Question
115 Poe Company is considering the purchase of new equipment costing $80,500. The projected net cash...
115
Poe Company is considering the purchase of new equipment costing
$80,500. The projected net cash flows are $35,500 for the first two
years and $30,500 for years three and four. The revenue is to be
received at the end of each year. The machine has a useful life of
4 years and no salvage value. Poe requires a 10% return on its
investments. The present value of $1 and present value of an
annuity of $1 for different periods is presented below. Compute the
net present value of the machine.
| Periods | Present Value of $1 at 10% |
Present Value of an Annuity of $1 at 10% |
||||
| 1 | 0.9091 | 0.9091 | ||||
| 2 | 0.8264 | 1.7355 | ||||
| 3 | 0.7513 | 2.4869 | ||||
| 4 | 0.6830 | 3.1699 | ||||
Multiple Choice
-
$(16,816).
-
$(5,801).
-
$16,816.
-
$5,801.
-
$24,859.
Homework Answers
Answer #1
SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE
Not the answer you're looking for?
Similar Questions
Butler Corporation is considering the purchase of new equipment costing $36,000. The projected annual after-tax net...
Butler Corporation is considering the purchase of new equipment
costing $36,000. The projected annual after-tax net income from the
equipment is $1,400, after deducting $12,000 for depreciation. The
revenue is to be received at the end of each year. The machine has
a useful life of 3 years and no salvage value. Butler requires a
10% return on its investments. The present value of an annuity of
$1 for different periods follows:
Periods
10%
1
0.9091
2
1.7355
3
2.4869...
The following relates to a proposed equipment purchase: Cost $ 156,000 Salvage value $ 4,500 Estimated...
The following relates to a proposed equipment
purchase:
Cost
$
156,000
Salvage value
$
4,500
Estimated useful life
4
years
Annual net cash flows
$
52,100
Depreciation method
Straight-line
Ignoring income taxes, the annual net income amount used to
calculate the accounting rate of return is:
Multiple Choice
$52,100
$14,225
$15,350
$89,975
$50,975
Poe Company is considering the purchase of new equipment costing
$81,000. The projected net cash flows are $36,000 for the first two
years and $31,000 for years...
Yale Inc. has two independent investment opportunities, each requiring an initial investment of $260,000. The company's...
Yale Inc. has two independent investment opportunities,
each requiring an initial investment of $260,000. The company's
required rate of return is 10 percent. The cash inflows for each
investment are provided below
Investment A
Investment B
Year 1
$140,000
$20,000
Year 2
100,000
40,000
Year 3
60,000
60,000
Year 4
40,000
80,000
Year 5
20,000
160,000
Total inflows
$360,000
$360,000
Factors: Present Value of $1
Factors: Present Value of an Annuity
(r = 10%)
(r = 10%)
Year 0
1.0000...
A project requires an initial investment of $1,500,000 and will return $420,000 each year for six...
A project requires an initial investment of $1,500,000 and will
return $420,000 each year for six years. Factors: Present Value of
an Annuity (r = 10%) Year 1 0.9091 Year 2 1.7355 Year 3 2.4869 Year
4 3.1699 Year 5 3.7908 Year 6 4.3553 Use this data to answer
questions 15 and 16: If taxes are ignored and the required rate of
return is 10%, what is the project's net present value (rounded to
the nearest dollar)? (5pts) a. $1,262,910...
Copa Corporation is considering the purchase of a new machine costing $150,000. The machine would generate...
Copa Corporation is considering the purchase of a new machine
costing $150,000. The machine would generate net cash inflows of
$43,690 per year for 5 years. At the end of 5 years, the machine
would have no salvage value. Copa’s cost of capital is 12 percent.
Copa uses straight-line depreciation. The present value factors of
annuity of $1.00 for different rates of return are as follows:
Period
12%
14%
16%
18%
4
3.03735
2.91371
2.79818
2.69006
5
3.60478
3.43308
3.27429...
CHOOSE THE CORRECT ANSWER: 1) PVC Corporation is considering an investment proposal in which a technology...
CHOOSE THE CORRECT ANSWER:
1) PVC Corporation is considering an investment proposal in
which a technology investment of $10,000 would be required. The
investment would provide cash inflows of $2,000 per year for six
years. The technology investment will have no salvage value at the
end of six years. If the company's discount rate is 10%, the
investment's net present value is closest to (Ignore income
taxes.): (See the time value of money BELOW THE PAGE.)
A. $1,289
B. $(1,289)...
Grady Corp. is considering the purchase of a new piece of equipment. The equipment costs $51,500,...
Grady Corp. is considering the purchase of a new piece of
equipment. The equipment costs $51,500, and will have a salvage
value of $5,040 after six years. Using the new piece of equipment
will increase Grady’s annual cash flows by $6,190. Grady has a
hurdle rate of 12%. (Future Value of $1,
Present Value of $1, Future Value Annuity of $1, Present Value
Annuity of $1.) (Use appropriate factor from the
PV tables.)
a. What is the present value of...
Tulsa Company is considering investing in new bottling equipment and has two options: Option A has...
Tulsa Company is considering investing in new bottling equipment
and has two options: Option A has a lower initial cost but would
require a significant expenditure to rebuild the machine after four
years; Option B has higher maintenance costs, but also has a higher
salvage value at the end of its useful life. Tulsa’s cost of
capital is 11 percent. The following estimates of the cash flows
were developed by Tulsa’s controller:
A
B
Initial Investment
320,000
454,000
Annual Cash...
Concord, Inc. is considering purchasing equipment costing $48000 with a 6-year useful life. The equipment will...
Concord, Inc. is considering purchasing equipment costing $48000
with a 6-year useful life. The equipment will provide annual cost
savings of $12000 and will be depreciated straight-line over its
useful life with no salvage value. Concord requires a 10% rate of
return. Present Value of an Annuity of 1 Period 8% 9% 10% 11% 12%
15% 6 4.623 4.486 4.355 4.231 4.111 3.784 What is the approximate
net present value of this investment? $5832 $4260 $2771 $24000
XYZ Company is considering the purchase of new equipment that will cost $130,000. The equipment will...
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...
ADVERTISEMENT
Need Online Homework Help?
Get Answers For Free
Most questions answered within 1 hours.
ADVERTISEMENT
Active Questions
asked 4 minutes ago
asked 4 minutes ago
asked 14 minutes ago
asked 15 minutes ago
asked 19 minutes ago
asked 20 minutes ago
asked 21 minutes ago
asked 21 minutes ago
asked 23 minutes ago
asked 30 minutes ago
asked 35 minutes ago
asked 56 minutes ago