A project is estimated to cost P110,000, last 8 years and have a P15,000 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 Payback Period in years:

Q: A project is estimated to cost 110,000, last 8 years and have a 15,000 salvage value. The annual…

A: A rate of return is the net gain or loss of an investment over a specific period represented as a…

Q: The investment cost is $23,889 and the equipment will have a market value of $5,060 at the end of a…

A: Investment cost = $ 23,889 Market value after 5 years = $ 5,060 Annual cash inflow = $ 8,352 MARR =…

Q: A fixed capital investment of P10 million is required for a proposed manufacturing plant and an…

A: Fixed capital investment = 10,000,000 Estimated working capital = 2,000,000 Depreciation rate = 10%…

Q: A capital investment of Php 508,000 on a project can produce an annual revenue of Php 383,000 for 5…

A: Capital investment = 508,000 Annual Revenue = 383,000 N = 5 years Salvage Value = 7% of capital…

Q: uipment that will increase revenue by P94,500 a year requires an investment of P430,000. It is…

A: Future value of any investment gives the compound interest and principal. Gives decision making in…

Q: Maroc Group of Companies (MGC) Ltd is considering an investment in an equipment costing GHȻ80,000.…

A: Cost of Capital is the cut-off rate at which the company make profits on its investment so as to…

Q: A osed capital expenditure project involves purchasing and installing new equipment. The equipment…

A: Cash flows: These are the inflow & outflow of cash from a company or a project. It measures…

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: The Chum Company is considering the production of a new product line which will require an…

A: The return on investment is a comparable tool that is used to measure the particular investment and…

Q: Determine the rate of return on the total investment and the payout period if the annual profit is…

A: Payback (payout) period refers to the period within which the sum invested by the company in a…

Q: An investment of $875,000 in equipment will produce annual profits of $175,000 for eight years. The…

A: Investment amount = $ 875000 Annual profit = $ 175000 Residual value = $ 40000 Period = 8 Years

Q: You are considering investing RM60000 in new equipment. You estimate that the net cash flows will be…

A: Equivalent annual cost is the cost of a project annually for the time period of its completion. This…

Q: MHD is considering an expansion project that requires an initial outlay of OMR120,000. The project…

A: Required Return = 12% Depreciation expense each year = 10,000 Year Net Income Net operating Cash…

Q: 1.) A project is estimated to cost P100,000, lasts 8 years and have a P10,000 salvage value. The…

A: “Since you have asked multiple questions, we will solve the one question for you. If you want any…

Q: project requires an initial investment of P300,000 on equipment. The project will generate sales…

A: Salvage value of equipment 0 as it will be sold at book value that is 300000, so no depreciation…

Q: A fixed capital investment of P10,000,000 is required for a proposed manufacturing plant and an…

A: Fixed capital (F) = P 10,000,000 Working capital (W) = P 2,000,000 Depreciation (D) = 10% of F = P…

Q: The Wildhorse Co. is going to take on a project that is expected to increase its EBIT by $90,000,…

A: Cash flow represents the cash inflow and cash outflow of the company due to operating, investing,…

Q: A fixed capital investment of ₱10,000,000 is required for a proposed manufacturing plant and an…

A: Given Information: Fixed capital investment = ₱10,000,000 Estimated working capital = ₱2,000,000…

Q: A new project will result in the annual incremental production of 5,000 sonar units.  Each unit will…

A: Solution:- Operating cash flow (OCF) means the cash flow available to a firm after paying taxes on…

Q: An investment of $875,000 in equipment will produce annual profits of $175,000 for eight years. The…

A: Cost = $ 875000 Annual cash inflow = $ 175000 Salvage value = $ 40000 Project life = 8 Years

Q: An investment project requires an initial expenditure of $160 000.00 with a salvage value of $30…

A: Calculate NPV of the project to determine whether project should be undertaken or not.

