Sergei Company purchases land for $4,000,000 from which it expects to extract 2,000,000 tons of coal. The estimated residual value is $400,000, and it mines 80,000 tons of coal in the first year. The unit depletion rate used to determine yearly depletion will be 1. $1.80 per ton. 2. $2.00 per ton. 3. $18.00 per ton. 4. $20.00 per ton.
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- Vaughn Company is considering a capital investment of $378,400 in additional productive facilities. The new machinery is expected to have a useful life of 6 years with no salvage value. Depreciation is by the straight-line method. During the life of the investment, annual net income and net annual cash flows are expected to be $18,920 and $86,000, respectively. Vaughn has an 7% cost of capital rate, which is the required rate of return on the investment. (a1) Compute the cash payback period. (Round answer to 2 decimal places, e.g. 2.25.) Your answer is correct. Cash payback period (a2) eTextbook and Media (b) Your answer is correct. Annual rate of return Compute the annual rate of return on the proposed capital expenditure. (Round answer to 2 decimal places, e.g. 2.25%.) eTextbook and Media 4.4 years Net present value $ 10 Attempts: 1 of 5 used % Attempts: 1 of 5 used Using the discounted cash flow technique, compute the net present value. (Round present value factor calculations to 5…Ten investors invested an amount of P 75 million each for coal mining at Sierra Madre Mountain. It is expected that the mine contains 5, 000, 000 tons of coal ores and due to latest technology, it can mine 125, 000 tons of unprocessed ores. The management expects an annual expenses of P 35 million, an annual miscellaneous expenses of P 12 million and milling, drilling and other procedural expenses yearly costs P 815 per ton of unprocessed ores of coal. After such process, 85% of the coal ores produces an income of P 1, 750 per ton. a) Find the annual depletion cost of the mine. b) Ten years after operation, the management annual expenses decreases an amount of P 4 million, annual miscellaneous expenses becomes P13 million and procedural expenses becomes P 920 per ton of unprocessed ores. After procedural process, 75% of unprocessed ores produces an income of P 1, 850 per ton. What would then be its average depletion cost annually for the remaining years of the mine?Prime Petroleum Inc. is considering an acquisition of a new production facility in order to expand production ofit its main product, a gasoline additive Gas Gain. The cost of construction (first cost) is $9,000,000. The annualoperating cost is projected to be $700,000. The facility will be liquidated in 24 years, resulting in a salvage valueinflow of $2,000,000. Assuming MARR of 4%, compute the annual worth of the project's cash flows, and type inyour answer expressed as a cost (do not include negative sign with your answer
- 1. Batinah Water Desalination project is a 15 year project. The project manager estimated that net initial investment expend in year zero is 100 million rials. The investment will be depreciated on a straight line basis to a 10 million book value by enc the project. During the operating phase revenue per year is 35 million and expense per year is estimated to be 20 million ria per year for 15 years. In year 15 net salvage value is estimated to be 15 million. WACC is estimated to be 10%. Tax Rate 209 1. Calculațe annual depreciation expenses 2. Calculate cash flow after tax CFAT in year 5 3. Calculate net present value. 4. Is it a good project Only final answers are requiredAn injection molding system has a first cost of $200,000 and an annual operating cost of $69,000 in years 1 and 2, increasing by $5,500 per year thereafter. The salvage value of the system is 25% of the first cost regardless of when the system is retired within its maximum useful life of 5 years. Using a MARR of 11% per year, determine the ESL and the respective AW value of the system. The ESL is ]year(s) and AW value of the system is $|Vaughn Company is considering a capital investment of $378,400 in additional productive facilities. The new machinery is expected to have a useful life of 6 years with no salvage value. Depreciation is by the straight-line method. During the life of the investment, annual net income and net annual cash flows are expected to be $18,920 and $86,000, respectively. Vaughn has an 7% cost of capital rate, which is the required rate of return on the investment. (a1) Compute the cash payback period. (Round answer to 2 decimal places, e.g. 2.25.) Your answer is correct. Cash payback period (a2) eTextbook and Media (b) Your answer is correct. Annual rate of return Compute the annual rate of return on the proposed capital expenditure. (Round answer to 2 decimal places, e.g. 2.25%.) eTextbook and Media Your answer is correct. 4.4 years Net present value $ 10 % Attempts: 1 of 5 used Using the discounted cash flow technique, compute the net present value. (Round present value factor calculations to…
- Pina Colada Company is considering a capital investment of $419,870 in additional productive facilities. The new machinery is expected to have a useful life of 5 years with no salvage value. Depreciation is computed by the straight-line method. During the life of the investment, annual net income and cash flows are expected to be $39,000 and $121,000, respectively. Pina Colada has a 12% cost of capital rate, which is the minimum acceptable rate of return on the investment. Click here to view PV tables. (a) Compute the annual rate of return. (Round answer to 1 decimal place, e.g. 15.5.) Annual rate of return. % Compute the cash payback period on the proposed capital expenditure. (Round answer to 2 decimal places, e.g. 15.25.) Cash payback period yearsThe first cost of a machine is $375,000 with a 7 years life. Annual interest rate is 20% and the expected annual maintenance cost of this machine is $15,000. For each case in the following, calculate the double declining balance depreciation payments if its salvage value is A) $85,000 B) $10,000 C) $35,575.$500,000 is invested in equipment having a negligible salvage value regardless of the number of years used. O&M costs equal $125,000 the first year and increase $25,000 per year. Based on a MARR of 10%, what are the optimum replacement interval and minimum EUAC?
- Pique Corporation plans to purchase a new machine for $300,000. Management estimates that with the machine cash flows from sales will increase by $160,000 each year for the next 5 years. Expenses to generate the additional sales include direct materials, direct labor, and factory overhead (excluding depreciation) totaling $70,000 per year. The firm uses straight-line depreciation with no terminal disposal value for all depreciable assets. The new machine has an expected salvage value of zero at the end of the project. Pique's combined income tax rate is 20%. Management requires a minimum after-tax rate of return of 8% on all investments.a. Calculate the Net Present Value (NPV) for this project.Perkins, Inc., is considering an investment of $378,000 in an asset with an economic life of 5 years. The firm estimates that the nominal annual cash revenues and expenses at the end of the first year will be $258,000 and $83,000, respectively. Both revenues and expenses will grow thereafter at the annual inflation rate of 2 percent. The company will use the straight-line method to depreciate its asset to zero over five years. The salvage value of the asset is estimated to be $58,000 in nominal terms at that time. The one-time net working capital investment of $16,500 is required immediately and will be recovered at the end of the project. The tax rate is 23 percent. What is the project's total nominal cash flow from assets for each year? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to the nearest whole dollar, e.g., 32.) Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 $ $ $ 6A6A $ $ $ Cash Flow -394,500 149,470 152,165…Sunland is considering the purchase of equipment costing $147000. The equipment has a 12- year useful life, has an estimated salvage value of zero, and is expected to generate $29000 in annual cash flows. The company has a 10% required rate of return and uses the straight-line depreciation method. The accounting rate of return on this equipment is closest to 11.4%. 10.0%. 21.1%. 9.7%. O O O O