636
0.572
0.482
0.952
0.906
0.863
0.784
0.681
0.621
0.567
0.497
0.402
6.
0.942
0.888
0.837
0.746
0.630
0.564
0.507
0.432
0.335
7
0.933
0.871
0.813
0.711
0.583
0.513
0.452
0.376
0.279
8.
0.924
0.853
0.789
0.677
0.540
0.467
0.404
0.327
0.233
9.
0.914
0.837
0.766
0.645
0.500
0.424
0.361
0.284
0.194
10
0.905
0.820
0.744
0.614
0.463
0.386
0.322
0.247
0.162
11
0.896
0.804
0.722
0.585
0.429
0.350
0.287
0.215
0.135
12
0.888
0.788
0.701
0.557
0.397
0.319
0.257
0.187
0.112
13
0.879
0.773
0.681
0.530
0.368
0.290
0.229
0.163
0.093
14
0.861
0.758
0.661
0.505
0.340
0.263
0.205
0.141
0.078
15
0.861
0.743
0.642
0.481
0.315
0.239
0.183
0.123
0.065
16
0.853
0.728
0.623
0.458
0.292
0.218
0.163
0.107
0.054
17
0.844
0.714
0.605
0.436
0.270
0.198
0.146
0.093
0.045
18
0.836
0.700
0.587
0.416
0.250
0.180
0.130
0.081
0.038
19
0.828
0.686
0.570
0.396
0.232
0.164
0.116
0.070
0.031
20
0.820
0.673
0.554
0.377
0.215
0.149
0.104
0.061
0.026
Present Value of $1 Table.
Period (n)

Gardner Denver Company is considering the purchase of a new piece of factory equipment that will cost $360,500 and will generate $100,000 per year for 5 years.
Calculate the IRR for this piece of equipment.
(Click here to see present value and future value tables)
%

Definition Definition Discount rate of a project wherein its net present value equals zero. Internal rate of return equates the present value of future cash flows with the initial investments. Internal rate of return helps to determine nominal cash flows.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

MAG Industrial needs 1000 square meters of storage space. Purchasing land for $80,000 and then erecting a temporary metal building at $70 persquare meter is one option. The president hopes to sell the land for $100,000 and the building for $20,000 after 3 years. Another option is to lease space for $30 per square meter per year payable at the beginning of each year. The MARR is 20%. Perform a present worth analysis of the building and leasing alternatives to determine the sensitivity of the decision if the construction cost decreases by 10% to $63 per square meter and the lease cost remainsat $30 per square meter per year.
A company wants to purchase a piece of equipment that costs $18,000. In 8 years, that same piece of equipment is expected to have a salvage value of $5,000. The estimated annual maintenece cost is $1,000 in the first year, but is expected to increase by $300 each year thereafter. What is the present worth of the project, using a 10% interest rate.
Rakesh
Nelson Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in cash flow of $105,000. The equipment will have an initial cost of $420,000 and have a 5 year life. If the salvage value of the equipment is estimated to be $80,000, what is the payback period? Ignore income taxes. Multiple Choice 3.24 years 4.00 years 4.76 years 7.00 years
Please tutor help me with this question
the to be In 2 years, XYZ is considering buying a new, high efficiency interception system. The new system would be purchased today for $46,500.00. It would be depreciated straight-line to $0 over 2 years. system would be sold for an after-tax cash flow of $14,700.00. Without the system, costs are expected to be $100,000.00 in 1 year and $100,000.00 in 2 years. With the system, $79,700.00 in 1 year and $67,000.00 in 2 years. If the tax rate is 48.30% and the cost of capital is 8.30%, what is the net present value of the new interception system project? costs are expected O $13344.34 (plus or minus $50) O $14279.01 (plus or minus $50) O $10213.60 (plus or minus $50) O $11718.49 (plus or minus $50) None of the above is within $50 of the correct answer
Consider a machine purchased one year ago for $18,000. The machine is being depreciated $3,000 per year throughout a six-year period. Its current market value is $6,000, and the expected market value of the machine one year from now is $4,000. If the interest rate is 10%, the expected cost of holding the machine during the next year is $___.
The Adderley Corporation is considering investing in a new machine that has an estimated life of three years. The cost of the machine (in 5 millions) is $500 and the machine will be depreciated straight line over its three-year life to a residual value of $0. The machine will result in sales of 300 million widgets in year 1 with future sales estimated to grow by 10% per year. The price per widget that Adderley will charge its customers is $19 and is to remain constant over the three years. The widgets have a cost per unit to manufacture of $7 each. Installing the machine and the resulting increase in manufacturing capacity will require an increase in various net working capital accounts. It is estimated that the company will need to hold 3% of its annual revenues in cash, 4% of its annual revenues in accounts receivable, 13% of its annual revenues in inventory, but will also benefit from trade financing (ie, accounts payable) equal to 6% of its annual revenues. The firm is in the 28%…
Riordan Manufacturing is considering an investment in new equipment that will produce equal annual cash flows of $52,000 for 8 years and has a net present value of $94,182. The initial investment is $247,000, the useful life is 8 years, and the equipment's salvage value after 8 years is $26,000. What is the equipment's profitability index? Round your answer to two decimal places. 6.56 1.38 4.75 1.81
Bunnings Ltd is considering to invest in one of the two following projects to buy a new equipment. Each equipment will last 5 years and have no salvage value at the end. The company’s required rate of return for all investment projects is 8%. The cash flows of the projects are provided below. Equipment 1 Equipment 2 Cost $186000 $195000 Future Cash Flow Year 1 86000 97000 Year 2 93000 84000 Year 3 83000 86000 Year 4 75000 75000 Year 5 55000 63000 Required:a) Identify which option of equipment should the company accept based on Profitability Index? b) Identify which option of equipment should the company accept based on discounted pay back method if the payback criterion is maximum 2 years?
JT Engineering wants to buy a machine that costs $158,000, has a 20-year life, and a $12,000 salvage value. Annual cash inflows are $66,000 and annual cash outflows are $41,000. JT requires a 14% return, which has an annuity present value factor of 6.6231 and a single future amount present value factor of 0.0728. What is the NPV of this purchase to the nearest dollar? Select answer from the options below
Please help me