A project capitalized for ₱45,000 invested in depreciable assets will earn a uniform, annual income of ₱19945 in 10 years. The cost for operation and maintenance total ₱9,000 a year, and annual taxes and insurance will cost 4% of the investment. The company expects its capital to earn 12% before income taxes. Determine the equivalent uniform annual cost of the project.
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A project capitalized for ₱45,000 invested in
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- A machine that costs $12,000 is expected to operate for 10 years. The estimated salvage value at the end of 10 years is $0. The machine is expected to save the company $2,331 per year before taxes and depreciation. The company depreciates its assets on a straight-line basis and has a marginal tax rate of 40 percent. The firm’s cost of capital is 14 percent. What is the internal rate of return (IRR) for the machine? Based on the IRR criterion, should this machine be purchased?A chemical plant worth P 110M has an estimated life of 6 years and a projected scrap value of P 10M. after 3 years of operation an explosion made it a total loss. How much money would have to be raised to put up a new plant costing P 150M, if depreciation reserved had been maintained during its 3 years of operation by Straight Line method?Henredon purchases a high-precision programmable router for shaping furniture components for $190,000. It is expected to last 12 years and have a salvage value of $5,000. It will produce $45,000 in net revenue each year during its life. Corporate income taxes are 40 percent, and the after-tax MARR is 10 percent. Determine the ATCF for each year and the after-tax PW, AW, IRR, and ERR, if the router is kept for 12 years.
- (Show the cashflow diagram if needed) A project is estimated to cost P100,000, lasts 8 years, and have a P10,000 salvage value. The annual gross income is expected to average P24,000 and annual expenses, excluding depreciation, will total P6,000. If capital is earning 10% before income taxes, determine if this is a desirable investment using PWM and FWM.The company uses a 10% discount rate and the total-cost approach to capital budgeting analysis. The working capital required under the new system would be released for use elsewhere at the conclusion of the project. Both alternatives are expected to have a useful life of ten years.1. The net present value of the overhaul alternative (rounded to the nearest hundred pesos) is: P(750,300) P(987,400) P(725,800) P(975,800) 2. The net present value of the new system alternative (rounded to the nearest hundred pesos) is: P(552,900) P(758,400) P(862,900) P(987,400). A project requires an initial investment of BD 75,000, has a salvage value of BD 15,000 after 4 years, incurs annual expenses of BD 5,000. Using MARR of 10%, determine the CR of this project over the four years. Show your full steps with your final table.
- Peabody Corporation has the following base-case estimates for its new smallengine assembly project:• Price per un it= $500• Variable costs = $120 per unit• Fixed costs = $2.5 million• Demand = 20,000 units per year• Capital investment = $8 million a1 year 0• Product life = 8 years• Salvage value = $500,000• Depreciation method =seven-year MACRS• Tax rate= 35%• MARR = l2%Suppose the company believes that all of its estimates (except the product life, depreciation method, tax rale, and MARR) are accurate only 10 within ±20%.(a) What is the NPW of the project based on its base-case scenario?(b) What is the NPW of the project based on its best-case scenario?(c) What is the worst-case scenario?(d) What conclusion would you make about the project after seeing the scenario analyses?Determine the capitalized cost of a research laboratory which requires Php 4,500,000 for original construction: Php 110,000 at the end of every year for the first 6 years and then Php 130,000 each year thereafter for operating expenses, and Php 600,000 every 7 years for replacement of equipment with interest at 12% per annum? CC = Php 5,996,693.866 CC = Php 8,123,567.369 CC = Php 7,876,854.896 CC = Php 6,987,693.311A fixed capital investment of ₱87,000,000 is required for a proposed manufacturing plant and an estimated working capital of ₱3,000,000. Annual depreciation is estimated to be 11% of the fixed capital investment. Annual revenue is ₱2778,000.What is the payback period (in years) of the proposed manufacturing plant?
- install cost of the new machinery is $400,000 and is expected to last for 5 years. The salvage value is expected to be $30,000 in today’s dollars. Revenue is expected to increase by $40,000 while operating costs are expected to increase $2500 (both actual). Determine the present worth of the project, assuming an (actual) MARR of 10%, a CCA rate of 10% and a corporate tax rate of 15%.Two proposals are being considered by a company for building a bottling plant. These are: Proposal A:The construction of a building now costing P700,000. Proposal B: The construction of a smaller building now costing P600,000, and an additional wing costing P200,000 at the end of 10 years. Assuming depreciation to be negligible, which of the two proposals is more economical if interest is at 6%?An investment of P 250,000 can be made in a project that will produce a uniform annual revenue of P 192,800 for 5 years and then have a salvage value of 10% of the first cost. Operation and maintenance will be P 72,000 per year. Taxes and insurance will be 4% of the first cost per year. The company expects capital to earn 20% before income taxes. Show whether or not the investment is justified economically using1. ROR method2. payout method