Rogers Inc.is considering investing $320,000 in hardware and software to develop a business-to-business (B2B) portal. The company expects the portal to save $40,000 each year for seven years of its useful life. Please figure out the payback period. b) AND its accounting rate return
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Rogers Inc.is considering investing $320,000 in hardware and software to develop a business-to-business
(B2B) portal. The company expects the portal to save $40,000 each year for seven years of its useful life.
- Please figure out the payback period. b) AND its accounting
rate return
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- 1. A consulting firm is considering the purchase of a new computer system for their enterprise management needs. A vendor has quoted a purchase price of $240,000. The consulting firm plans to borrow one-fourth of the purchase price from a bank at 8% compounded annually. The loan is to be repaid in equal annual payments over a six year period. The remainder of the purchase price is available through other funding sources (e.g. not a loan or money that must be repaid). The time. computer system is expected to last eight years and has a salvage value of $8,000 at that During the 8-year period, the consultant firm also expects to pay a technician $25,000 per year to maintain the system but will also save an estimated $55,000 per year through increased efficiencies in operations. The consulting firm project manager has determined that a MARR of 12%/year should be used to evaluate this investment project. What is the external rate of return for the investment project? Should the new computer…Galvanized Products is considering the purchase of a new computer system for its enterprise data management system. The vendor has quoted a purchase price of $100,000. Galvanized Products is planning to borrow one-fourth of the purchase price from a bank at 15% compounded annually. The loan is to be repaid using equal annual payments over a 3-year period. The computer system is expected to last 5 years and has a salvage value of $5,000 at that time. Over the 5-year period, GalvanizedProducts expects to pay a technician $25,000 per year to maintain the system but will save $55,000 per year through increased efficiencies. Galvanized Products uses a MARR of 18%/yr to evaluate investments. Solve a. What is the external rate of return of this investment? b. What is the decision rule for judging the attractiveness of investments based on external rate of return? c. Should the new computer system be purchased?A small northern California consulting firm wants to start a recapitalization pool for replacement of network servers. If the company invests $14,000 at the end of year 1 but decreases the amount invested by 5% each year, how much will be in the account 5 years from now? Interest is earned at a rate of 12% per year. Five years from now, the account will have $.
- Cisco is considering the development of a wireless home networking appliance, called HomeNet. The company expects to sell 300000 units per year over the project's life at an expected wholesale price of 170. Actual production will be outsourced at a cost of 93 per unit. Additionally, the company will spend $21000 in interest expense each year towards financing the project. In year 1, the firm must increase its accounts receivable by $854000, which will return to regular levels at the end of the project. The company spent $285000 last year on software to develop the router. $101.8 million of new equipment will be purchased and then depreciated using the straight-line method over a 10-year life. They expect the market value of the equipment to depreciate at 2.8% per year. The project is expected to end in year 7. The current tax rate is 21%. Use this rate for both income tax rate and the capital gains rate. The WACC for the company is 12.4%.áWhat is the NPV of the project? $21,604,034.24…Galactic is contemplating the purchase of a new $570,000 computer-based order entry system. The system will be depreciated using the MACRS 5-year depreciation schedule. It will be worth $70,000 at the end of the project in 6 years. You will save $40,000 before taxes per year in order processing costs, and you will be able to reduce net working capital by $30,000. You will also increase sales by $100,000 per year for the first year and this number will increase by 3% per year. If the tax rate is 30 percent, and the required rate of return is 10%, what is the NPV of this project?Sauer Food Company has decided to buy a new computer system with an expected life of three years. The cost is $290,000. The company can borrow $290,000 for three years at 11 percent annual interest or for one year at 9 percent annual interest. Assume interest is paid in full at the end of each year. a. How much would Sauer Food Company save in interest over the three-year life of the computer system if the one-year loan is utilized and the loan is rolled over (reborrowed) each year at the same 9 percent rate? Compare this to the 11 percent three-year loan. 9 percent loan 11 percent loan Interest savings Interest b. What if interest rates on the 9 percent loan go up to 14 percent in year 2 and 17 percent in year 3? What would be the total interest cost compared to the 11 percent, three-year loan? Fixed-rate 11% loan Variable-rate loan Additional interest cost Interest
- Cohen Brothers Fixers R Us is a small company specializing in emergency home repairs. They are considering expanding into a domestic emergency consultation business. Doing so will involve investing $1 million in licensing, recruiting, training, advertising, and a phone call answering center. A staff of 20 licensed clinical social workers will be hired to perform emergency counseling. If the service is well-received (probability 60%) then cash flows will be $500,000 per year for 3 years. If the service is not well-received (probability 40%) then the cash flows will be $210,000 per year for 3 years. Calculate the expected NPV of the project. Cohen's discount rate is 10% -$40,953 -$45,049 -$49,554 -$54,509…The engineering team at Manuel's Manufacturing, Inc., is planning to purchase an enterprise resource planning (ERP) system. The software and installation from Vendor A costs $410,000 initially and is expected to increase revenue $110,000 per year every year. The software and installation from Vendor B costs $290,000 and is expected to increase revenue $95,000 per year. Manuel's uses a 4- year planning horizon and a 12.0% per year MARR. Part a 8 Your answer is incorrect. What is the present worth of each investment? Vendor A: $ Vendor B: $ Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is ±20.Informics, Inc. is building fifth-generation software. The software quality initiatives will cost $26,800, and $37,000 is for maintenance of quality initiatives. The revenues from the initiatives: What is the cost of software quality? What is the software quality net present value? What is the return on software quality? Year Cash Flow O ($22,500) 1 51,000 2 96,250 3 96,250 4 96,250 5 96,250
- An entrepreneur is considering opening up a restaurant off of a popular biking trail. The start-up cost to open this restaurant off this popular biking trail is expected to be $350,000. The new restaurant is expected to lose $100,00 the first 2 years before becoming profitable in year three with a positive $75,000 cash flow. After becoming profitable, the cash flows are expected to grow at 20% per year for 5 years. What return can this entrepreneur expect given these estimates and should this project be accepted or rejected? You will need to calculate the MIRR and Payback Period for this proposed project in order to explain if this project should be accepted or rejected. Use MIRR and Payback Period to explain your reasoning for accepting or rejecting this project proposalYour organization is planning to purchase a new office building four years from now. The building will cost $8,000,000, have a useful life of 30 years, and have no salvage value. If your organization currently has put aside $1,500,000 in an investment account with an annual interest rate of 4.8%, how much additional money must your organization deposit into the account each month in order to be able to purchase the building in four years? (select one)Master Lock is evaluating whether to replace an older laser engraving machine to inscribe logos with a new machine. – The initial investment to acquire the machine is $380,000. – The machine has an expected useful life of 5 years. – The new machine would generates annual cost savings of $100,0000 (cash flows) one each of the five years. – The discount rate (or required rate of return) is 8%. • What’s the NPV (assume no taxes or inflation)?
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