A project has an initial requirement of $95,316 for equipment. The equipment will be depreciated to a zero book value over the 6-year life of the project. The investment in net working capital will be $4,025. All of the net working capital will be recouped at the end of the 6 years. The equipment will have an estimated salvage value of $21,686.  The annual operating cash flow is $48,769. The cost of capital is 14 percent. What is the project’s net present value if the tax rate is 26 percent?

Q: The original cost for a distillation tower is $24,000 and the useful life of the tower is estimated…

A: Original cost for distillation tower = $24000 Scrap value = $4000 Estimated life = 8 years Annual…

Q: An asset that costs $3 million dollars will be depreciated to a zero book value across a 12 year…

A: Deprecation would be charge on useful life of Assets. There are two method of deprecation SLM &…

Q: Oriental Corporation has gathered the following data on a proposed investment project:…

A: Payback period is 6.83 years Step-by-step explanation  Investment in depreciable equipment =…

Q: A project capitalized for ₱25,000 invested in depreciable assets will earn a uniform, annual income…

A: Here, Investment = I = P 25,000 Uniform annual income = P 29,647 O & M cost = P 5,000 Taxes and…

Q: BAM Co. is evaluating a project requiring a capital expenditure of $806,250. The project has an…

A: Average rate of return = Average annual income / Average investment Average annual income = Total…

Q: what is the projects equivalent annual cost, or EAC?

A:

Q: The project costs 1,40,000 and has no scrap value after five years. It is depreciated on straight…

A: It has to be calculated on Return On Average Investment Method  Under this method, average…

Q: A project has an initial requirement of $261,000 for fixed assets and $27,000 for net working…

A: Net present value is the difference between present value of future cash inflow minus present value…

Q: Drake Corporation is reviewing an investment proposal. The initial cost is $106,200. Estimates of…

A: Payback period is the method used by the management in determining the possible time taken by the…

Q: A company is evaluating a new 4-year project. The equipment necessary for the project will cost…

A: Initial cost of the project = $2,900,000 Salvage value = $ 655,000 Dpreciation method = 5-years…

Q: A project requires an initial investment of 45,000$, has a salvage value of 11,000$ after six years,…

A: Annual worth of project is the equivalent annual cost of initial investment less equivalent annual…

Q: ABC, Inc. purchased an equipment at time=0 for $135,077. The shipping and installation costs were…

A: Calculation of Cash Flow in Year 4:The cash flow in year 4 is $123,123.96.Excel Spreadsheet:

Q: ABC, Inc. purchased an equipment at time=0 for $84,362. The shipping and installation costs were…

A: Calculation of Cash Flow in Year 3:The cash flow in year 3 is $64,637.16.Excel Spreadsheet:

Q: he Novak Company is planning to purchase $502,100 of equipment with an estimated seven-year life and…

A: Payback period:   Payback period is the expected time period which is required to recover the cost…

Q: e estimates of a project:        Initial investment                   $50,000        Annual…

A: PW or Present worth can be computed using PV function in excel. PV function will compute present…

Q: A five-year project has an initial fixed asset investment of $280,000, an initial NWC investment of…

A: Equivalent Annual Cost (EAC) is the cost of owning an asset. It is used as an important tool for…

Q: mainte

A:

Q: Drake Corporation is reviewing an investment proposal. The initial cost is $105,100. Estimates of…

A: Payback period is the time taken to recover initial investment. Payback period =Initial…

Q: An equipment costing P120,000 is expected  with an estimated economic life of 6 years,  salvage…

A: The question is related to Capital Budgeting. The Net Present Value will be calculated with the help…

Q: Sommers Company is evaluating a project requiring a capital expenditure of $300,000. The project has…

A:

Q: An asset in the five-year MACRS property class cost $100,000 and has a zero estimated salvage value…

A: Present worth is the worth in current time of the amount which is expected to be received in some…

Q: Mimi Company is considering a capital investment of $275,000 in new equipment. The equipment is…

A: Capital budgeting is the process undertaken to evaluate projects and investments. The construction…

Q: Company Q is considering a project which needs an equipment. The cost of the equipment is $350,000.…

A: Given: Sales $175,000 Cost $93,000 Tax 40% Cost of equipment = $350,000

Q: An injection molding system has a first cost of $175,000 and an annual operating cost of $95,000 in…

A: ESL means maximum life of the machinery up to which machine can provides positive cashflows. ESL is…

