A factory costs $260,000. You forecast that it will produce cash inflows of $70,000 in year 1, $130,000 in year 2, and $200,000 in year 3. The discount rate is 10%.   a. What is the value of the factory? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. Is the factory a good investment?   multiple choice Yes No

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A:

Q: A factory costs $460,000. You forecast that it will produce cash inflows of $150,000 in year 1,…

A: Given: Initial cost = $460,000 Year 1 cash inflows = $150,000 Year 2 cash inflows = $210,000 Year 3…

Q: ISA is planning to spend $650,000 on a new marketing campaign. They believe that this action will…

A: Net Present Value = Present value of Cash Inflows – Initial investment in the project

Q: after a lengthy meeting with the marketing team about a new product being introduced, your boss asks…

A:

Q: There are two competing alternatives in your textile business. A-type Tufting Machine costs $10,000…

A: The right answer is  c)  Between $25,176 and $26,367

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A:

Q: A factory costs $28000. You forecast that it will produce cash inflows of $80000 in year 1, $140000…

A: The provided information are: Discount rate (r) = 12% = 0.12 Cash outflow = $28000

Q: Kira Wang produces 20,000 vases a day at a cost of RM8 per vase for materials and takes 25 days to…

A: Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

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A: A method of capital budgeting that helps to evaluate the time period a project requires to cover its…

Q: Suppose you have an internship at a chemical factory. Your supervisor asks you to calculate the net…

A: NPV is the difference between the present value of cash inflows and the present value of outflows. A…

Q: What is the NPV of the investment? (Rounded to the nearest whole dollar)

A: Net Present Value: It represents the project's or investment's profitability in dollar amounts. It…

Q: A factory costs $420,000. You forecast that it will produce cash inflows of $130,000 in year 1,…

A: Value of factory = Present Value of cash inflow (PVCI) - Present Value of cash outflow (PVCO)

Q: Talbot Industries is considering launching a new product. The new manufacturing equipment will cost…

A: A company evaluates and measures various costs and expenses before launching or starting a new…

Q: A factory costs $320,000. You forecast that it will produce cash inflows if $100,000 in a year,…

A: The value of factory can be determined with the help of below expression:

Q: A factory costs $430,000. You forecast that it will produce cash inflows of $135,000 in year 1,…

A: Net present value method: Net present value method is the method which is used to compare the…

Q: A factory costs $330,000. You forecast that it will produce cash inflows of $105,000 in year 1,…

A: The present value function uses a discount factor for converting a series of future cash flows to…

Q: Franklin Mints, a confectioner, is considering purchasing a new jelly bean-making machine at a cost…

A: IRR(Internal Rate of Return) is the rate of discounting at which the present value of cash inflows…

Q: You are starting a family pizza parlor and need to buy a motorcycle for delivery orders. You have…

A: Given, Model A cost = $8,500 Expected run time = 7 years  Model B cost = $14,900 Expected run time =…

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A: Annual Worth  It is defined as an equivalent uniform AW of all the estimated receipts as well as the…

Q: Walden Industries is considering investing in production−management software that costs $620,000​,…

A: Accounting Rate of Return is a very easy but effective tool for…

Q: Suppose Francine Dunkelberg’s Sweets is considering investing in warehouse-management software that…

A: Accounting Rate of Return:  The accounting rate of return is the amount of income that is earned…

Q: Butcher Butcher is considering whether to invest in a new product, the Zam. Details of the Zam are…

A: Capital budgeting is basically discovering, assessing, and choosing investments to determine a…

Q: A factory costs $300,000. You forecast that it will product cash inflows of $105,000 in year 1,…

A: Factory Cost= 300,000 Cash inflows: Year 1= 105,000 Year 2 = 165,000  Year 3 = 270,000 Discount rate…

Q: Management of Carla Vista Mints, a confectioner, is considering purchasing a new jelly bean-making…

A: Capital budgeting is one of the processes used by businesses to assess major projects or investments…

Q: Nine Point Industries is trying to decide whether to invest in equipment to manufacture a ne…

A: Increase in sales = $94,000 Decrease in Material Cost =$37,000 Equipment Cost = $148,000 Time Period…

Q: Cecil company is considering the of a new machine. The machine cost $227,500 and will generate a…

A: Machine cost (C) = $227500 Cash inflow (A) = $35000

Q: A factory costs $400,000. You forecast that it will produce cash inflows of $115,000 in year 1.…

A: The value of the factory is the sum of present value of future cashflows.

Q: The Payback Period (assume the operating cashflows are spread evenly over each year) The Accounting…

A: Calculation of Payback Period                   Year Annual Cash Flow Cumulative Cash Flow   1…

Q: Which material will you recommend?

A: Cost is defined as the amount which is incurred by the entity over transforming the products from…

Q: A firm has only $10,000 to invest and must choose between two projects. Project A returns $12,400…

A: Return on investment represents income earned by the company on the investment made.

Q: A factory costs $970,000. You reckon that it will produce an inflow after operating costs of…

A: The present value function or concept can be used to determine the present value of a future sum or…

Q: An investment of ₱270,000 can be made in a project that will produce a uniform annual revenue of…

A: Pay back period of the investment can be estimated using various methods like: The Rate of Return…

Q: Safe Driving School is considering purchasing new autos costing $235,000. The company's management…

A: YEAR  CASH FLOW CUMULATIVE CASH FLOW  0 ($235,000) ($235,000) 1 $80,000 ($155,000) 2 $85,000…

Q: Healthy Food, Inc.  is considering two investments.  Each costs $10,000 but they have different cash…

A: NPV computes the existing value of future benefits by discounting future cash flows with a given…

Q: A project currently generates sales of $14 million, variable costs equal 50% of sales, and fixed…

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Q: You are operating an old machine that is expected to produce a cash inflow of $5,800 in each of the…

A: EAC means net annual cost to operating the machine. With passage of time, value of money decline.…

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A: The payback period, NPV and IRR are the values determined for comparing the available projects for…

Q: A project currently generates sales of $18 million, variable costs equal 60% of sales, and fixed…

A: The net amount of cash and cash equivalents transported into and out of a corporation is referred to…

Q: Management of Sandhill Mints, a confectioner, is considering purchasing a new jelly bean-making…

A: Net present value is the present value of all cash flow in minus present value of cash flow out…

Q: You are purchasing a factory at $550,000. Your projected cash flow streams from the factory will be…

A: Rate of Return for an investment is the yield rate. Every investment decision is based on the return…

Q: A factory costs $290,000. You forecast that it will produce cash inflows of $85,000 in year 1,…

A: For project acceptance decision we will calculate the NPV and IRR of the project

Q: Vandalay industries is considering the purchase of a new machine for the production of latex.…

A: Equivalent annual cost (EAC) is used to compare two assets which have different life spans. It…

Q: A factory cost $330,000. You forecast that it will produce cash inflows of $105,000 in year 1,…

A: All financials are in $.Let PV(I) = Present value of all the cash inflows and Ci be the cash inflow…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.