The management of Charlton Corporation is considering the purchase of a newmachine costing $460,000. The company's desired rate of return is 6%. In addition tothe foregoing information, use the following data in determining the acceptability inthis situation:Income fromOperations$20,00020,000Net CashFlow$95,00095,00095,00095,00095,000Year13.20,00020,00020,0004The cash payback period for this investment is:O4 yearsO 4.8 yearsO 23 yearsThe project will never recover the invested cash

Cash payback period = Initial investment/Net cash flow per year

The management of Charlton Corporation is considering the purchase of a new machine costing $460,000. The company's desired rate of return is 6%. In addition to the foregoing information, use the following data in determining the acceptability in this situation: Net Cash Flow $95,000 95,000 95,000 95,000 95,000 Income from Operations $20,000 20,000 20,000 Year 1 3. 4 20,000 20,000 The cash payback period for this investment is: 4 years 4.8 years 23 years The project will never recover the invested cash

The management of Charlton Corporation is considering the purchase of a new machine costing $460,000. The company's desired rate of return is 6%. In addition to the foregoing information, use the following data in determining the acceptability in this situation: Net Cash Flow $95,000 95,000 95,000 95,000 95,000 Income from Operations $20,000 20,000 20,000 Year 1 3. 4 20,000 20,000 The cash payback period for this investment is: 4 years 4.8 years 23 years The project will never recover the invested cash

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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Rihanna Company is considering purchasing new equipment for $440,000. It is expected that the equipment will produce net annual cash flows of $55,000 over its 10-year useful life. Annual depreciation will be $44,000. Compute the cash payback period. (Round answer to 1 decimal place, e.g. 10.5.) Cash payback period years
The financial staff of Cairn Communications has identified the following information for the first year of the roll-out of its new proposed service: Projected sales $22 million Operating costs (not including depreciation) $11 million Depreciation $5 million Interest expense $3 million The company faces a 25% tax rate. What is the project's operating cash flow for the first year (t = 1)? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as $1,200,000. Round your answer to the nearest dollar. $
The financial staff of Cairn Communications has identified the following information for the first year of the roll-out of its new proposed service: Projected sales $22 million Operating costs (not including depreciation) $9 million Depreciation $5 million Interest expense $3 million The company faces a 25% tax rate. What is the project's operating cash flow for the first year (t = 1)? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as $1,200,000. Round your answer to the nearest dollar.
2. Hobart Industries is trying to estimate its first-year operating cash flow (att-1) for a proposed project. The financial staff has collected the following information: Projected sales Operating costs Depreciation $3,000,000 1,200,000 450,000 330,000 Interest expense The company faces a 40% tax rate. What is the project's operating cash flow for the first year (t-13? a $1.260,000 b. $ 810,000 € $1,080,000 d. $1,500,000 $1,800,000
ABC, Inc., is considering purchase of a new equipment. The expected sales are expected to be $5,556,982. The annual cash operating expenses are expected to be $2,957,536. The annual depreciation is estimated to be $456,926 and the interest expense is estimated to be $206,975. If the tax rate is 33%, what is the operating cash flow?
Elmdale Enterprises is deciding whether to expand its production facilities. Although long-term cash flows are difficult to estimate, management has projected the following cash flows for the first two years (in millions of dollars): a. What are the incremental earnings for this project for years 1 and 2? (Note: Assume any incremental cost of goods sold is included as part of operating expenses.) b. What are the free cash flows for this project for years 1 and 2? a. What are the incremental earnings for this project for years 1 and 2? (Note: Assume any incremental cost of goods sold is included as part of operating expenses.) Calculate the incremental earnings of this project below: (Round to one decimal place.) Incremental Earnings Forecast (millions) Sales Operating Expenses Depreciation EBIT Income tax at 21% Unlevered Net Income Year 1 Year 2 $ $ SA $ 69 $ GA 67 69 $ $ $ 6969 $ $ SA
Three machine alternatives are being evaluated by a company. The annual cash flows for each of these three alternatives are given in the table below (all in dollars). Based on the NPW criterion, rank these three alternatives from most attractive to least attractive assuming a MARR of 7% compounded annually. n Alternative 1 Alternative 2 Alternative 3 ======== 0 -1,400 -2.000 -1,000 1 300 300 400 2 500 600 400 ==================== ==#== 3 500 800 400 4 700 1,000 400 Alternative 1– Alternative 3 – Alternative 2 Alternative 2 – Alternative 3 – Alternative 1 Alternative 3 – Alternative 2 - Alternative 1 O Alternative 3 – Alternative 1- Alternative 2 O O O O
he financial staff of Cairn Communications has identified the following information for the first year of the roll-out of its new proposed service: Projected sales $20 million Operating costs (not including depreciation) $7 million Depreciation $4 million Interest expense $4 million The company faces a 25% tax rate. What is the project's operating cash flow for the first year (t = 1)? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as $1,200,000. Round your answer to the nearest dollar.
Mendez Company has identified an investment project with the following cash flows. Year Cash Flow 1 2 3 $780 1,050 1,310 1,425 a. If the discount rate is 8 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the present value at 17 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the present value at 25 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Present value at 8% b. Present value at 17% c. Present value at 25%
Subject: accounting

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