Net present value : Net present value is the difference between the present values of cash inflows minus present value of cash outflows. Calculate the cost of retained earnings are as follows: Net present value = Present value of cash inflows − Initial investment Decision rule: NPV > 0 Accept the project NPV < 0 Reject the project AA is determining to purchase an asset which has cost of $90,000. Asset is classified under three years MACRS class and can be sold after five years for $8,000. Savings from the machine is $29,800 and working capital requires is $22,000. Tax rate is 34% and required rate of return is 15%.

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Answer 1

Question

Chapter 10, Problem 12PROB

Summary Introduction

Net present value:

Net present value is the difference between the present values of cash inflows minus present value of cash outflows.

Calculate the cost of retained earnings are as follows:

Net present value=Present value of cash inflows−Initial investment

Decision rule:

NPV>0 Accept the projectNPV<0 Reject the project

AA is determining to purchase an asset which has cost of $90,000. Asset is classified under three years MACRS class and can be sold after five years for $8,000. Savings from the machine is $29,800 and working capital requires is $22,000. Tax rate is 34% and required rate of return is 15%.

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Answer 2

Question

Chapter 10, Problem 12PROB

Summary Introduction

Net present value:

Net present value is the difference between the present values of cash inflows minus present value of cash outflows.

Calculate the cost of retained earnings are as follows:

Net present value=Present value of cash inflows−Initial investment

Decision rule:

NPV>0 Accept the projectNPV<0 Reject the project

AA is determining to purchase an asset which has cost of $90,000. Asset is classified under three years MACRS class and can be sold after five years for $8,000. Savings from the machine is $29,800 and working capital requires is $22,000. Tax rate is 34% and required rate of return is 15%.

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Answer 3

Question

Chapter 10, Problem 12PROB

Summary Introduction

Net present value:

Net present value is the difference between the present values of cash inflows minus present value of cash outflows.

Calculate the cost of retained earnings are as follows:

Net present value=Present value of cash inflows−Initial investment

Decision rule:

NPV>0 Accept the projectNPV<0 Reject the project

AA is determining to purchase an asset which has cost of $90,000. Asset is classified under three years MACRS class and can be sold after five years for $8,000. Savings from the machine is $29,800 and working capital requires is $22,000. Tax rate is 34% and required rate of return is 15%.

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Answer 4

Question

Chapter 10, Problem 12PROB

Summary Introduction

Net present value:

Net present value is the difference between the present values of cash inflows minus present value of cash outflows.

Calculate the cost of retained earnings are as follows:

Net present value=Present value of cash inflows−Initial investment

Decision rule:

NPV>0 Accept the projectNPV<0 Reject the project

AA is determining to purchase an asset which has cost of $90,000. Asset is classified under three years MACRS class and can be sold after five years for $8,000. Savings from the machine is $29,800 and working capital requires is $22,000. Tax rate is 34% and required rate of return is 15%.

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Answer 5

Chapter 10, Problem 12PROB

Summary Introduction

Net present value:

Net present value is the difference between the present values of cash inflows minus present value of cash outflows.

Calculate the cost of retained earnings are as follows:

Net present value=Present value of cash inflows−Initial investment

Decision rule:

NPV>0 Accept the projectNPV<0 Reject the project

AA is determining to purchase an asset which has cost of $90,000. Asset is classified under three years MACRS class and can be sold after five years for $8,000. Savings from the machine is $29,800 and working capital requires is $22,000. Tax rate is 34% and required rate of return is 15%.

Answer 6

Chapter 10, Problem 12PROB

Summary Introduction

Net present value:

Net present value is the difference between the present values of cash inflows minus present value of cash outflows.

Calculate the cost of retained earnings are as follows:

Net present value=Present value of cash inflows−Initial investment

Decision rule:

NPV>0 Accept the projectNPV<0 Reject the project

AA is determining to purchase an asset which has cost of $90,000. Asset is classified under three years MACRS class and can be sold after five years for $8,000. Savings from the machine is $29,800 and working capital requires is $22,000. Tax rate is 34% and required rate of return is 15%.

Answer 7

Chapter 10, Problem 12PROB

Summary Introduction

Net present value:

Net present value is the difference between the present values of cash inflows minus present value of cash outflows.

Calculate the cost of retained earnings are as follows:

Net present value=Present value of cash inflows−Initial investment

Decision rule:

NPV>0 Accept the projectNPV<0 Reject the project

AA is determining to purchase an asset which has cost of $90,000. Asset is classified under three years MACRS class and can be sold after five years for $8,000. Savings from the machine is $29,800 and working capital requires is $22,000. Tax rate is 34% and required rate of return is 15%.

Answer 8

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Answer 10

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Answer 11

Ch. 10 - Prob. 1PROB Ch. 10 - Prob. 2PROB Ch. 10 - Prob. 3PROB Ch. 10 - Prob. 4PROB Ch. 10 - Prob. 5PROB Ch. 10 - Prob. 6PROB Ch. 10 - Prob. 7PROB Ch. 10 - Prob. 8PROB Ch. 10 - Prob. 9PROB Ch. 10 - Prob. 10PROB

Solution Summary: The author explains Net present value, which is the difference between the present values of cash inflows and cash outflow. AA is determining to purchase an asset which has cost of 90,000.

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