Question 7 A company's annual cost in year one is $26,000, with costs increasing by $2000 per year in years 2 through 5. Al an interest rate of 10% per year, determine v Present worth based on base amount in year O 1. 112.205 - Present worth based on gradient amount in year 0 2.13.724 v Total present worth in year O 3.98,501
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- Net present value method for a service company Coast-to-Coast Inc. is considering the purchase of an additional delivery vehicle for 70,000 on January 1, 20Y1. The truck is expected to have a five-year life with an expected residual value of 15,000 at the end of five years. The expected additional revenues from the added delivery capacity are anticipated to be 65,000 per year for each of the next five years. A driver will cost 40,000 in 20Y1, with an expected annual salary increase of 2,000 for each year thereafter. The annual operating costs for the truck are estimated to be 6,000 per year. a. Determine the expected annual net cash flows from the delivery truck investment for 20Y120Y5. b. Compute the net present value of the investment, assuming that the minimum desired rate of return is 12%. Use the present value table appearing in Exhibit 2 of this chapter. c. Is the additional truck a good investment based on your analysis? Explain.1. two sources of income with equal present valuec C at time 0 provide annual payents in arrears during 10 years. The first product, i.e. Product 1, pays 50,000 - 2,000k, where k is measured in years, and the second product pays a constant annual amount of b. The present vaues are calculated using a force of interest of delta(t) = 0.05 - 0.002t, where t is measured in years. derive a general expression for the pv of each income stream in function of k, C, and b and without integrals.1. DRS Sdn. Bhd. earned operating income last year as shown in the following income statement: Sales = 580000 Cost of goods sold = 333000 Gross margin = 247000 Selling and administrative expense = 190000 Operating income = 57000 At the beginning of the year, the value of operating assets was RM177,000. At the end of the year, the value of operating assets was RM277,000. DRS Sdn. Bhd. requires a minimum rate of return of 10%. a) Calculate the return on investment (ROI). b) Calculate the residual income (RI).
- Net cost of investment is 100,000. Profitability index is 1.3 while cost of capital is 10%. Useful life is 10 years. Use up to two decimal places for the PVF. What is the ARR? A• 42.35% B• 21.17% C• 22.34% D• 30%Assumptions (Currency: €) Cap. ex €1000 Asset life 10 years Cash from sales €1200 per year Cost of goods sold (COGS) 700 (all paid in cash not stock at the year end) SG&A (exclude depreciation) 150 (all paid in cash) Owner equity 700 Now assume that as well as the €1200 received from customer the company sells extra goods for €100 in year 1 that will be paid in year 2, please consider also that 50€ of SG&A will be due first on the forthcoming year. Build a spreadsheet that forecasts the cash flow, income statement and balance sheet of ABC for the first year.Question 1- A $12,000 investment will return annual benefit for six yearswith no salvage value at the end of six years. Assumestraight line depreciation and a 46% tax rate and the inflationrate is 5%. What is the inflation free after tax rate ofreturn on the investment if the annual benefits are $2,918 intoday’s dollars? a. 10.18% b. 4.94% c. 5% d. 8.20%
- Investment End of Year A B C 1 $ 13,000 $ 18,000 2 13,000 3 13,000 4 13,000 5 13,000 $ 13,000 6 13,000 54,000 7 13,000 8 13,000 9 13,000 10 13,000 18,000 Assuming an annual discount rate of 23 percent, find the present value of each investment. a. What is the present value of investment A at an annual discount rate of 23 percent? b. What is the present value of investment B at an annual discount rate of 23 percent? c. What is the present value of investment C at an annual discount rate of 23 percent?A company epects the cost of ts product parts to increase by 8℅ per year begnning 4 years from now theough to year 10 The cost in years 1-3 is AED 600 and the interest rate is 12% per year 1) Calculate the total present worth in year-02) Calculate the future worth in year-10 option a AED 21361.88b AED 4032.74C AED 3786.61d AED 4400. 66e AED 12524. 89f AED 6878.06not use of excel.only use formula to solve. Q)For an income of $4,500 per month for the past five years, what is the present worth of the income at an interest rate of 15% per year, compounded monthly? $270,000 $543,078 $398,585 $298,485
- XYZ Company's single product has a selling price of $15 per unit The fxed expenses were $100,000 This year the company po a net operating income of $40000. If sales are predicted to increase by 10% next year, how much would the increase in profit be Select one Da6000 Ob5600 OENO change in income d 14000 e4000A company is thinking of investing in one of two potential new products for sale. The projections are as follows: Year Revenue/cost £ (Product A) Revenue/cost £ (Product B)0 (150,000) outlay (150,000) outlay 1 24,000 12,0002 24,000 25,3333 44,000 52,0004 84,000 63,333 1.Calculate the payback period for both products in years and months, not as a decimal. Please present answer to nearest half a month.This Year’s Actual Results Next Year’s Initial Forecast Net sales $17,000,000 $20,060,000 Cost of goods sold 13,600,000 16,048,000 Gross profit $3,400,000 $4,012,000 Fixed operating costs except depreciation 850,000 850,000 Depreciation 340,000 401,200 Earnings before interest and taxes $2,210,000 $2,607,800 Interest 340,000 340,000 Earnings before taxes $1,870,000 $2,267,800 Taxes 748,000 907,120 Net income $1,122,000 1,360,680 Common dividends 605,880 605,880 Addition to retained earnings $516,120 $754,800 Earnings per share $0.22 $0.27 Dividends per share $0.12 $0.12 Number of common shares (millions) 5.00 5.00 Which of the following are assumptions made by the initial income statement forecast? Check all that apply. The forecasted increase in net sales is 18.00%. No additional external financing will be required. The assigned depreciation method has changed. The facility is not currently operating at full capacity.…
