RVC makes a control valve regulator. How much can the company afford to spend now on new equipment in lieu of spending $75,000 four years from now? The company's rate of return is 12% per year.
Q: The makers of Lifestraw, a filter designed to allow the user to drink water safely from a stream,…
A: Present value is the present worth of any sum of money to be received in the future at a specified…
Q: Altmax Ltd, a company that manufactures automobile wiring harnesses, has budgeted P = $400,000 now…
A: Time value of money means that worth of a rupee today is less than the worth of rupee in future.…
Q: Verizon Communications said it plans to spend $22.9 billion to expand its fiber-optic Internet and…
A: F=PF/P i, n P=CustomersAverage IncomeP/A i, n+CustomersAverage IncomeCustomer baseP/G i,…
Q: An energy-efficient motor may be purchased for $3,000 that will last for 5 years. It will save $800…
A: Present Worth: It is the notion of "present value" that asserts that a sum of money is worth more…
Q: McMillan Company manufactures electronic flow sensors that are designed as an alternative to…
A:
Q: office building is currently for sale, and you are thinking of purchasing it. From your extensive…
A: The maximum price that can be paid for a property is the present value of all net income that will…
Q: Rubbermaid Plastic Corp. invested ₱10,000,000 in manufacturing equipment for producing small…
A: Invested money is ₱10,000,000. Annual interest rate is 5%. Maturity is 7 years. Compounding…
Q: A company plans to modernize its facilities in 8 years. They estimate saving $5,000 per month if…
A: Estimated saving Per Month = $5,000.00 Time Period(Years) = 8 Salvage Value = $29,700.00 Nominal…
Q: A manufacturer of toilet flush valves wants to have ₱15,000,000 available 10 years from now so that…
A: The given problem relates to concept of annuity. An annuity is a series of uniform cash flows over a…
Q: A corporation is considering purchasing a machine that costs $120,000 andwill save $X per year after…
A: Saving after tax can be calculated by this formula. X= saving after tax .i = Interest rate .n=…
Q: The Dominion Freight Company has invested $50,000 in a new sorting machine that is expected to…
A: NPV is an abbreviation for Net Present Value. For example, NPV helps us to know the present value of…
Q: Determine the NPV for the following: An information system will cost $95,000 to implement over…
A: According to the information provided: Cost in Year 0 = $95000 Savings in Year 1 = $30000 Saving in…
Q: A discount furniture store is planning an expansion which will cost 12, 000, 000 three years from…
A: Future value = $ 12,000,000 Annual interest rate = 10% Period = 3 Years Deposit in year 1 = x…
Q: An investment company wants to study the usage of new technology for one of its clients. This…
A: Human Hour Per month = 187 Average Savings per Human hour = $450 Average savings per month =…
Q: A manufacturing firm spends $350,000 annually for a required safety inspection program. A new…
A: A theory that helps to compute the present or future value of the cash flows is term as the TVM…
Q: What is the NPV of this investment
A:
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: A High Torque DC Motors manufacturer estimated that the permanent magnet component will cost $95,000…
A: Cost per year is $95,000 Time period is 5 years At year, manufacturer mistakenly spends $55,000…
Q: Need help with cost savings
A: Computation of operating cash flow:The NPV will be zero when the firm is indifferent among accepting…
Q: Mikes Bike Co. currently sells 11 million bike tires each year at a price of $17 per tire. It is…
A: Given Information, Price of each tire = $17 Price of Improved tire = $23 each Cost of old tire to…
Q: quarterly
A: Introduction: The amount that would be in the account at the end of a particular time period is…
Q: A software company that installs systems for inventory control using RFID technology spent $600,000…
A: Inventory is the investment in material which is done by the firm. Firm maintains the level of…
Q: The optical products division of Panasonic is planning a $3.5 million building expansion for…
A: The present value of an annuity is the current worth of a cash flow series at a certain rate of…
Q: The market volume for widgets is increasing by 15% per year from current profits of $300,000.…
A: Year Current Profit Sample Working Profit in case of design change Sample Working Extra Cash Flow =…
Q: Suppose you are in business and you buy a new machine for $40,000. After paying all other expenses,…
A: We need to compute the rate of return earned by the machine. Machine should be bought if rate of…
Q: A small northern California consulting firm wants to start a recapitalization pool for replacement…
A: Time value of money (TVM) refers to the method or technique which is used to measure the amount of…
Q: The company is considering investing $810,000 in equipment. They expect the equipment to save…
A: Formulas: Payback period = cash out flows / Cash inflows
Q: Sensotech, Inc., a maker of microelectromechanical systems, believes it can reduce product recalls…
A: MARR is return that an proposal must earn to qualify for investment. Investors or Manager have…
Q: Food Corporation of dalican wants money to construct a new granary. If the granary will cost…
A: In this we need to find out future value factor and from that we can get the quarterly deposit.