Q: SLAC Corp is planning to expand and new projects is expecting to earn an average of P750,000.00…

A: The price of means the total amount return necessary by a corporation to justify beginning on a…

Q: A five-year project is expected to generate annual revenues of $159,000, variable costs of $72,500,…

A: To find the annual operating cash flow, we will follow these steps: Sales…

Q: Company X is planning to run a project that requires an initial investment of RM 80,000. Operation…

A: Cash flow diagrams visually represent income and expenses over some time intervals. The diagram…

Q: expenses is P6T. I

A: Initial cost (C) = P 120000 Salvage value (S) = P 20000 Annual profit (P) = P 40000 - P 6000 = P…

Q: A project has a first cost of $75,000, operating and maintenance costs of $10,000 during each year…

A: First cost (C) = $75000 Annual cost (A) = $10000 n = 8 years Salvage value (S) = $15000 r = 12%

Q: Johnson Chemicals is considering an investment project. The project requires an initial P3 million…

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

Q: A water Reservoir will have a first cost of Php 10,000,000,000, an annual maintenance cost of…

A: First cost (C) = Php 10,000,000,000 Annual maintenance cost (A) = Php 35,000,000 Reconstruction cost…

Q: A project has an initial investment of $45,000. This project needs an annual spending of $6,000 to…

A: The annual worth refers to the present value of cash flows for each year of the project. The net…

Q: A PROJECT IS ESTIMATED TO COST P 100,000.00, LASTS 8 YEARS, AND HAVE A P 10,000.00 SALVAGE VALUE.…

A: Investment income includes interest charges, dividends, capital appreciation earned from the sale of…

Q: A project is estimated to cost P120T, last 8 years & have a salvage value of P20T. The annual gross…

A: Net cost is nothing but the opposite of NPV where cost of an investment exceeds the present value of…

Q: Maroc Group of Companies (MGC) Ltd is considering an investment in an equipment costing GHȻ80,000.…

A: The cost of capital is the minimum required rate of return necessary to meet the optimum return on…

Q: Bourque Enterprises is considering a new project. The project will generate sales of $1.6 million,…

A: As a first step, let's calculate the NOPAT and working capital requirement of the project. Please…

Q: Chase Brew Inc is considering an investment with the following information: initial…

A: To answer this question 1st we can calculate depreciation per year. Depreciation = Cost of the…

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

A: Average rate of return for the project means how much actual net income is generated by investing…

Q: A 7-year project is expected to provide annual sales of $221,000 with costs of $97,500. The…

A: GIVEN, WORST SCENARIO accuracy = +/-15% annual sale= $221,000 x (1-0.15)= $187,850 annual cost =…

Q: A 7-year project is expected to generate annual sales of 10,400 units at a price of $91 per unit and…

A: Formulas:

Q: An investment of P8.5 M is expected to yield an annual income of P2.8 M. Determine the payout period…

A: Payback period is the time taken by the investment to recover the cost of the investment. The…

Q: The initial investment in machinery would be $8 million immediately and the project is expected to…

A: The amount of the asset which is allocated each period as per the useful life of the asset is termed…

Q: A capital investment of$10,000 can be made in a project that will produce uniform revenue of $5310…

A: The present value is the value of the sum received at time 0. It is the current value of the sum…

Q: The company will invest for a 2-year project. The first year, return of the investment is 240.000…

A: Formula for calculating PV: PV=FV×11+rn where FV=Future value r=interest rate n=number of years…

Q: An investment of P3M can be made in a business that will produce uniform annual revenue of P1.2M for…

A: Required Return = 20% Cash Flows: Year Cash Flow Reference 0 -3,000,000 First Cost 1 950,000…

Q: An investment of P270,000 can be made in a project that will produce a uniform annual revenue of…

A: Computation:

Q: 3.) A project is estimated to cost $350,000, last 9 years, and have a salvage value of $90,000. The…

A: First we need to calculate present value(PV)  of all annual cash inflows by using this equation PV…

Q: The proposal is for a warehouse costing P100 million. The warehouse has an expected useful life of…

A: Net Present Value:   Net present value (NPV) is the present value of cash flows. It is the…

Q: A project is estimated to cost P110,000, last 8 years and have a P15,000 salvage value. The annual…

A: Capital budgeting techniques have the following two criteria: (a) Accounting Profit Criteria…

Q: XYZ is considering a project that would last for 3 years and have a cost of capital of 18.20…

A: Year 0 1 2 3 Revenue   $             -    $          12,500.00  $          10,400.00  $…

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.