Sunland Oil Company is considering investing in a new oil well. It is expected that the oil well will increase annual revenues by $133.605 and will increase annual expenses by $90,000 including depreciation. The oil well will cost $450,000 and will have a $9,000 salvage value at the end of its 10-year useful life. Calculate the annual rate of return. (Round answer to O decimal places, eg. 13 %)

Sunland Oil Company is considering investing in a new oil well. It is expected that the oil well will increase annual revenues by $133.605 and will increase annual expenses by $90,000 including depreciation. The oil well will cost $450,000 and will have a $9,000 salvage value at the end of its 10-year useful life. Calculate the annual rate of return. (Round answer to O decimal places, eg. 13 %)

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Can you show me how this is done? Ava Company projects an increase in net income of $34,766 each year for the next five years if it invests $140,145 in new equipment. The equipment has a five-year life and an estimated salvage value of $5,273. What is the annual rate of return on this investment? Round your answer to 2 decimal places. Answer as a percentage. For example, if your calculation is .1056, your answer would be 10.56 Selected Answer: 8,866 Correct Answer: 24.81 ± 0.01
Mini Inc. is contemplating a capital project costing $47,019. The project will provide annual cost savings of $18,501 for 3 years and have a salvage value of $3,000. The company's required rate of return is 10%. The company uses straight-line depreciation. Present Value of an Annuity of 1 Period Present Value of 1 at 10% Present Value of an Annuity of 1 at 10% 1 .909 .909 .826 1.736 3 .751 2.487 Calculate the Net Present Value. Round your answer to 2 decimal places.
Swift Oil Company is considering investing in a new oil well. It is expected that the oil well will increase annual revenues by $139,070 and will increase annual expenses by $82,000 including depreciation. The oil well will cost $429,000 and will have a $10,000 salvage value at the end of its 10-year useful life. Calculate the annual rate of return. (Round answer to O decimal places, e.g. 13%.) Annual rate of return %
Ibuku Property Development Company is refurbishing a 200-unit condominium complex at a cost of $5,250,000. It expects that this will lead to expected annual after tax cash flows of $900,000 for the next ten years. What internal rate of return can the company earn from this project?
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* Your answer is incorrect. Sheridan Oil Company is considering investing in a new oil well. It is expected that the oil well will increase annual revenues by $122,625 and will increase annual expenses by $90,000 including depreciation. The oil well will cost $424,000 and will have a $11,000 salvage value at the end of its 10-year useful life. Calculate the annual rate of return. (Round answer to O decimal places, e.g. 13%.) Annual rate of return 20 %
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Pierre's Hair Salon is considering opening a new location in French Lick, California. The cost of building a new salon is $270,000. A new salon will normally generate annual revenues of $65,850, with annual expenses (including depreciation) of $39,900. At the end of 15 years the salon will have a salvage value of $76,000. Calculate the annual rate of return on the project. Annual rate of return %
Sheridan's Hair Salon is considering opening a new location in French Lick, California. The cost of building a new salon is $261,000. A new salon will normally generate annual revenues of $63,650, with annual expenses (including depreciation) of $40,200. At the end of 15 years, the salon will have a salvage value of $74,000. Calculate the annual rate of return on the project. Annual rate of return eTextbook and Media Save for Later % Attempts: 0 of 7 used Submit Answer
Sheridan Company is considering a long-term investment project called ZIP. ZIP will require an investment of $123,200. It will have a useful life of 4 years and no salvage value. Annual revenues would increase by $79.240, and annual expenses (excluding depreciation) would increase by $39,200. Sheridan uses the straight-line method to compute depreciation expense. The company's required rate of return is 12%. Compute the annual rate of return. Annual rate of return Determine whether the project is acceptable? the project. eTextbook and Media Save for Later Attempts: 0 of 3 used Submit Answer
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
Stevie’s Sporting Goods is considering investing $33,000 in a new machine. The machine is expected to last five years and have a salvage value of $8,000. Annual after-tax net cash inflow from the machine is expected to be $7,000. Calculate the accounting rate of return (aka the unadjusted rate of return). (Enter your answer as a percentage rounded to one decimal place, but do NOT include the percentage sign. For example: 5 divided by 35 is 0.142857, which you would enter as “14.3”)

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