A3 Required informationA potential investment has a cost of $395,000 and a useful life of 6 years. Annual cashsales from the investment are expected to be $213,180 and annual cash operating expensesare expected to be $83,980. The expected salvage value at the end of the investment's life is$35,000. The company has a before-tax discount rate of 17%.Required:Calculate the following. (Round dollar amounts to the nearest whole dollar and IRR to one decimal place (i.e.0555.5%). Enter negative amounts with a minus sign.)Annual PMT of the investmentFV of the investmentNPV of the investmentIRR of the investment$696

Net present value (NPV) is the difference between the present value of cash inflows and the present…

Answered: Required information A potential…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 8P

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Gardner Denver Company is considering the purchase of a new piece of factory equipment that will cost $420,000 and will generate $95,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further Instructions on internal rate of return in Excel, see Appendix C.
Consolidated Aluminum is considering the purchase of a new machine that will cost $308,000 and provide the following cash flows over the next five years: $88,000, 92,000, $91,000, $72,000, and $71,000. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return in Excel, see Appendix C.
A potential investment has a cost of $395,000 and a useful life of 6 years. Annual cash sales from the investment are expected to be $267,382 and annual cash operating expenses are expected to be $105,332. The expected salvage value at the end of the investment's life is $50,000. The company has a before-tax discount rate of 17%. Required: Calculate the following. (Round dollar amounts to the nearest whole dollar and IRR to one decimal place (i.e. .055 = 5.5%). Enter negative amounts with a minus sign.) Annual PMT of the investment FV of the investment NPV of the investment IRR of the investment $ LA $ $ LA %
3.
Required information A potential investment has a cost of $455,000 and a useful life of 7 years. Annual cash sales from the investment are expected to be $195,112 and annual cash operating expenses are expected to be $76,862. The expected salvage value at the end of the investment's life is $35,000. The company has a before-tax discount rate of 17%. Required: Calculate the following. (Round dollar amounts to the nearest whole dollar and IRR to one decimal place (.e. .055 = 5.5%). Enter negative amounts with a minus sign.) Annual PMT of the investment FV of the investment NPV of the investment IRR of the investment %
Required information A potential investment has a cost of $395,000 and a useful life of 7 years. Annual cash sales from the investment are expected to be $237,270 and annual cash operating expenses are expected to be $93,470. The expected salvage value at the end of the investment's life is $35,000. The company has a before-tax discount rate of 16%. Required: Calculate the following. (Round dollar amounts to the nearest whole dollar and IRR to one decimal place (i.e. .055 = 5.5%). Enter egative amounts with a minus sign.) Annual PMT of the investment V of the investment NPV of the investment RR of the investment %
(J)
D1. Answer ASAP. Please complete all parts correctly.
A computer system can be purchased for $18,000. The operating costs will be $10,000 per year, and the useful life is expected to be 5 years with a $5,000 salvage value at that time. The present annual sales volume should increase by $16,000 as a result of acquiring the system. Assume the company's tax rate is 50%. Using a straight-line deprecation method, compute annual taxes and IRR for the investment. Rework the previous problem assuming (i) the system's taxable life is 8 years with a salvage value of $2,000, but that (ii) the company still salvages the system after 5 years for $5,000. Describe how this may affect cash flow in the forthcoming years.
A company purchase a piece of manufacturing equipment for an additional income. The expected income is $4,500 per semester. Its useful life is 9 years. Expenses are estimated to be $500 semiannually. If the purchase price is $44,000 and there is a salvage value of $4,500, what is the prospective rate of return (IRR) of this investment? The IRR is compounded semiannually. O a. IRR = 3% semiannual O b. IRR = 12% semiannual O c. IRR = 8.02% semiannual O d. IRR = 6% semiannual
Blue Spruce Company is considering investing in new equipment that will cost $1,433,000 with a 10-year useful life. The new equipment is expected to produce annual net income of $25,300 over its useful life. Depreciation expense, using the straight-line rate, is $143.300 per year. Compute the cash payback period. (Round answer to 1 decimal place, e.g. 15.2.) Cash payback period years
Bartlett Car Wash Company is considering the purchase of a new facility. It would allow Bartlett to increase its net income by $106,439 per year. Other information about this proposed project follows: Initial investment $ 514,200 Useful life 10 years Salvage value $ 45,000 Assume straight line depreciation method is used. Required: 1. Calculate the accounting rate of return for Bartlett. Note: Round your percentage answer to 2 decimal places. 2. Calculate the payback period for Bartlett. Note: Round your answer to 2 decimal places. 1. Accounting Rate of Return 2. Payback Period % years

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