Answered: -The cost of a certain piece of…

-The cost of a certain piece of equipment was $20,000 when the M&S index was 915.1, what was the index value when the same equipment was estimated to cost $30,000?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

1. The cost of a certain piece of equipment was $20,000 when the M&S index
was 915.1, what was the index value when the same equipment was
estimated to cost $30,000?

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3. Consider a three-year project with the following information: initial fixed asset investment = $698,000; straight-line depreciation to zero over the four-year life; zero salvage value; price = $34.15; variable costs = $22.60; fixed costs = $210,500; quantity sold = 96,500 units; tax rate = 40 percent. Required: What is the OCF at the base-case quantity sold? OCF What is the OCF at 97,500 units sold? OCF How sensitive is OCF to changes in quantity sold? AOCF/AQ $ $
Consider a four-year project with the following information: Initial fixed asset investment = $560,000; straight-line depreciation to zero over the four-year life; zero salvage value; price = $28; variable costs = $20; fixed costs = $200,000; quantity sold = 86,000 units; tax rate = 35 percent. How sensitive is OCF to changes in quantity sold? (Do not round intermediate calculations and round your answer to 2 decimal places,
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9. The Short-Line Railroad is considering a $100,000 investment in either of two companies. The cash flows are as follows: Year Electric Co. Water Works $70,000 $15,000 2 15,000 15,000 3 15,000 70,000 ......... 4-10 10,000 10,000 a. Using the payback method, what will the decision be? b. Explain why the answer in part a can be misleading.
The present value of the net cash flows for Product A is $65,145 while the cost of the initial investment is $38,560. The profitability index is