me straight line depreciation method is used. ired: BBS evaluate this project by calculating each of the following: counting rate of return. ote: Round your answer to 2 decimal places. yback period. ote: Round your answer to 2 decimal places. et present value (NPV). ote: Do not round intermediate calculations. Negative amount should be indicated by a minus earest whole dollar. calculate the NPV assuming BBS's cost of capital is 13 percent. ote: Do not round intermediate calculations. Negative amount should be indicated by a minus earest whole dollar. counting rate of return yback period 7.90 % 5.42 years
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- PA11-1 (Algo) Calculating Accounting Rate of Return, Payback Period, Net Present Value, Estimating Internal Rate of Return [LO 11-1, 11-2, 11-3, 11-4] Balloons By Sunset (BBS) is considering the purchase of two new hot air balloons so that it can expand its desert sunset tours. Various information about the proposed investment follows: (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided.) Initial investment (for two hot air balloons) $ 486,000 Useful life 9 years Salvage value $ 45,000 Annual net income generated 36,450 BBS’s cost of capital 9 % Assume straight line depreciation method is used.Required:Help BBS evaluate this project by calculating each of the following:1. Accounting rate of return. (Round your answer to 2 decimal places.)2. Payback period. (Round your answer to 2 decimal places.)3. Net present value (NPV). (Do not round…Monroe, Inc., is evaluating a project. The company uses a 13.8 percent discount rate for this project. Cost and cash flows are shown in the table. What is the NPV of the project? Year0 ($11,368,000)1 $2,112,5892 $3,787,5523 $3,300,6504 $4,115,8995. $ 4,556,424 Round to two decimal places. For year 0 , its initial investment .The Corporation is considering two alternative investment proposals with the following data: Proposal X Proposal Y Investment $860,000 $510,000 Useful life 8 years 8 years Estimated annual netcash inflows for 8 years $130,000 $68,000 Residual value $42,000 $- Depreciation method Straight-line Straight-line Required rate of return 13% 13% What is the accounting rate of return for Proposal X? (Round any intermediary calculations to the nearest dollar, and round your final answer to the nearest hundredth of a percent, X.XX%.) 2.62% 15.12% 3.23% 1.57%
- Ziege Systems is considering the following independent projects for the coming year: Project RequiredInvestment Rate ofReturn Risk A $4 million 14.75% High B 5 million 12.25 High C 3 million 10.25 Low D 2 million 9.5 Average E 6 million 13.25 High F 5 million 13.25 Average G 6 million 7.5 Low H 3 million 11.75 Low Ziege's WACC is 10.75%, but it adjusts for risk by adding 2% to the WACC for high-risk projects and subtracting 2% for low-risk projects. Which projects should Ziege accept if it faces no capital constraints? Project A -Select-AcceptRejectItem 1 Project B -Select-AcceptRejectItem 2 Project C -Select-AcceptRejectItem 3 Project D -Select-AcceptRejectItem 4 Project E -Select-AcceptRejectItem 5 Project F -Select-AcceptRejectItem 6 Project G -Select-AcceptRejectItem 7 Project H -Select-AcceptRejectItem 8 If Ziege can only invest a total of $13 million, which projects should it accept? Project A -Select-AcceptRejectItem 9 Project B…Consider the following investment project: n An I0 -$8,500 9%1 $4,400 12%2 $4,400 10%3 $1,500 13%4 $3,500 12%5 $4,300 10%Suppose, as shown in the preceding table, that the company's reinvestment opportunities (that is, its MARR) change over the life of the project. For example, the company can invest funds available now at 9% for the first year, 12% for the second year, and so forth. Calculate the net present worth of this investment, and determine its acceptability.Sammy Corporation is considering two alternative investment proposals with the following data: Proposal A Proposal B Investment $850,000 $468,000 Useful life 8 years 8 years Estimated annual net cash inflows for 8 years $125,000 $78,000 Residual value $40,000 $ — Depreciation method Straight-line Straight-line Required rate of return 14% 10% Using a financial calculator, determine the internal rate of return for Proposal A? (Ignore taxes) Select one: a. 2.88 % b. 14.71 % c. 4.57 % d. 2.79%
- Ziege Systems is considering the following independent projects for the coming year: Project RequiredInvestment Rate ofReturn Risk A $4 million 13.25% High B 5 million 10.75 High C 3 million 8.75 Low D 2 million 8.50 Average E 6 million 11.75 High F 5 million 11.75 Average G 6 million 6.50 Low H 3 million 10.50 Low Ziege's WACC is 9.25%, but it adjusts for risk by adding 2% to the WACC for high-risk projects and subtracting 2% for low-risk projects. Which projects should Ziege accept if it faces no capital constraints? Project A accept or reject Project B accept or reject Project C accept or reject Project D accept or reject Project E accept or reject Project F accept or reject Project G accept or reject Project H accept or reject If Ziege can only invest a total of $13 million, which projects should it accept? Project A accept or reject Project B accept or reject Project C accept or reject Project D accept or reject Project E…BE12.5 , AN McKnight Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $400,000, has an expected useful life of 10 years and a salvage value of zero, and is expected to increase net annual cash flows by $70,000. Project B will cost $310,000, has an expected useful life of 10 years and a salvage value of zero, and is expected to increase net annual cash flows by $55,000. A discount rate of 9% is appropriate for both projects. Compute the net present value and profitability index of each project. Which project should be accepted? Perform a post-audit.Pearl Limited is considering upgrading its plant to expand it client base. The financial details of the investment proposal are as follows: Cost of plant R4 700 000 Import duty R 900 000 Installation cost R 450 000 Net cash flows Year 1-8 R1 700 000 per annum (excluding residual value) Residual/scrap value R1 300 000 The company uses straight-line depreciation. The cost of capital for projects of similar risk is 18%. Ignore taxation. Required: 2.1 C alculate the investment’s Accounting Rate of Return (ARR). 2.2 Briefly explain if the ARR is acceptable or not based on a target rate of return of 25%. 2.3 Assume a payback period of 3 years. Determine the
- Juniper Corporation is considering two alternative investment proposals with the following data: Proposal X Proposal Y Investment $810,000 $466,000 Useful life 8 years 8 years Estimated annual net cash inflows for 8 years $130,000 $70,000 Residual value $58,000 $− Depreciation method Straight−line Straight−line Required rate of return 13% 10% What is the accounting rate of return for Proposal X? (Round any intermediary calculations to the nearest dollar, and round your final answer to the nearest hundredth of a percent, X.XX%.)Redwood Corporation is considering two alternative investment proposals with the following data: Proposal X Proposal Y Investment $840,000 $466,000 Useful life 9 years 9 years Estimated annual net cash inflows for 9 years $145,000 $52,000 Residual value $33,000 $− Depreciation method Straight−line Straight−line Required rate of return 19% 6% What is the accounting rate of return for Proposal X?The data below are estimated for the project for the project study of a certain businessinvestment. IF money is worth 15% which of the project is more desirable, using PresentWorth Method and determine the difference in profit from each project study.For A, the initial investment is P5,000, with annual revenue of P2000. Annualdisbursement amounts to P650 with no salvage value at the end of its life which is 4years.For B, the initial investment is P8,000, with annual revenue of P3000. Annualdisbursement is P1500 with no salvage value at the end of its life which is 8 years.