Garnette Corp is considering the purchase of a new machine that will cost $342,000 and provide the following cash flows over the next five years: $99,000, $88,000, $92,000, $87,000, and $72,000. Calculate the IRR for this piece of equipment. NOTE: Enter amounts rounded to two decimals (e.g., 78.76 or 40.00).
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Garnette Corp is considering the purchase of a new machine that will cost $342,000 and provide the following
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- Consolidated Aluminum is considering the purchase of a new machine that will cost $308,000 and provide the following cash flows over the next five years: $88,000, 92,000, $91,000, $72,000, and $71,000. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return in Excel, see Appendix C.Referring to PA7 where Kenzie Company purchased a 3-D printer for $450,000, consider how the purchase of the printer impacts not only depreciation expense each year but also the assets book value. What amount will be recorded as depreciation expense each year, and what will the book value be at the end of each year after depreciation is recorded?RODEO, Inc., is purchasing machinery at a cost of $2,957,720. The company’s management expects the machinery to produce cash flows of $782,410, $944,160, and $1,546,150 over the next three years, respectively. What is the payback period? (Round answer to 2 decimal places, e.g. 15.25.) Payback period is ___________ years
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- Six years ago, ABC Company invested $47,736 in a new machinery. The investment in net working capital was $9,046 which would be recovered at the end of the project. Today, ABC Company is selling the machinery for $17,745. Today, the book value of the machinery is $11,017. The tax rate is 35 percent. What are the terminal cash flows in Year 6? Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.Baird Bros. Construction is considering the purchase of a machine at a cost of $202,000. The machine is expected to generate cash flows of $37,000 per year for 10 years and can be sold at the end of 10 years for $27,000. Interest is at 11%. Assume the machine purchase would be paid for on the first day of year one, but that all other cash flows occur at the end of the year. Ignore income tax considerations. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required:a. What is the net present value of the cash flows?b. Determine whether Baird should purchase the machine.An equipment costing ₱600,000, with a residual value of ₱30,000 at its useful life of five years, is expected to bring the following net cash inflows: Year 1-->₱350,000; Year 2--> ₱250,000; Year 3--> ₱150,000; Year 4--> ₱100,000; Year 5--> ₱50,000. The company uses a 12% discount rate. The net present value would be? a. ₱727,560 b. ₱127,560 c. ₱312,550 d. ₱199,250 e. ₱106,800
- Lotus purchases a new machine for $20,000, and spends $2,000 on sales taxes, $500 for delivery, and $300 for installation of the new machine. What is the amount that will be capitalized on the company’s balance sheet? $22,500 $20,000 $22,000 $22,8003. Kiwanda limited is considering the purchase of a new machine. Two alternatives machines, A and B, which will cost shs 6m and 7m respectively, are available in the market at a cost of 12%. The cash flows after taxation of each machine are as follows;Year Cash flowMachine A Machine Bshs shs1. 600,000 1,800,0002. 1,800,000 2,400,0003. 2,000,000 3,000,0004. 3,000,000 1,800,0005. 2,400,000 1,600,000 Required:a. Compute the net present value of each machine. b. Assume that each machine represent a project. Compute the Internal rate of return the company expects to earn from each of the two projects. c. Comments on the use of the results obtained in (a) and (b) above in selecting between the two projects.2. If an asset costs $70,950 and is expected to have a salvage value of $949 at the end of five year life, and generates annual cash net cash inflows of $4,447 each year, the cash payback period rounding to two decimal places is