Q: CJN Corporation is evaluating a project requiring a capital expenditure of $725,650. The project has…

A: The average rate of return refers to the income generated from the sum of cash flow over its…

Q: A 5-yr project has an initial requirement of $100,415 for new equipment and $8,944 for net working…

A: Calculation of Net Present Value:The net present value is $185,513.41.Excel Spreadsheet:

Q: A potential investment has a cost of $542,500 and a useful life of 7 years. Annual cash sales from…

A: 1) Calculation of NPV (in case of investment before tax):   Year 1 2 3 4 5 6 7   Sales 219202…

Q: CJN Corporation is evaluating a project requiring a capital expenditure of $806,250. The project has…

A: Average  Rate of Return is given by the formula: Average Rate of Return= Average  Net Earnings /…

Q: Oriole Company is considering a capital investment of $196,000 in additional productive facilities.…

A: Cash flow states the cash inflow and cash outflow of the company. It is represented in the cash flow…

Q: Sergei Company purchases land for $4,000,000 from which it expects to extract 2,000,000 tons of…

A: Introduction: Depletion rate per ton = ( Asset value - salvage value ) / Estimated Tons

Q: A project requires an initial investment of $150,000, to be depreciated straight-line over 3 years…

A: NPV computes the existing value of future benefits by discounting future worth with a stated…

Q: A 4-year project requires an initial investment in fixed assets of $40,000, an investment in…

A: Discount rate = 12% As per information Calculation of present value of cash flows Year Cash flow…

Q: CC Company invested in a project which required an investment of P10,000 with a salvage value of…

A: GIVEN   CC Company invested in a project which required an investment of P10,000 with a salvage…

Q: The initial cost of a paint sand mill, including its installation is P765,952. The mill will last…

A: A sinking fund is a method of charging depreciation where every year a fixed amount of depreciation…

Q: Company Q is considering a project which needs an equipment. The cost of the equipment is $350,000.…

A: Cash flows are the cash generated from the operation of the business organisation. In other words,…

Q: Machine “A” has an initial cost of $ 50,000 with an estimated period of 12 years and a salvage value…

A: Present value of cash outflows = Cash outflows/(1+r)n  r is interest rate and n is time period of…

Q: Would be necessary for equipment. The annual revenues and expenses are expected to be $38,000 and…

A: B/C ratio is ratio of present value of benefits to initial investment and if B/C B/C ratio is more…

Q: An elective project is currently under review. It requires an initial investment of $116,000 for…

A: IRR is the Internal rate of return. It is that rate at which the NPV of a project is zero.

Q: The initial cost of a paint sand mill, including its installation is P806,875. The mill will last…

A: A sinking fund is a method of charging depreciation where every year a fixed amount of depreciation…

Q: A contractor can buy dump trucks for ₱ 800,000 each or rent them for ₱ 1,200 per truck per day. The…

A: Solution- (A)-EAC=NPV/At,rwhereA=The present value of an annuity factort=Number of periodsr=Interest…

Q: The initial cost of an evaporative crystallizer including its installation is P930,000. The approve…

A:

Q: A project requires an initial investment of $45,000, has a salvage value of $12,000 after six years,…

A: capital recovery refers to the time when the amount initially invested would be returned through the…

Q: A machine costs P8,000, lasts 8 years, and has a salvage value of P400. Determine the depreciation…

A: The question is based on the concept of Depreciation Accounting. As per the Bartleby guidelines we…

Q: Beam Company, which is planning to spend P135,000 for a new machine, to be depreciated on a straight…

A: Payback period is the number of periods within which the investment on a project can be recovered in…

Q: A machine costs $400,000 with salvage value of 20,000. Life of it is six years. In the first year,…

A: Solution:- The fall in value of asset due to its wear and tear cost is called depreciation.…

Q: A project requires an initial investment of $150,000, to be depreciated straight-line over 3 years…

A: Given Data: Project cost $1,50,000.00 Life(years) 3 Revenue $1,50,000.00 Expenses $ 85,000…

Q: A machine has a first cost of PhP 800,000 and a salvage value of PhP 50,000 at the end of its life…

A: Return means earn additional on invested amount over the period. It shows excess cash inflow over…

Q: The following information is for a proposed project that will provide the capability to produce a…

A: Capital budgeting techniques are commonly used at a large scale by companies to identify the…

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.