Consider a project with the following information: Initial fixed asset investment = $540,000; straight-line depreciation to zero over the 4-year life; zero salvage value; price = $52; variable costs = $33; fixed costs = $222,000; quantity sold = 112,000 units; tax rate = 21 percent.    How sensitive is OCF to changes in quantity sold?

Q: A project that cost $80,000 with a useful life of 5 years is being considered. Straight-line…

A: Capital budgeting is a technique which is used to evaluate a project in order to make a decision…

Q: You are considering an investment proj ect with the following financialin formation:(a) Required…

A: The firm should proceed with the project as it will give the company positive returns. Here is the…

Q: Consider a project with the following information: Initial fixed asset investment = $515,000;…

A: The initial fixed investment cost is $515,000. So, annual depreciation will be ($515,000 ÷ 4) =…

Q: An 8 year project is estimated to cost 336000 and have no residual value.  If the straight line…

A: Given: Cost = 336,000 Average rate of return = 13%

Q: The expected average rate of return for a proposed investment of $6,960,000 in a fixed asset, using…

A: Formulas: Average net income = Expected income / Number of years ----------------------- Average…

Q: A five-year project has an initial fixed asset investment of $345,000, an initial NWC investment of…

A: Given: Particulars Amount Initial fixed investment -$345,000 Initial working capital -$25,000…

Q: A project has an initial cost of $16,780 and a 3-year life. The company uses straight-line…

A: Average Accounting Return:  The average accounting return (ARR) is the method of determining the…

Q: determine the average annual income.

A: The average rate of Return: The average rate of return is the percentage of average return incurred…

Q: Cardinal Company is considering a five-year project that would require a $2,890,000 investment in…

A: Net Operating Income $4,20,000 Add: Depreciation $5,78,000 Annual net Cash inflows $9,98,000…

Q: A proposed cost-saving device has an installed cost of $765,000. The device will be used in a…

A: The net present value is an important technique of capital budgeting. It helps in the determination…

Q: Cardinal Company is considering a five-year project that would require a $2,890,000 investment in…

A: Simple rate of return = Net operating income / Initial investment

Q: An 8-year project is estimated to cost $528,000 and have no residual value. If the straight-line…

A:

Q: Harris Co. is considering a 12-year project that is estimated to cost $900,000 and has no residual…

A: In this question, we have to calculate the average annual income  we have the formula of Average…

Q: An 8-year project is estimated to cost $496,000 and have no residual value. If the straight-line…

A: Average investment = (Beginning investment + Ending investment)/2

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

A: Here, Initial investment = P 120,000 Time period = 8 years Salvage value = P 20,000 Annual income =…

Q: Cardinal Company is considering a five-year project that would require a $2,890,000 investment in…

A: Solution : Computation of Project profitability index - Cardinal Company Particulars Amount…

Q: We are evaluating a project that costs $907,000, has an 14-year life, and has no salvage value.…

A: Solution 1-   A Sales = 94000 units Fixed cost =916070 Contribution per unit= sales unit - variable…

Q: undertaken, then the land can be sold for $4.3 million. The initial capital expenditure for this…

A: Since, land will be used in project hence opportunity cost of selling land should be included in…

Q: Kenora Industries is analyzing a new project. They have gathered the following data: Worst Case Base…

A: Operating cash flow :— It is the amount cash & cash equivalents that are related to operating of…

Q: Rossiter Restaurants is analyzing a project that requires $180,000 of fixed assets. When the project…

A: Initial investment in fixed assets = 180,000 Salvage value = 45,000

Q: Consider a three-year project with the following information: initial fixed asset investment =…

A: Operating cash flow (OCF) refers to the amount of cash flow (CF) generated by the company during a…

Q: A company is considering purchasing a $10,000 machine that will reduce pretax operating costs by…

A: The computation of after-tax operating cash flow per year:

Q: Mariam is analyzing a project and has gathered the following data. The firm depreciates its assets…

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

Q: Genoa Company is considering a new investment whose data are shown below.  The equipment would be…

A: Net Present Value(NPV) is excess of PV of inflows over PV of outflows related to investment proposal…

Q: A project using passive heating/cooling design concepts to reduce energy costs requires an…

A: PW means PV of net benefits arises from the project in the future. It can be computed easily by…

Q: . Required rate of return on this project is 10%

A: Capital budgeting is a  technique used by the company to analyze various projects available to the…

Q: The expected average rate of return for a proposed investment of $5,090,000 in a fixed asset, using…

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

Q: Assume a project has estimated fixed costs of $61,200, variable costs per unit of $84.29, a selling…

A: Excel Spreadsheet:

Q: Consider a four-year project with the following information: initial fixed asset investment =…

A: Given, Initial fixed asset investment = $590,000 Price = $34 Variable Cost = $26 Contribution =…

Q: $20,000 12 years $30,000 8 years $0 $188,000 $170,000 Capital Investment Life Salvage Value Annual…

A: Given information depreciation = straight line method  income tax = 40% after tax MARR = 10%

Q: Use excel and show formula Gateway Communications is considering a project with an initial fixed…

A:

Q: An 8-year project is estimated to cost $384,000 and have no residual value. If the straight-line…

A: Average investment amount is the average of initial investment and ending investment of the…

Q: A project with a life of 8 has an initial fixed asset investment of $9,660, an initial NWC…

A: Equivalent annual cost: Equivalent annual cost is the ratio of net present value of the project and…

Q: The expected average rate of return for a proposed investment of $6,250,000 in a fixed asset, using…

A: Rate of return on investment is the percentage return earned on the investment in fixed assets by an…

Q: A project with a life of 10 has an initial fixed asset investment of $25,620, an initial NWC…

A: Equivalent Annual Cost(EAC) is the composition of annual cash outlay and annuity for initial cash…

Q: A project has an accounting break-even quantity of 28,700 units, a cash break-even quantity of…

A: The financial break-even quantity is a break-even in which the firm is come to the stage of that…

Q: The expected average rate of return for a proposed investment of $6,000,000 in a fixed asset, using…

A: Formulas: Average rate of return = Average net income / Average investment

Q: ELK, Inc. has compiled this information for a proposed project: sales price = $89 ±3 percent; fixed…

A: Under scenario analysis, three or more scenarios are considered with the corresponding net present…

Q: Consider a four-year project with the following information: Initial fixed asset investment =…

A: The question gives the following information:

Q: A 5-year project is estimated to cost $700,000 and have no residual value. If the straight-line…

A: Depreciation is an accounting method that spreads the cost of a measurable or physical asset over…

Q: A five-year project has an initial fixed asset investment of $300,000, an initial NWC investment of…

A: Equivalent annual cost (EAC) is the annual cost of owning and maintaining an asset determined by…

Q: An 8-year project is estimated to cost $368,000 and have no residual value. If the straight-line…

A: Average investment = (Beginning investment + Ending investment)/2

Q: Consider a project with the following information: Initial fixed asset investment = $515,000;…

A: Actual Quantity Sold = 102,000 units Assumption:Quantity sold changes to 101,000 units. Calculation…

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.