Mountain Frost is considering a new project with an initial cost of $295,000. The equipment willbe depreciated on a straight-line basis to a zero book value over the four-year life of the project.The projected net income for each year is $21,800, $22,700, $24,600, and $18,700, respectively.What is the average accounting return?Multiple ChoiceO 13.64%O 14.88%7.44%O 11.16%15.94%

A method of capital budgeting that provides information regarding the percentage of return of the…

Answered: Mountain Frost is considering a new…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section10.A: Mutually Exclusive Investments Having Unequal Lives

Problem 2P

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Redbird Company is considering a project with an initial investment of $265,000 in new equipment that will yield annual net cash flows of $45,800 each year over its seven-year life. The companys minimum required rate of return is 8%. What is the internal rate of return? Should Redbird accept the project based on IRR?
Gardner Denver Company is considering the purchase of a new piece of factory equipment that will cost $420,000 and will generate $95,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further Instructions on internal rate of return in Excel, see Appendix C.
Average rate of returncost savings Maui Fabricators Inc. is considering an investment in equipment that will replace direct labor. The equipment has a cost of 125,000 with a 15,000 residual value and an eight-year life. The equipment will replace one employee who has an average wage of 28,000 per year. In addition, the equipment will have operating and energy costs of 5,150 per year. Determine the average rate of return on the equipment, giving effect to straight-line depreciation on the investment.
A Mountain Frost is considering a new project with an initial cost of $270,000. The equipment will be depreciated on a straight-line basis to a zero book value over the four-year life of the project. The projected net income for each year is $21,300, $22,200, $24,600, and $18.200, respectively, What is the average accounting return? Multiple Choice O O O C 14.65% 15.00% 11.99% 1712%
A new project has an initial cost of $250,000. The equipment will be depreciated on a straight-line basis to a zero book value over the five-year life of the project. The projected net income each year is $13,250, $18,000, $20,240, $15,150, and $11,900, respectively. What is the average accounting return? Multiple Choice 11.52% 8.95% 13.46% 12.57% 5.33%
Alpha Zeta is considering purchasing some new equipment costing $390,000. The equipment will be depreciated on a straight line basis to zero book value over the four year life of the project. Projected net income for the four years is $18,900; $21,300; $26,700; and $25,000. What is the average accounting rate of return?
Mountain Frost is considering a new project with an initial cost of $180,000. The equipment will be depreciated on a straight-line basis to a zero book value over the four-year life of the project. The projected net income for each year is $19,500, $20,400, $24,600, and $16,400, respectively. What is the average accounting return?
A new municipal refuse-collection truck can be purchased for $84,000. Its expected useful life is six years, at which time its market value will be zero. Annual receipts less expenses will be approximately $18,000 per year over the six-year study period. At MARR of 19%, calculate the following a. future worth of the project Choices: $ - 63,250 $ - 64,250 $ - 65,250 None of the choices b. the return on investment of the project Choices: -35% -36% -37% None of the choices c. benefit-cost ratio of the project Choices: 0.53 0.63 0.73 None of the choices d. the internal rate of return of the project. Choices: 7% 8% 9% None of the choices
You are given opportunity to purchase product for $42, 000. The product will have annual operating expenses of $4,000, and a salvage value of $20,000 at the end of its useful life of 6 years. Assuming a discount rate of 9.0%, what is the minimum acceptable revenue to justify taking this project? A 1.01% B $333 C $2704 D $767 E $10704
8. A project has an initial cost of $32,000 and a 3-year life. The projected net income from the project is $1,500, $2,100, and $1,700 a year for the next 3 years, respectively. The company uses straight-line depreciation to a book value of zero over the life of the project. What is the average accounting return? A. 8.72% В. 10.10% С. 11.04% D. 14.69%
Mountain Frost is considering a new project with an initial cost of $205,000. The equipment will be depreciated on a straight-line basis to a zero book value over the four-year life of the project. The projected net income for each year is $20,000, $20,900, $24,600, and $16,900, respectively. What is the average accounting return? Please make sure its correct
Palmer Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net income after tax of $164,900. The equipment will have an initial cost of $485,000 and have a 7 year life. If the salvage value of the equipment is estimated to be $9,000, what is the accounting rate of return? Multiple Choice 34.00% 23.28% 156.37% 51.11%

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