Question

The purchase price of a certain equipment is $74,115 but this equipment is expected to save $21,212 annually for 10 years. What is the internal rate of Preturn (IRR) for this investment

Answer #1

It
is estimated that a certain piece of equipment can save $22,000 per
year in labor and materials costs. The equipment has an expected
life of five years no market value. If the company must earn a 7%
annual return on such investments, how much could be justified now
for the purchase of this piece of equipment?

XYZ Company is considering the purchase of new equipment that
will cost $130,000. The equipment will save the company $38,000 per
year in cash operating costs. The equipment has an estimated useful
life of five years and a zero expected salvage value. The company's
cost of capital is 10%.
Required:
1) Ignoring income taxes, compute the net present value and
internal rate of return. Round net present value to the nearest
dollar and round internal rate of return to the...

It is estimated that a certain piece of equipment can
save $22,000 per year in labor and materials costs. The equipment
has an expected life of five years and no market value. If the
company must earn a 5% annual return on such investments, how much
could be justified now for the purchase of this piece equipment?
Draw a cash-flowing diagram from the company's viewpoint

It is estimated that a certain piece of equipment can
save $22,000 per year in labor and materials costs. The equipment
has an expected life of five years and no market value. If the
company must earn a 5% annual return on such investments, how much
could be justified now for the purchase of this piece equipment?
Draw a cash-flowing diagram from the company's viewpoint

King’s Department store is analyzing the purchase of
manufacturing equipment that will cost $40,000. The annual cash
inflows for the next three years will be, $20,000, $18,000, and
$13,000. Calculate the internal rate of return (IRR) for this
investment. b. If the company’s cost of capital is 12%, should the
equipment be purchased? Why or why not

King’s Department store is analyzing the purchase of
manufacturing equipment that will cost $40,000. The annual cash
inflows for the next three years will be, $20,000, $18,000, and
$13,000.
Calculate the internal rate of return (IRR) for this
investment.
b. If the company’s cost of capital is 12%, should the equipment
be purchased? Why or why not

Aurora Playground Equipment Inc is considering the purchase of a
new machine. The firm requires 14.00% return on the investment and
payback within 3 years. The machine is expected to provide cash
flows as follows:
$11000
$5,500
$6,000
$1,000
$1,000
Year 0
1
2
3
4
Determine the Pay pack Period for the Machine and whether it
should be acceptable for investment.
Payback Period?______
Determine the Internal Rate of Return (IRR) of the
Machine_______?

Milton Industries wants to purchase new equipment that has a
quoted price of $1,000,000. Milton estimates an additional cost of
$85,000 will be needed today to have the equipment modified,
shipped, and installed. The purchase of this additional equipment
will require Milton to invest an estimated $55,000 in net working
capital upfront, and this investment should be recovered when
Milton sells the equipment. If purchased, the equipment will be
employed for a total of five years, and then sold for...

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:...

A building with a purchase price of $20,000,000 is expected to
generate an NOI of $1,750,000 for each of the next five years and
can be resold at the end of the fifth year for $21,000,000. The
purchase will be financed by a $12,000,000 interest only loan with
yearly payments of $720,000. What is the levered IRR of the
investment?
a. 14.2%
b. 11.7%
c. 13.9%
d. 12.8%
e. 14.7%

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