ment of $3M can be made in a business that will produce uniform annual revenue of $1.2M for five years and then have a salvage value of 10% of the investment. Operations and maintenance will be $100, 000 per year. Taxes and insurance will be 5% of the first cost per year. The investor expects to earn not less than 20% before income taxes. Is this a good investment? Use the annual cost me

Q: pplegate Industries is planning to expand its production facility in a few years. New plant…

A: Number of Years = 3.5 Periods per year = 4 (interest rate compounded quarterly) Nominal rate= 8%…

Q: In an investment project, the initial cost of investment is $400,000. The annual revenues are…

A: Payback period:  The payback period (PBP) is an investment assessment approach that determines how…

Q: Park Co. is considering an investment that requires immediate payment of $27,000 and provides…

A: Present value of $1 annuity = Annuity x ((1-(1+i)^-n)/i)

Q: A firm has annual operating outlays of P1,800,000 and a cash conversion cycle of 60 days. If the…

A: Cash Conversion Cycle: The cash conversion cycle (CCC) is a statistic that represents the amount of…

Q: Thompson Mechanical Products is planning to set aside $150,000 now for possible replacement of large…

A: Computation of future compounded amount: Answer: Future compounded amount is $343,163.66

Q: Finnegan Company plans to invest in a new operating plant that is expected to cost $762,500. The…

A: Formulas that are used:-

Q: You have the opportunity to expand your business by purchasing new equipment for $152,000. The…

A: Cost of equipment = $152,000. Useful life = 9 years  Fixed cost = $79,000 Variable cost = 5%

Q: Elearning Company would like to develop its technology process by purchasing a production equipment…

A: Net present value is the difference between the present value of cash inflows and present value of…

Q: Applegate Industries is planning to expand its production facility in a few years. New plant…

A: Future Value = Present Value x Future Value Factor

Q: The Chum Company is considering the production of a new product line which will require an…

A: The return on investment is a comparable tool that is used to measure the particular investment and…

Q: A firm is considering a project with a 5-year life and an initial cost of $1,000,000. The discount…

A: Initial cost = -$1000000 After tax cash flow Year 1 – 3 = 2500*120 = $300,000 Abandon option, After…

Q: An investment of P270,000 can be made in a project that will produce a uniform annual revenue of…

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

Q: A project with a useful life of eight years requires an investment of $200,000 and yields after tax…

A: Income after tax = $ 30,000 Investment = $ 200,000

Q: Valve Corporation spent P600,000 per year for the past 3 years in developing their latest product.…

A: Here, we need to equate the present value of the cost and revenues. PV of cost now = PV of base…

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

A: Payback period: Payback period is the period required to collect amount invested in a capital…

Q: A company is considering the purchase of a new machine for P480,000. Management predicts that the…

A: Payback period: The payback period refers to the total years needed to cover the initial cash…

Q: Hurkin Manufacturing Company pays accounts payable on the tenth day after purchase. The average…

A: Working capital is the cash needed to run a firm on a day-to-day basis, such as purchasing raw…

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: mployees at JPGR Inc have been busy evaluating a potential new $9 million investment for their firm…

A: NPV is a Capital Budgeting Techniques which help in decision making on the basis of future Cash…

Q: A small minority firm invested $100000 for a project. At an interest rate of 15% per year,…

A: In order to recover the invested amount, present value of all bimonlthy incomes can be equated to…

Q: A company purchased a small equipment for $70000. Annual maintenance costs are expected to be $1850,…

A: Net present value (NPV) is the value of all the cash flow of the investment (positive and negative)…

Q: An investment project is expected to yield $10,000 in annual revenues, will incur $2,000 in fixed…

A: Cost of goods sold = Sales x 60% = $10000 x 60% = $6,000

Q: Packaging equipment for Xi Cling Wrap costs $60,000 and is expected to result in end of year net…

A: Capital budgeting The variance between Cash inflow (PV) and cash outflow (PV) over a time period at…

Q: You have the opportunity to expand your business by purchasing new equipment for $152,000. The…

A: Note: We are answering 1st sub-part of the question as information related to the second part is…

Q: An investment of $23,500 in new equipment will generate income of $6,500 per year for 10 years. What…

A: PV of cash outflow=$23,500 Income per year=$6,500 Duration(n)=10 years   As per the equation of IRR,…

Q: What is the internal rate of return on this investment?

A: Rate of return of a company implies the amount of money that is being returned after investing in an…

Q: Suppose you are considering an investment project that requires $800,000, has a six-year life, and…

A: Capital Budgeting: Capital budgeting decisions are the most important decision in corporate…

Q: a company is considering the purchase of a new machine for 480,000. Management predicts that the…

A: Calculation of Annual operating cash flows :- Sales                                      180,000…

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: (a) Calculate the NPV of this investment.  (b) Calculate the sensitivity of your calculation to the…

A: Given: Initial investment = 80000 selling cost (A) 16.5 variable cost(B) 12 contribution per…

Q: New manufacturing equipment costs $225,000, salvage value is $25,000, and average annual earnings of…

A: a) Average annual rate of return = Average Annual Earning per year / Investment value

Q: A firm has only $10,000 to invest and must choose between two projects. Project A returns $12,400…

A: Return on investment represents income earned by the company on the investment made.

Q: An investment costs $23,958 and will generate cash flow of $6,000 annually for five years. The…

A: Net present value: The net present value can be computed by subtracting the present value of all the…

Q: An investment of P270,305 is needed for a Korean Mart that will produce a uniform annual revenue.…

A:

Q: An investment of ₱270,000 can be made in a project that will produce a uniform annual revenue of…

A: Pay back period of the investment can be estimated using various methods like: The Rate of Return…

Q: Packaging equipment for Xi Cling Wrap costs $60,000 and is expected to result in end-of-year net…

A: MARR is used as a hurdle rate in the capital budgeting projects. It is that minimum rate which an…

Q: The company will invest for a 2-year project. The first year, return of the investment is 240.000…

A: Formula for calculating PV: PV=FV×11+rn where FV=Future value r=interest rate n=number of years…

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: Your company is analyzing purchase of a machine costing $5,900 today. The investment promises to add…

A: Incremental Rate of Return (IRR) is a capital budgeting method which shows the return generated…

Q: what will be the annual​ savings?

A: Annual savings are the savings per year after deducting all the costs and expenses from the incomes…

Q: You invest in a piece of equipment costing $30,000. The equipment will beused for two years, at the…

A: Calculation of the equivalent net savings per machine hour is shown:

Q: Solar Calculator Company proposes to invest $9 million in a new calculator-making plant. Fixed costs…

A: The net present value technique is a discounted cash flow method that considers the time value of…

Q: An investment with total costs of $10,000 will generate total revenues of $11,000 for one year.…

A: An investment with total costs of $10,000 will generate total revenues of $11,000 for one year.…

Q: An investment of P270,000 can be made in a project that will produce a uniform annual revenue of…

A: Computation:

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.