The management of Lanzilotta Corporation is considering a project that would require an investment of$208,000 and would last for 6 years. The annual net operating income from the project would be $104,000,which includes depreciation of $15,000. The scrap value of the project's assets at the end of the project wouldbe $24,000. The cash inflows occur evenly throughout the year. The payback period of the project is closest to(Ignore income taxes.): (Round your answer to 1 decimal place.)Multiple Choice1.7 years2.9 years2.0 years1.5 years

The investment cost is $208,000 The expected useful life of the investment is 6 years The annual net…

Answered: The management of Lanzilotta…

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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Ace Inc. is evaluating two mutually exclusive projects—Project A and Project B. The initial investment for each project is $50,000. Project A will generate cash inflows equal to $15,625 at the end of each of the next five years; Project B will generate only one cash inflow in the amount of $99,500 at the end of the fifth year (i.e., no cash flows are generated in the first four years). The required rate of return of Ace Inc. is 10 percent. Which project should Ace Inc. purchase? Group of answer choices Project A should be purchased because it has a higher net present value (NPV) than Project B. Project A should be purchased because it will produce cash every year for five years. Project A should be purchased because it has a positive net present value (NPV). Neither project should be purchased, because neither has a positive net present value (NPV).
Acme Company is expanding and expects operating cash flows of $85,000 a year for 4 years as a result. This expansion requires $240,000 in new fixed assets. These assets will be worthless at the end of the project. In addition, the project requires a $15,000 investment in net working capital (assume NWC will be recovered at the end of the project). What is the net present value of this expansion project at a required rate of return of 15 percent? Question 1 options: $(3,375.49) $(3,638.02) $(3,750.54) $(3,563.01) $(3,825.55)
Ace Barker Inc. is evaluating two mutually exclusive projects: A and B. The initial investment for each project is $42,000. Project A will generate cash inflows equal to $15,600 at the end of each of the next five years; Project B will generate only one cash inflow in the amount of $70,000 at the end of the fifth year (i.e., no cash flows are generated in the first four years). The required rate of return of Ace Barker Inc. is 10 percent. Which project should Ace Barker Inc. purchase? O Project A should be purchased because it has a higher net present value (NPV) than Project B O Project A should be purchased because it will produce cash every year for five years. O Project B should be purchased because it has a positive net present value (NPV). Neither project should be purchased, because neither has a positive net present value (NPV).
Bruin Building Supply is considering expansion. Operating cash flow will be $710,000 a year. The project will require new equipment costing $1,850,000 that would be depreciated on a straight-line basis to zero over the 5-year life of the project. The equipment will have a market value of $370,000 at the end of the project. The project requires an initial investment of $525,000 in net working capital, which will be recovered at the end of the project. The tax rate is 28.00 percent. What is the project's IRR? Answer in whole numbers, rounded to three decimal places.
A project will produce an operating cash flow of $14,600 a year for 7 years. The initial fixed asset investment in the project will be $48,900. The net aftertax salvage value is estimated at $12,000 and will be received during the last year of the project's life. What is the net present value of the project if the required rate of return is 12 percent? Group of answer choices $22,627.54 $23,159.04 $34,627.54 $39,070.26 $41,040.83 please please solve it with a finance calculator and show your work, I know the answer but looking for some easy way to slove it by a finance calculator
A project with a life of 6 years is expected to provide annual sales of $260,000 and costs of $173,000. The project will require an investment in equipment of $490,000, which will be depreciated on a straight-line method over the life of the project. You feel that both sales and costs are accurate to +/-15 percent. The tax rate is 21 percent. What is the annual operating cash flow for the best-case scenario?
A project with a life of 7 years is expected to provide annual sales of $270,000 and costs of $181,000. The project will require an investment in equipment of $505,000, which will be depreciated on a straight-line method over the life of the project. You feel that both sales and costs are accurate to +/-10 percent. The tax rate is 21 percent. What is the annual operating cash flow for the best-case scenario? Multiple Choice O O $80,460 $95,907 $82,497 $55,197 $121,089
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A project has an initial outlay of $2,255. The project will generate annual cash flows of $536 over the 5-year life of the project and terminal cash flows of $328 in the last year of the project. If the required rate of return on the project is 17%, what is the net present value (NPV) of the project?
A 4-year project is expected to generate annual sales of 30,000 units at a price of $50.00 per unit and a variable cost of $38.00 per unit. The equipment necessary for the project will cost $205,000 and will be depreciated on a straight-line basis over the life of the project. Fixed costs are $250,000 per year and the tax rate is 28.00 percent. How sensitive is the operating cash flow to a $1 change in the per unit variable cost? Answer in the form of a percentage change from the base case, e.g., 7.425% change in operating cash flow, and enter your answer as a whole number rounded to three decimal places, i.e., 7.425.
Monroe Printing is evaluating the pamphlet project. The project would require an initial investment of $73,300.00 that would be depreciated to $12,300.00 over 4 years using straight-line depreciation. The first annual operating cash flow of $18,000.00 is expected in 1 year, and annual operating cash flows of $18,000.00 are expected each year forever. Monroe Printing expects the project to have an after-tax terminal value of $108,700.00 in 3 years. The tax rate is 22.80%. What is X, the project's relevant expected cash flow for NPV analysis in year 3? $83,916.40 (plus or minus $10) $108,700.00 (plus or minus $10) $101,916.40 (plus or minus $10) $126,700.00 (plus or minus $10) None of the above is within $10 of the correct answer

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