A project in NU will cost $200,000 for planning and $40,000 in each of the next six years. It is expected to generate $40,000 revenues per year permanently. Additional revenues will be gained in the pattern of an arithmetic gradient with $20.000 in the first year, declining by $4,000 per year to zero in the sixth year. What is the Rate of Return of this project?

Q: Fielding Hardware is adding a new product line that will require an investment of $1,470,000,…

A: Accounting rate of return= Average annual operating income from asset/ initial investment

Q: Garfield Inc. is considering a 10-year capital investment project with forecasted revenues of…

A: Net cash inflow represents the inflow of the company after deducting the cash outflow of the…

Q: In an investment project, the initial cost of investment is $400,000. The annual revenues are…

A: Payback period:  The payback period (PBP) is an investment assessment approach that determines how…

Q: A proposed project is expected to generate returns of $50,000 per year for each of the next four…

A: Annual return (A) = $50000 n = 4 years Project cost (C) = $145685 Let i = IRR

Q: How many years must the cash flows last for the investment to be acceptable?

A: Time value of money:   Any amount invested today earns an additional income, called interest…

Q: Roberts Hardware is adding a new product line that will require an investment of $1,418,000.…

A: Payback Period is the period in which the full investment of the project will be recovered through…

Q: A project with a life of 8 years is expected to provide annual sales of $440,000 and costs of…

A: Annual Operating Cash Flow for the Best-Case Scenario Annual Sales = $506,000  [$440,000 *115%]…

Q: We are examining a new project. We expect to sell 6,500 units per year at $43 net cash flow apiece…

A: Net Present Value(NPV) is excess of PV of inflows over PV of cash outlays of proposed project. It is…

Q: The Square Box is considering two independent projects, both of which have an initial cost of…

A: Information Provided: Initial cost = $18,000 Required return = 12% Term = 3 years

Q: EABL is considering an investment that will cost $80,000 and have a useful life of 4 years. During…

A: The payback period is the time taken by an investment to reach its Break-Even Point or in other…

Q: Giant Equipment Ltd. is considering two projects to invest next year. Both projects have the same…

A: YEAR CASHFLOW A cashflow Y 1 42000 48000 2 42000 48000 3 42000 48000 4 42000 48000 5 42000…

Q: A project your firm is considering for implementation has these estimated costs and revenues: an…

A: The present value of all the inflows and outflows of cash in the future are discounted to the…

Q: mates that it can generate $4,600 per year in additional cash inflows for the next five years if it…

A: Therefore , the correct option is C.2438   Calculate Present value: Present value: Present value…

Q: A new project will cost $80,000 initially and will last for 7 years, at which time its salvage value…

A: The question is based on the concept of sensitivity analysis of capital budgeting. The analysis…

Q: JFINEX Corporation is considering a new project that will cost 200,000. It will provide an annual…

A: The NPV can be calculated as the Present Value of cash Inflows-Initial Cost

Q: Cullumber Corp. management is expecting a project to generate after-tax income of $76,300 in each of…

A: Average After Tax Income = 76,300 Average Book Value of Equipment = 194,140

Q: Assume the following facts:• A project will cost $45,000 to develop.• When the system becomes…

A: Computation:

Q: Quintiles Corporation is considering a project that would require an investment of $343,000 and…

A: The payback period refers to the period that is required to recover the initial cost. With the help…

Q: You are evaluating a project that will cost 5484 000, but is expected to produce cash flows of…

A: The payback is the time it takes the cash inflow from the capital investment project to equal the…

Q: is considering a project that would require an initial investment of P235,000. The project would…

A: Internal rate of return or IRR is the rate at which present value of cash inflows is equal to…

Q: An advertising campaign will cost $500,000 for planning and $50,000 in each of the next five years.…

A: Internal Rate of Return: The internal rate of return (IRR) is a financial research indicator that is…

