Quiz

An automation asset with a high first cost of $10 million has a capital recovery (CR) of $1,985,000 per year. The correct interpretation of this CRvalue is that:a. the owner must pay an additional $1,985,000 each year to retain the asset.b. each year of its expected life, a net revenue of $1,985,000 must be realized to recover the $10 million first cost and the required rate ofreturn on this investment.c. each year of its expected life, a net revenue of $1,985,000 must be realized to recover the $10 million first cost.d. the services provided by the asset will stop if less than $1,985,000 in net revenue is reported in any year.

What is the ERR for this project? Assume that   = 12% and MARR = 20% per year.  Is this project considered to be profitable? What is the simple payback period?

Assume that a company Is considering purchasing a new plece of equlpment for $240,000 that would have a useful life of 10 years and no salvage value. The new equipment would cost $20,000 per year to operate and it would replace an old plece of equipment that costs $53,000 per year to operate. The old equipment currently belng used could be sold for a salvage value of $40,000. The simple rate of return for the new equipment is closest to: Multiple Cholce 4.50%. 7.55%. 12.00%. 20.00%.

Longmont Corporation is considering the purchase of a machine costing $44,000 with a 5-year useful life and no salvage value. Longmont uses straight- line depreciation and assumes that the annual cash inflow from the machine will be received uniformly throughout each year. In calculating the accounting rate of return, what is Longmont's average investment? Multiple Choice $26,400. $44,000. O $10,560. $8,800. $22,000.

Godo

GIVEN: Project C requires $800,000 net initial investment for new machinery with a 8-year life and a Salvage Value of $40,000. The company uses straight-line depreciation. Project C is expected to yield an annual Net Income of $65,000 per year. What is the Payback Period using the above information? A) 5 years B) 6 years C) 7 years D) 8 years E) None of the above

Thornton Manufacturing Company has an opportunity to purchase sometechnologically advanced equipment that will reduce the company's cash outflow foroperating expenses by $1, 278,000 per year. The cost of the equipment is S7,661,925.67. Thornton expects it to have a 9 - year useful life and a zero salvagevalue. The company has established an investment opportunity hurdle rate of 15percent and uses the straight - line method for depreciation. (PV of S1 and PVA of S1) (Use appropriate factor (s) from the tables provided.) Required Calculate theinternal rate of return of the investment opportunity. (Do not round intermediatecalculations.) Indicate whether the investment opportunity should be accepted.

Mariam is analyzing a project and has gathered the following data. The firm depreciates its assets using straight-line depreciation to a zero book value over the life of the asset. Required rate of return on this project is 10%     Year Cash Flow Net Income 0 -$642,000   n/a 1 170,000   $9,500   2 240,000                     79,500   3 $270,000 $85,500     a.What is the payback period for this project? b. What is the discounted payback period? c.  What is the projects average accounting rate of return (AAR)? d. What is the NPV for this project? e. What is the profitability index for this project? f. Based on your answers in a) through e), which project will you finally choose?

i need the answer quickly

A company is considering two alternatives with regards to equipment which it needs. The alternatives are as follows: Alternative A: Purchase Cost of Equipment 703,668700,000 Salvage Value 100,454100,000 Daily operating cost 501500 Economic life, years 10 Alternative B: Rental at 1,5751,500 per day. At 18% interest, how many days per year must the equipment be in use if Alternative A is to be chosen.

A five-year project has an initial fixed asset investment of $345,000. an initial NWC investment of $25,000, and an annual OCF of -$41,000. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required return is 11percent, what is this project's equivalent annual cost, or EAC? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Equivalent annual cost

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%

Martin Corporation is considering an investment in new equipment costing $155,000. The equipment will be depreciated on a straight-line basis over a five-year life and is expected to generate net cash inflows of $45,000 the first year, $65,000 the second year, and $90,000 every year thereafter until the fifth year. What is the payback period for this investment? The equipment has no residual value OA 3.22 years OB. 1.58 years OC. 4.22 years OD. 2.29 years CKIE

A five-year project has an initial fixed asset investment of $320,000, an initial NWC investment of $32,000, and an annual OCF of -$31,000. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required return is 10 percent, what is this project's equivalent annual cost, or EAC? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Equivalent annual cost

Having an issue with this problem.

A five-year project has an initial fixed asset investment of $300,000, an initial NWC investment of $28,000, and an annual OCF of – $27,000. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required return is 11%, what is this project's equivalent annual cost, or EAC? (Negative answer should be indicated by a minus sign. Do not round your intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) Equivalent annual cost %24

An 8-year project is estimated to cost $368,000 and have no residual value. If the straight-line depreciation method is used and the average rate of return is 18%, determine the average annual income.$_______________

savita

What's the best way to solve this problem?

The Gamma Inc. is planning to spend P600,000 for a machine that will depreciate on a straight-line basis over a ten-year period with no terminal disposal price. The machine will generate cash flow from operations of P120,000 a year. Ignoring income taxes, what is the accounting rate of return on the net initial investment? (in percentage)

Sunland is considering the purchase of equipment costing $147000. The equipment has a 12- year useful life, has an estimated salvage value of zero, and is expected to generate $29000 in annual cash flows. The company has a 10% required rate of return and uses the straight-line depreciation method. The accounting rate of return on this equipment is closest to 11.4%. 10.0%. 21.1%. 9.7%. O O O O

Clemson Software is considering a new project whose data are shown below.  The required equipment has a 3-year tax life, after which it will be worthless, and it will be depreciated by the straight-line method over 3 years.  Revenues and other operating costs are expected to be constant over the project's 3-year life.  What is the project's Year 1 cash flow?   Equipment cost (depreciable basis) $77,000 Straight-line depreciation rate 33.333% Sales revenues, each year $70,000 Operating costs (excl. depr.) $28,000 Tax rate 35.0%         $36,800     $36,772     $36,993     $35,990     $36,283