Q: Labco Scientific sells high-purity chemicals to universities, research laboratories, and…
A: Given: New equipment cost = $560,000 Year = 3 Interest rate = 6%
Q: How much money could a maker of super- conducting magnetic energy storage systems afford to spend…
A: Present value refers to the current valuation for a future sum. Investors determine the present…
Q: A northern California consulting firm wants to start saving money for replacement of network…
A: The computation is done below: The amount available will be $26,751.81
Q: Environmental recovery company RexChem Partners plans to finance a site reclamation project that…
A: Given: The company borrows $4.1 million The compounding period n is 4 years Interest is 15% per…
Q: Management is considering buying a pump that costs $20,000 and could save them $7,500 per year over…
A: Solution:- The investment should be made or not will depend on the Net Present Value (NPV). If NPV…
Q: Your firm has the option of making an investment in new software that will cost $278,367 today and…
A: We need to calculate Net present value(NPV) of software. NPV is the difference between present value…
Q: A large electronic retailer is considering the purchase of software that will minimize shipping…
A: In the given situation, Purchase of Software has to be justified for the annual expenditure incurred…
Q: A maker of mechanical systems can reduce product recalls by 25% if it purchases new packaging…
A: Given information : Reduction rate = 25% Expected cost = $40,000 Time period = 4 years Minimum…
Q: A project, that consists of just readjusting some parts to adapt them to assemble to electric cars,…
A: Annual savings =200000 which is expected to grow at 1% per year Year Revneue A B=Revenue of PY…
Q: Amphenol manufactures motor power connectors and is considering upgrading the production equipment…
A: Future worth (FW) is the value of present worth of a cash flow to be received on a future date with…
Q: A company plans to modernize its facilities in 8 years. They estimate saving $5,783 per month if…
A: Estimated saving Per Month = $5,783.00 Time Period(Years) = 8 Salvage Value = $28,671.00 Nominal…
Q: How much will be the equivalent worth of ₱2M invested today for three years at a commercial rate of…
A: The equivalent worth of the amount can be calculated using the formula of the future value.
Q: A company receives 13.78% per year from accounts. They are considering a project that will force…
A: present value of annuity (PVA): PVA=A×1-11+RNRwhere,A=annuityR=interest rateN=number of years…
Q: A manufacturing firm spends $500,000 annually for a required safety inspection program. A new…
A: Costs = $500,000 Interest rate = 9.569% Time Period = 10 Years Cost occurred in year 5 = $10,000…
Q: A seaI firm Trodent’s customers expects to decrease downtime by 0.3 as a result of the new seal…
A: Annuity Factor:- It is simplifying the process of calculating the present value of cash flow and…
Q: A company plans to modernize its facilities in 8 years. They estimate saving $9,518 per month if…
A: To Find: Capital Availability
Q: Kennywood Amusement Park spends $75,000 each year in consulting services for ride inspection and…
A: Series of payments or receipts is referred as cash flows in an organization. Initial investment is…
Step by step
Solved in 2 steps
- A grocery store is considering the purchase of a new refrigeration unit with an Initial Investment of $412,000, and the store expects a return of $100,000 in year one, $72000 in years two and three, $65,000 in years four and five, and $38,000 in year six and beyond, what is the payback period?A restaurant is considering the purchase of new tables and chairs for their dining room with an initial investment cost of $515,000, and the restaurant expects an annual net cash flow of $103,000 per year. What is the payback period?Gardner Denver Company is considering the purchase of a new piece of factory equipment that will cost $420,000 and will generate $95,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further Instructions on internal rate of return in Excel, see Appendix C.
