All of the following are capital investment decisions except Multiple Choice acquiring $420,000 of common stock purchasing $41,600 of machinery buying a $4,050,000 manufacturing plant. paying $518,000 to renovate a restaurant.
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- The Scampini Supplies Company recently purchased a new delivery truck. The new truck cost $22,500, and it is expected to generate net after-tax operating cash flows, including depreciation, of $6,250 per year. The truck has a 5-year expected life. The expected salvage values after tax adjustments for the truck are given here. The company’s cost of capital is 10%. Should the firm operate the truck until the end of its 5-year physical life? If not, then what is its optimal economic life? Would the introduction of salvage values, in addition to operating cash flows, ever reduce the expected NPV and/or IRR of a project?All of the following are capital investment decisions except: A. paying $600,000 to renovate a restaurant.B. acquiring $100,000 of common stock.C. purchasing equipment for $80,000. D. buying a $5,000,000 manufacturing plant.The following data are accumulated by Lone Peak Inc. in evaluating two competing capital investment proposals: 3D Printer Truck Amount of investment $40,000 $50,000 Useful life 7 years 10 years Estimated residual value $ 3,000 $ 6,000 Estimated total income over the useful life $24,080 $36,400
- The following data are accumulated by GreenApple Motors Inc. evaluating two competing capital investment proposals: Testing Equipment Diagnostic Software Amount of investment $44,000 $80,000 Useful life 4 years 7 years Estimated residual value $0 $0 Estimated total income over the useful life $4,840 $28,000 Determine the expected average rate of return for each proposal. If required, round to one decimal place. Testing Equipment % Diagnostic Software %On July 1, Coastal Distribution Company is considering leasing a building and buying the necessary equipment to operate a public warehouse. Alternatively, the company could use the funds to invest in $740,000 of 4.5% U.S. Treasury bonds that mature in 14 years. The bonds could be purchased at face value. The following data have been assembled: Equipment Categories Amount Cost of equipment $740,000 Life of equipment 14 years Estimated residual value of equipment $75,000 Annual costs to operate warehouse, less depreciation $175,000 Annual expected revenues of years 1-7 $280,000 Annual expected revenues of years 8-14 $240,000 Prepare a differential analysis as of July 1 presenting the proposed operation of the warehouse for the 14 years (Alternative 1) as compared with investing in U.S. Treasury bonds (Alternative 2). Based on the results disclosed by the differential analysis, should the proposal be accepted? If the proposal is…The following data are accumulated by Lone Peak Inc. in evaluating two competing capital investment proposals: 3D Printer Truck Amount of investment $64,000 $24,000 Useful life 4 years 7 years Estimated residual value 0 0 Estimated total income over the useful life $7,680 $9,240 Determine the expected average rate of return for each proposal. If required, round your answers to one decimal place. 3D Printer % Truck %
- On July 1, Coastal Distribution Company is considering leasing a building and buying the necessary equipment to operate a public warehouse. Alternatively, the company could use the funds to invest in $149,900 of 6% U.S. Treasury bonds that mature in 16 years. The bonds could be purchased at face value. The following data have been assembled: Cost of store equipment $149,900 Life of store equipment 16 years Estimated residual value of store equipment $18,000 Yearly costs to operate the warehouse, excluding depreciation of equipment $56,500 Yearly expected revenues—years 1-8 75,100 Yearly expected revenues—years 9-16 69,300 Required: 1. Prepare a differential analysis as of July 1 presenting the proposed operation of the warehouse for the 16 years (Alternative 1) as compared with investing in U.S. Treasury bonds (Alternative 2). If an amount is zero, enter "0". If required, use a minus sign to indicate a loss. Differential Analysis Operate Warehouse (Alt. 1)…On July 1, Matrix Stores Inc. is considering leasing a building and buying the necessary equipment to operate a public warehouse. Alternatively, the company could use the funds to invest in $148,800 of 5% U.S. Treasury bonds that mature in 16 years. The bonds could be purchased at face value. The following data have been assembled: Cost of store equipment $148,800 Life of store equipment 16 years Estimated residual value of store equipment $19,000 Yearly costs to operate the warehouse, excluding depreciation of equipment depreciation of store equipment $56,500 Yearly expected revenues—years 1-8 74,200 Yearly expected revenues—years 9-16 69,800 Required: Question Content Area 1. Prepare a differential analysis as of July 1 presenting the proposed operation of the warehouse for the 16 years (Alternative 1) as compared with investing in U.S. Treasury bonds (Alternative 2). If an amount is zero, enter "0". For those boxes in which you must enter subtracted or…Harvard Manufacturing Company is considering the following investment proposal: Initial investment: Depreciable assets (straight-line) $48,000 Working capital 4,000 Operations (per year for 4 years): Cash receipts $30,000 Cash expenditures 17,000 Disinvestment: Salvage value of equipment $2,000 Recovery of working capital 4,000 The investment's accounting rate of return (rounded to two decimal points) on the original investment is: Select one: A. 3.85 percent B. 5.88 percent C. 10.71 percent D. 8.33 percent
- A lessor made an investment of ₱550,000 in equipment with an expected life of 5 years. He expects and incremental revenue of ₱460,000 while costs to be incurred are: Costs of sales₱120,000; Marketing, admin, and maintenance ₱150,000. Tax rate is 25%. Annual depreciation is ₱110,000. Cost of capital is 11%. The NPV would be? ₱ 87,203 ₱ 152,221 (₱ 23,334) ₱ 78,302 ₱ 63,712 ₱ 28,486On July 1, Coastal Distribution Company is considering leasing a building and buying the necessaryequipment to operate a public warehouse. Alternatively, the company could use the funds to invest in$740,000 of 5% U.S. Treasury bonds that mature in 14 years. The bonds could be purchased at face value.The following data have been assembled:Cost of store equipment $740,000Life of store equipment 14 yearsEstimated residual value of store equipment $75,000Yearly costs to operate the warehouse, excludingdepreciation of store equipment $175,000Yearly expected revenues—years 1-7 $280,000Yearly expected revenues—years 8-14 $240,000Required:1. Prepare a differential analysis as of July 1 presenting the proposed operation of the warehouse for the14 years (Alternative 1) as compared with investing in U.S. Treasury bonds (Alternative 2). If an amountis zero, enter "0". For those boxes in which you must enter subtracted or negative numbers use a minussign.The following data are accumulated by Lone Peak Inc. in evaluating two competing capital investment proposals: 3D Printer Truck Amount of investment $36,000 $24,000 Useful life 4 years 5 years Estimated residual value 0 0 Estimated total income over the useful life $5,760 $6,600 Determine the expected average rate of return for each proposal. If required, round your answers to one decimal place. 3D Printer fill in the blan % Truck