Q: Ace Hardware is adding a new product line that will require an investment of $1,454,000. Managers…

A: Calculation of Accounting rate of return(ARR):- Accounting rate of return(ARR)  = 13.15%…

Q: Ace Investment Company is considering the purchase of the Apartment Arms project. Next year’s NOI…

A: Given: Cash flows: $2000,000 Growth rate: 4% Required rate of return :13% Formulas for the above…

Q: Grayson Company is considering a purchase of equipment that costs $62,000 and is expected to offer…

A: Capital Budgeting Decision: In most cases, a capital budgeting choice is either a yes or no decision…

Q: The following problem is designed to be solved by spreadsheet. Maintenance costs for a new facility…

A: Present value is the current worth of an amount of money in future. The future amount is…

Q: Jen Law Firm is evaluating a project that must create a revenue of $4,600 in the 1st year, $5,200 in…

A: Future worth refers to the value of the amount in future which is deposited or received today at…

Q: A project will produce cash inflows of $3,200 a year for 4 years with a final cash inflow of $5,700…

A: Calculation of NPV: Excel spread sheet:

Q: Conventional Corporation is evaluating a capital budgeting project that will generate $600,000 per…

A: Computation:

Q: A project is expected to create operating cash flows of $30,000 a year for three years. The initial…

A: The question is based on the concept of Financial Management. Net present value is the difference…

Q: Determine the average rate of return for a project that is estimated to yield total income of…

A: Average rate of return = Average annual income / Initial investment where, Average annual income =…

Q: The management of Lanzilotta Corporation is considering a project that would require an investment…

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

Q: Giant Equipment Ltd. is considering two projects to invest next year. Both projects have the same…

A: In order to know which project to be selected one has to find the Net present value.

Q: Wandering RV is evaluating a capital budgeting project that is expected to generate $36,950 per year…

A: Given information: Cash flows generated $36,950 for 6 years Rate of return is 10%

Q: What is the NPV of a project that costs $38,000 today and is expected to generate annual cash…

A: Excel Spreadsheet:

Q: Corning Ceramics expects to spend $400,000 to upgrade equipment two years from now. If the company…

A: Amount to be spent 2 years from now=$400,000 Minimum attractive rate of return=20% p.a. Formula to…

Q: A company requires an initial investment of $75,000 with a residual value of $12,500 after five…

A: Answer initial investment = $75,000 residual value  = $12,500 annual returns = $20,000 Discounting…

Q: Project NAG generates positive cash flows of $60,000 per year at the end of each of the next five…

A: In we need to calculate the cost of project from net present value.

Q: A project costing $6,200 initially should produce cash inflows of $2,860 a year for three years. The…

A: Net present value is the technique used in capital budgeting to evaluate the acceptability of the…

Q: A project is expected to cost $30,000, with the capital due immediately. Four annual cash flows are…

A: Capital budgeting techniques are quantitative approaches that a company adopts while evaluating…

Q: A project your firm is considering for implementation has these estimatedcosts and revenues: an…

A: Given information is: Useful life of the project = 10 years MARR = 10% Resale value after 10 years =…

Q: Giant Equipment Ltd. is considering two projects to invest next year. Both projects have the same…

A: Introduction: For the selection of the projects, we need to calculate the Present Value for both…

Q: Robinson Hardware is adding a new product line that will require an investment of $1,454,000.…

A: Payback period refers to the time period that is required to recover the initial cost. With the help…

Q: BNN Corporation is currently evaluating a project that requires an initial investment of $1,000,000…

A: The payback period is the time period required by an investment to generate enough cash flows to…

Q: The company estimates that a project with an initial investment of -$25 will produce ten positive…

A: Timing option states whether it is good to wait or not for a period to go with a project when there…

Q: We are examining a new project. We expect to sell 6,500 units per year at $43 net cash flow apiece…

A: Required  The NPV of the project. Level of sales if the project can be dismantled and sold for…

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.