Suppose your company has a building worth $467 million. Because it is located in a high-risk area for natural disasters, the probability of a total loss in any particular year is 2.350 %. What is your company's expected loss per year on this building? (Enter the answer in dollars, not millions of dollars. Input the amount as positive value. Omit $ sign in your response.) Expected loss 2$

Suppose your company has a building worth $467 million. Because it is located in a high-risk area for natural disasters, the probability of a total loss in any particular year is 2.350 %. What is your company's expected loss per year on this building? (Enter the answer in dollars, not millions of dollars. Input the amount as positive value. Omit $ sign in your response.) Expected loss 2$

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 7EA: A mini-mart needs a new freezer and the initial Investment will cost $300,000. Incremental revenues,...

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9. Lt. Dan Corporation invested S$80,000 in a manufacturing equipment. The salvage value of the asset is expected to be $0. The company is expected to add $9,600 per year to the net income. Using the original cost of the asset, the unadjusted rate of return on the investment will be? Hint: If the problem does not give you enough information to determine the net values, keep your calculations simple!
A mini-mart needs a new freezer and the initial Investment will cost $300,000. Incremental revenues, including cost savings, are $200,000, and incremental expenses, including depreciation, are $125,000. There is no salvage value. What is the accounting rate of return (ARR)?
You’re trying to determine whether or not to expand your business by building a new plant. The plant would cost $14m and be depreciated straight line to zero over four years. The net income is estimated as $1.741m, $1.628m, $1.301m and $1m. What is the project’s average accounting return (AAR)? You decide to implement new rules on depreciation. You recognise that the building housing the plant is increasing in value so that depreciation of $1m per year is appropriate. Does the AAR change? If you require a 20% AAR how is the project affected?
Fargo Cop, is considering the purchase of a new piece of equipment. The equipment costs $51,400 and will have a salvage value of $6,400 after nine years. Using the new piece of equipment will increase Fargo's annual cash flows by $7,400. Fargo has a hurdle rate of 13%. a. How much is Fargo's annual depreciation on the equipment? DepreciaSon b. What is Fargo's projected annual increase in net income? Net Income c. What is the accounting rate of return for purchasing the new plece of equipment? (Round your answer to 2 decimal places.) Rate of Retum
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You are looking at an investment which has an initial cost of $400,000 and a salvage value of zero after five years. What is the average accounting return for this investment given the following annual net incomes: year 1 $100,000, year 2 150,000, year 3 150,000, year 4 100,000 and year 5 50,000. a. 27.5%b. 52.5%c. 55.0%d. 137.5%
Suppose a company has a forklift but is considering purchasing a new electric-lift truck that would cost $18,000, have operating costs of $1,000 in the first year, and have a salvage value of $10,000 at the end of the first year. For the remaining years, operating costs increase each year by 15% over the previous year's operating costs. Similarly, the salvage value declines each year by 25% from the previous year's salvage value. The lift truck has a maximum life of three years. The firm's required rate of return is 15%. Find the economic service life of this new machine.
Suppose that you are contemplating an investment in an office building. Use the information provided below to answer the questions that follow: Type of Property: Leasable Space: Average Rent: Expected Annual Rent Growth: Vacancy and Collection Losses: Other Income: Office Building 300,000 $25 per square foot per year 1.5% per year 17.5% of Potential Gross Income $6.00 per square foot per year Expected Growth in Other Income: 2% per year Operating Expenses: Capital Expenditures: Selling Expenses: Going-Out Cap Rate: Expected Purchase Price: Loan Terms: Loan Amount: Interest Rate: 40% of Effective Gross Income 4% of Effective Gross Income 5% of Future Selling Price 8.0% $60 million Amortization Term: 75% of purchase price 4.75% per year with monthly payments and monthly compounding 30 years a. What is the net present value of the before-tax unlevered cash flows if you assume a five- year holding period and a before-tax discount rate of 7%? b. What is the internal rate of return of the…
A company buys a machine for $69,000 that has an expected life of 7 years and no salvage value. The company anticipates annual income of $3,300, with the cash flows to be received evenly throughout each year. What is the accounting rate of return?
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give me the right answer only ASAP Suppose we are thinking about replacing an old computer with a new one. The old one cost us $1.4 million; the new one will cost $1.7 million. The new machine will be depreciated straight-line to zero over its five-year life. It will probably be worth about $325,000 after five years. The old computer is being depreciated at a rate of $281,000 per year. It will be completely written off in three years. If we don’t replace it now, we will have to replace it in two years. We can sell it now for $450,000; in two years, it will probably be worth $130,000. The new machine will save us $315,000 per year in operating costs. The tax rate is 22 percent, and the discount rate is 12 percent. a-1. Calculate the EAC for the old and the new computer. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) a-2. What is the NPV of the decision to…
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