Calculate the Net Present Value and
Pay-Back Period for the below investment (please
show calculations):
Rate...
Calculate the Net Present Value and
Pay-Back Period for the below investment (please
show calculations):
Rate of return: 15%
Inflation rate: 2%
Investment:
Year
Investment Cost
Recurring Cost
Revenue
1
$5,000,000
1
$100,000
$3,500,000
2
$125,000
$3,500,000
3
$325,000
$2,500,000
4
$325,000
$2,000,000
5
$500,000
$1,250,000
PA11-1 Calculating Accounting Rate of Return, Payback Period,
Net Present Value, Estimating Internal Rate of Return...
PA11-1 Calculating Accounting Rate of Return, Payback Period,
Net Present Value, Estimating Internal Rate of Return [LO 11-1,
11-2, 11-3, 11-4]
Balloons By Sunset (BBS) is considering the purchase of two new
hot air balloons so that it can expand its desert sunset tours.
Various information about the proposed investment
follows:
Initial
investment (for two hot air balloons)
$
385,000
Useful life
8
years
Salvage
value
$
41,000
Annual net
income generated
31,185
BBS’s cost of
capital
7
%
Assume...
Net Present Value
Calculation
Initial Investment
Discount
Rate
Net Benefit Year 1
Net Benefit
Year 2...
Net Present Value
Calculation
Initial Investment
Discount
Rate
Net Benefit Year 1
Net Benefit
Year 2
New Benefit
Year 3
Present
Value
Is this a worthwhile
investment?
100,000
.06
50,000
50,000
50,000
100,000
.12
50,000
50,000
50,000
100.000
.24
50,000
50,000
50,000
200,000
.06
80,000
80,000
80,000
200,000
.36
100,000
100,000
100,000
500,000
.36
200,000
350,000
500,000
500,000
.36
500,00
350,000
200,000
PA11-1 Calculating Accounting Rate of Return, Payback Period,
Net Present Value, Estimating Internal Rate of Return...
PA11-1 Calculating Accounting Rate of Return, Payback Period,
Net Present Value, Estimating Internal Rate of Return [LO 11-1,
11-2, 11-3, 11-4]
Balloons By Sunset (BBS) is considering the purchase of two new
hot air balloons so that it can expand its desert sunset tours.
Various information about the proposed investment
follows:
Initial investment (for two hot
air balloons)
$
297,000
Useful life
7
years
Salvage value
$
52,000
Annual net income generated
22,572
BBS’s cost of capital
7
%
Assume...
PA11-1 Calculating Accounting Rate of Return, Payback Period,
Net Present Value, Estimating Internal Rate of Return...
PA11-1 Calculating Accounting Rate of Return, Payback Period,
Net Present Value, Estimating Internal Rate of Return [LO 11-1,
11-2, 11-3, 11-4]
Balloons By Sunset (BBS) is considering the purchase of two new
hot air balloons so that it can expand its desert sunset tours.
Various information about the proposed investment
follows:
Initial investment (for two hot
air balloons)
$
475,000
Useful life
8
years
Salvage value
$
51,000
Annual net income generated
41,325
BBS’s cost of capital
10
%
Assume...
Two quick questions: please show basic caculations.
1.) Determine the payback period if the initial cost...
Two quick questions: please show basic caculations.
1.) Determine the payback period if the initial cost is $50,000,
billable revenue of $50 per hour and cost to operate $15 per hour
plus the operator cost at $20 per hour. The billable hours per year
are 1,020. MUST show calculations to receive full credit
2.) Calculate the total profit and percentage of construction
revenue that became profit: Revenue: $700,000 Total construction
costs: $200,000 General overhead: $100,000. MUST show calculations
to receive...
Average Rate of Return, Cash Payback Period, Net Present Value
Method for a Service Company
Spanish...
Average Rate of Return, Cash Payback Period, Net Present Value
Method for a Service Company
Spanish Peaks Railroad Inc. is considering acquiring equipment
at a cost of $1,250,000. The equipment has an estimated life of
eight years and no residual value. It is expected to provide yearly
net cash flows of $312,500. The company’s minimum desired rate of
return for net present value analysis is 12%.
Present Value of an Annuity of $1 at
Compound Interest
Year
6%
10%
12%...