- Gina Ripley, president of Dearing Company, is considering the purchase of a computer-aided manufacturing system. The annual net cash benefits and savings associated with the system are described as follows: The system will cost 9,000,000 and last 10 years. The companys cost of capital is 12 percent. Required: 1. Calculate the payback period for the system. Assume that the company has a policy of only accepting projects with a payback of five years or less. Would the system be acquired? 2. Calculate the NPV and IRR for the project. Should the system be purchasedeven if it does not meet the payback criterion? 3. The project manager reviewed the projected cash flows and pointed out that two items had been missed. First, the system would have a salvage value, net of any tax effects, of 1,000,000 at the end of 10 years. Second, the increased quality and delivery performance would allow the company to increase its market share by 20 percent. This would produce an additional annual net benefit of 300,000. Recalculate the payback period, NPV, and IRR given this new information. (For the IRR computation, initially ignore salvage value.) Does the decision change? Suppose that the salvage value is only half what is projected. Does this make a difference in the outcome? Does salvage value have any real bearing on the companys decision?Conestoga Plumbing plans to invest in a new pump that is anticipated to provide annual savings for 10 years of $50,000. The pump can be sold at the end of the period for $100,000. What is the present value of the investment in the pump at a 9% interest rate given that savings are realized at year end?Talbot Industries is considering launching a new product. The new manufacturing equipment will cost $17 million, and production and sales will require an initial $5 million investment in net operating working capital. The company’s tax rate is 25%. What is the initial investment outlay? The company spent and expensed $150,000 on research related to the new product last year. What is the initial investment outlay? Rather than build a new manufacturing facility, the company plans to install the equipment in a building it owns but is not now using. The building could be sold for $1.5 million after taxes and real estate commissions. What is the initial investment outlay?
- Each of the following scenarios is independent. All cash flows are after-tax cash flows. Required: 1. Patz Corporation is considering the purchase of a computer-aided manufacturing system. The cash benefits will be 800,000 per year. The system costs 4,000,000 and will last eight years. Compute the NPV assuming a discount rate of 10 percent. Should the company buy the new system? 2. Sterling Wetzel has just invested 270,000 in a restaurant specializing in German food. He expects to receive 43,470 per year for the next eight years. His cost of capital is 5.5 percent. Compute the internal rate of return. Did Sterling make a good decision?Falkland, Inc., is considering the purchase of a patent that has a cost of $50,000 and an estimated revenue producing life of 4 years. Falkland has a cost of capital of 8%. The patent is expected to generate the following amounts of annual income and cash flows: A. What is the NPV of the investment? B. What happens if the required rate of return increases?Mason, Inc., is considering the purchase of a patent that has a cost of $85000 and an estimated revenue producing lite of 4 years. Mason has a required rate of return that is 12% and a cost of capital of 11%. The patent is expected to generate the following amounts of annual income and cash flows: A. What is the NPV of the investment? B. What happens if the required rate of return increases?
- The Rodriguez Company is considering an average-risk investment in a mineral water spring project that has an initial after-tax cost of 170,000. The project will produce 1,000 cases of mineral water per year indefinitely, starting at Year 1. The Year-1 sales price will be 138 per case, and the Year-1 cost per case will be 105. The firm is taxed at a rate of 25%. Both prices and costs are expected to rise after Year 1 at a rate of 6% per year due to inflation. The firm uses only equity, and it has a cost of capital of 15%. Assume that cash flows consist only of after-tax profits because the spring has an indefinite life and will not be depreciated. a. What is the present value of future cash flows? (Hint: The project is a growing perpetuity, so you must use the constant growth formula to find its NPV.) What is the NPV? b. Suppose that the company had forgotten to include future inflation. What would they have incorrectly calculated as the projects NPV?Towson Industries is considering an investment of $256,950 that is expected to generate returns of $90,000 per year for each of the next four years. What Is the Investments internal rate of return?Your company is planning to purchase a new log splitter for is lawn and garden business. The new splitter has an initial investment of $180,000. It is expected to generate $25,000 of annual cash flows, provide incremental cash revenues of $150,000, and incur incremental cash expenses of $100,000 annually. What is the payback period and accounting rate of return (ARR)?
