Question

ABuster Evans is considering investing $20,000 in a project with the following annual cash revenues and...

ABuster Evans is considering investing $20,000 in a project with the following annual cash revenues and expenses:

Cash Cash
Revenues Expenses
Year 1 $ 8,000 $ 8,000
Year 2 $12,000 $ 8,000
Year 3 $15,000 $ 9,000
Year 4 $20,000 $10,000
Year 5 $20,000 $10,000


Depreciation will be $4,000 per year.

What is the accounting rate of return on the investment?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and calculation. For detailed answer refer to the supporting sheet.

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
A company is considering a new project. The project will generate $200,000 in revenues and $110,000...
A company is considering a new project. The project will generate $200,000 in revenues and $110,000 in operating costs each year for the next 5 years. It would require an additional investment of $150,000 to be depreciated to a zero book value on a straight line basis over 5 years. The investment has a salvage value of $20,000. The tax rate is 40%. At the end of year 5, there is a $10,000 return of networking capital. Determine the annual...
7. (CMA) Garfield Inc. is considering a 10-year capital investment project with forecasted cash revenues of...
7. (CMA) Garfield Inc. is considering a 10-year capital investment project with forecasted cash revenues of $40,000 per year and forecasted cash operating costs of $29,000 per year. The initial cost of the equipment for the project is $23,000, and Garfield expects to sell the equipment for $9,000 at the end of the tenth year. The equipment will be depreciated on a straight-line basis over seven years for tax purposes. The project requires a working capital investment of $7,000 at...
The Beans Corporation is considering investing in a project with an initial cash investment of $180,000...
The Beans Corporation is considering investing in a project with an initial cash investment of $180,000 that provides an annual cash inflow of $40,000 in Years 1-3, then $25,000 per year in Years 4-5, and $50,000 per year in Years 6-8. The PAYBACK PERIOD for this project is: Select one: a. 5.8 years b. 5.6 years c. 5.2 years d. 5.4 years
A project costs $8,000. You expect the following cash flows from the project: Year Cash Flow...
A project costs $8,000. You expect the following cash flows from the project: Year Cash Flow 1 $1,000 2 $4,000 3 $8,000 4 $7,000 5 $9,000 If the required rate of return is 12%, what is the NPV of this project? Round your answer to two decimal places.
A project costs $4,000. You expect the following cash flows from the project: Year Cash Flow...
A project costs $4,000. You expect the following cash flows from the project: Year Cash Flow 1 $2,000 2 $6,000 3 $4,000 4 $8,000 5 $9,000 If the required rate of return is 14%, what is the NPV of this project? Round your answer to two decimal places.
1. A company is considering a 5-year project to open a new product line. A new...
1. A company is considering a 5-year project to open a new product line. A new machine with an installed cost of $120,000 would be required to manufacture their new product, which is estimated to produce sales of $40,000 in new revenues each year. The cost of goods sold to produce these sales (not including depreciation) is estimated at 49% of sales, and the tax rate at this firm is 27%. If straight-line depreciation is used to calculate annual depreciation,...
a company is considering investing in a project. The project will require a 10% rate return....
a company is considering investing in a project. The project will require a 10% rate return. The project will require $65,000 investment and provides the following returns: year 1:   $20,000 year 2: $20,000 year 3: $20,000 year 4: $25,000 I)Given that the company needs to make at least 10% return on its project what is the projects NPV for the return on its investment? A) $85,000 B) $20,000 C) Less than $2,000 but more than $1,000 D) less then $1,000...
You are considering the following two mutually exclusive projects. The required return on each project is...
You are considering the following two mutually exclusive projects. The required return on each project is 16 percent. Which project should you accept and what is the best reason for that decision? Year Project A Project B 0 -$10,000 -$20,000 1 $8,000 $16,000 2 $4,000 $9,000 3 $3,000 $5,000 4 $9,000 $7,000 A. Project A; because it pays back faster B. Project A; because it has the higher internal rate of return C. Project B; because it has the higher...
Sierra Mustard Company estimates the following cash flows and depreciation on a project that will cost...
Sierra Mustard Company estimates the following cash flows and depreciation on a project that will cost $200,000 and will last 10 years with no salvage value:   Revenues                Sales revenue                                                                            $80,000       Operating expenses                Salary expense                                            $32,000                Depreciation expense                                   20,000                Miscellaneous expenses                                 8,000                   60,000       Net Income                                                                                        $20,000 Instructions (a)   Calculate the expected annual rate of return on this project showing calculations to support your answer. (b)   Calculate the cash payback on this project showing calculations to support your answer.
Suzanne’s Restaurant Supplies is considering the purchase of manufacturing equipment that will cost $20,000. The annual...
Suzanne’s Restaurant Supplies is considering the purchase of manufacturing equipment that will cost $20,000. The annual cash inflows for the next three years will be: Year Cash Flow 1 $10,000 2 $9,000 3 $6,500 A. Determine the internal rate of return B. With a cost capital of 12%, should the machine be purchased?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT