Atty. Gacayan invested P280, 000 which will be used in a project that will produce a uniform annual revenue of P180,000 for 5 years and then have a salvage value of 16% of the investment. Out-of-pocket costs for operation and maintenance will be P80,000 per year. Taxes and insurance will be 3% of the first cost per year. Atty Gacayan expects capital to earn not less than 30% before income taxes. Determine if the investment is good and Calculate the following: a. Calculate using Rate of Return Method. b. Payback period of the investment.

Q: White Lion Homebuilders is considering investing in a one-year project that requires an initial…

A: Initial Investment = 450,000 Floatation Cost = 2% * Initial Investment = 2%*450,000 = 9000 Cash…

Q: Dover company is considering an investment project in which a working capital investment of $30,000…

A: Net Present Value : NPV is the difference between Present Value Cash inflow and Present Value Cash…

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A: Investments: Companies invest in stocks and bonds of other companies or governmental entity to…

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: Laurel’s Lawn Care Ltd., has a new mower line that can generate revenues of $129,000 per year.…

A: Operating cash flow is the amount received by the business by performing their core business…

Q: Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset…

A: Answer: Net Cash Flow in Year 3 : $1,936,876.80 NPV : $325,481.72

Q: Kelly, Inc. management is considering purchasing a new machine at a cost of $4,133,250.  They expect…

A: Net present value (NPV) is used to determine the present value of all future cash flows. Net present…

Q: Crockett Graphic Designs Inc. is considering two mutually exclusive projects. Both projects require…

A: Capital budgeting  Capital budgeting is a technique of undertaking an evaluation of major…

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

Q: Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset…

A: The free cash flows are calculated by adding tax shield for certain expenses as interest and…

Q: ordan is considering purchasing an investment costing $42,000 that will save power costs of $14,000…

A: In this question, we have to calculate the cashflow after taxes each year.

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A: NPV It is a capital budgeting tool to decide on whether the capital project should be considered or…

Q: Little Giant is building a manufacturing plant that will require a cash outlay of $300,000 for the…

A: YEAR CASH FLOW  COST OF CAPITAL 12% 0 300000 1 450000 2 710000

Q: a. Project A costs $7,000 and will generate annual after-tax net cash inflows of $2,850 for 5 years.…

A: Payback period is the period required to recover the initial investment of the project and this is…

Q: The LMN Corporation is considering an investment that will cost $80,000 and have a useful life of 4…

A: Payback periods is the time period required by a project to pay back the amount invested in it by…

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: In the fourth and final year of a project, XYZ expects operating cash flow after taxes of P440,000.…

A: The cash flow of the year is what is received after payment of all operating expenses and all…

Q: at is the expected net income (after tax) in Year 3 if the proposed investment is undertaken? Round…

A: Summary of the relevant information provided in the question : New Machine Cost = $ 303,000 Sales…

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

A: Given data, Initial investment = P3M Annual income =P1.2M Salvage value =10% of the investment…

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: 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: An investment of P200,000 can be made in a project that will produce a uniform annual revenue of…

A: As per the honor code, we’ll answer only one question at a time, we have answered the first question…

Q: Laurel's Lawn Care, Ltd., has a new mower line that can generate revenues of $135,000 per year.…

A: Given:

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A: Adjusted present value means that we have to determine the NPV (net present value) of a project in…

Q: Shelly's Boutique is evaluating a project which will increase annual sales by $70,000 and annual…

A: Annual Sales = 70,000 Annual Costs = 40,000 Investment in fixed assets = 100,000 SLM method of…

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 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 Investment is mentioned as 508,000 Salvage…

Q: A 4-year project has an annual operating cash flow of $55,000. At the beginning of the project,…

A: The cash flow in the year 4 will be the aggregate of the followings Year 4 cash flow = Annual…

Q: Camber Corporation has to decide if they can finance purchasing 10 new machines for all their…

A: b)The positive effects of corporations increasing the amount paid upfront for the capital purchases…

Q: The JLK Corporation is considering an investment that will cost RM80,000 and have a useful life of 4…

A: Payback period is the time taken to recover the initial investment

Q: Micheal is considering a capital investment that costs $540,000 and will provide net cash inflows…

A: Answer  Calaculation of Net Present Value(NPV): At first we need to calaculate the present value of…

Q: A printing press machine has a cash equivalent of P250,000. For the first three years, it will…

A: Initial cost (C) = P 250000 Profit in year 1 (A1) = P 20000 A2 = P 20000 A3 = P 20000 A4 = P 35000…

Q: Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset…

A: Cash flow: It refers to the money going out from the business and going in the business. It is of…

Q: BASF will invest $14 million this year to upgrade its ethylene glycol processes. This chemical is…

A: The weighted average cost of capital is the cost of funds which are used in the project…

Q: Atty. Munar invested P280, 000 which will be used in a project that will produce a uniform annual…

A: “Since you have posted a question with multiple sub-parts, we will solve first three subparts for…

Q: GoodFish Corporation is considering a new project with a four-year useful life. The initial…

A: NPV represents net present value which is the the net value added by undertaking a capital budgeting…

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Q: Green Caterpillar Garden Supplies Inc. is considering a one-year project that requires an initial…

A: Amount required to be raised = Amount required/(1-flotation cost)

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: Laurel’s Lawn Care Ltd., has a new mower line that can generate revenues of $171,000 per year.…

A: Formulas:

Q: Stu is working on a bid for a contract. Thus far, he has determined that he will need $218,000 for…

A: Calculation of Operating Cash Flow:To calculate the operating cash flow, it is necessary to…

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: our firm, Agrico Products, is considering a tractor that would have a cost of $37,000, would…

A: NPV of the tractor when the useful life is 5 years:

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.