Question

The management of Nixon Corporation is investigating purchasing equipment that would cost $542,000 and have a...

The management of Nixon Corporation is investigating purchasing equipment that would cost $542,000 and have a 7 year life with no salvage value. The equipment would allow an expansion of capacity that would increase sales revenues by $376,000 per year and cash operating expenses by $217,000 per year. (Ignore income taxes.)

Required:

Determine the simple rate of return on the investment. (Round your answer to 1 decimal place.)

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

For any clarifications please comment, thank you.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
The management of Nixon Corporation is investigating purchasing equipment that would cost $524,000 and have a...
The management of Nixon Corporation is investigating purchasing equipment that would cost $524,000 and have a 7 year life with no salvage value. The equipment would allow an expansion of capacity that would increase sales revenues by $367,000 per year and cash operating expenses by $212,500 per year. (Ignore income taxes.) Required: Determine the simple rate of return on the investment. (Round your answer to 1 decimal place.)
The management of Nixon Corporation is investigating purchasing equipment that would cost $554,000 and have a...
The management of Nixon Corporation is investigating purchasing equipment that would cost $554,000 and have a 7 year life with no salvage value. The equipment would allow an expansion of capacity that would increase sales revenues by $382,000 per year and cash operating expenses by $220,000 per year. (Ignore income taxes.) Required: Determine the simple rate of return on the investment. (Round your answer to 1 decimal place.)
14. (Ignore income taxes in this problem.) Messersmith Corporation is investigating automating a process by purchasing...
14. (Ignore income taxes in this problem.) Messersmith Corporation is investigating automating a process by purchasing a machine for $688,000 that would have an 8 year useful life and no salvage value. By automating the process, the company would save $160,000 per year in cash operating costs. The new machine would replace some old equipment that would be sold for scrap now, yielding $19,000. The annual depreciation on the new machine would be $86,000. What percent is the simple rate...
Ramson Corporation is considering purchasing a machine that would cost $283,850 and have a useful life...
Ramson Corporation is considering purchasing a machine that would cost $283,850 and have a useful life of 5 years. The machine would reduce cash operating costs by $81,100 per year. The machine would have a salvage value of $107,100 at the end of the project. (Ignore income taxes.) Required: a. Compute the payback period for the machine. (Round your answer to 2 decimal places.) b. Compute the simple rate of return for the machine. (Round your intermediate calculations to the...
Ramson Corporation is considering purchasing a machine that would cost $454,140 and have a useful life...
Ramson Corporation is considering purchasing a machine that would cost $454,140 and have a useful life of 8 years. The machine would reduce cash operating costs by $84,100 per year. The machine would have a salvage value of $107,130 at the end of the project. (Ignore income taxes.) Required: a. Compute the payback period for the machine. (Round your answer to 2 decimal places.) b. Compute the simple rate of return for the machine. (Round your intermediate calculations to nearest...
30. Ramson Corporation is considering purchasing a machine that would cost $633,080 and have a useful...
30. Ramson Corporation is considering purchasing a machine that would cost $633,080 and have a useful life of 9 years. The machine would reduce cash operating costs by $93,100 per year. The machine would have a salvage value of $107,220 at the end of the project. (Ignore income taxes.) Required: a. Compute the payback period for the machine. (Round your answer to 2 decimal places.) b. Compute the simple rate of return for the machine. (Round your intermediary answers to...
Croce, Inc., is investigating an investment in equipment that would have a useful life of 9...
Croce, Inc., is investigating an investment in equipment that would have a useful life of 9 years. The company uses a discount rate of 16% in its capital budgeting. The net present value of the investment, excluding the salvage value, is −$578,586. (Ignore income taxes.) Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using the tables provided. How large would the salvage value of the equipment have to be to make the investment...
Pendleton Parks is investigating the purchase of new maintenance equipment. The equipment would cost $5,000 and...
Pendleton Parks is investigating the purchase of new maintenance equipment. The equipment would cost $5,000 and have a five year life. It would save $500 per year in cash operating costs. In addition, because it would enhance the attractiveness of various parks and facilities, management estimates there would be an average of 1,000 additional paying visitors per year. The average contribution margin realized per visitor is $1. The approximate internal rate of return promised by this investment = _________%
The management of an amusement park is considering purchasing a new ride for $32,000 that would...
The management of an amusement park is considering purchasing a new ride for $32,000 that would have a useful life of 8 years and a salvage value of $4,000. The ride would require annual operating costs of $24,000 throughout its useful life. The company's discount rate is 10%. Management is unsure about how much additional ticket revenue the new ride would generate-particularly because customers pay a flat fee when they enter the park that entitles them to unlimited rides. Hopefully,...
Uncertain Future Cash Flows Hanover Industries is investigating the purchase of automated equipment that would save...
Uncertain Future Cash Flows Hanover Industries is investigating the purchase of automated equipment that would save $100,000 each year in direct labour and inventory carrying costs. This equipment costs $750,000 and is expected to have a 10-year useful life with no salvage value. The company requires a minimum 15% rate of return on all equipment purchases. This equipment would provide intangible benefits (such as greater flexibility and higher-quality output) that are difficult to estimate and yet are quite significant. Required:...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT