Q: Distinguish the nominal rate of return from the real rate of return.
A:
Q: What is annual worth of the project?
A: Annual Worth Analysis is a method which converts all cash flows to annual value of MARR. This is…
Q: Write the various applications that call for annual-worth analysis techniques?
A: Annual worth analysis is the analysis which is done by the managers before taking capital budgeting…
Q: What is the marginal rate of return? How is it calculated?
A: Answer: Marginal rate of return can be defined as the return obtained or received by means of…
Q: Annual rate of return
A: Annualized Rate of return is the annual rate of return earned on the investment over a period of…
Q: s. What is the geometric average return for this time period?
A: Geometric Average: It is the average return for a set of values computed with the products of the…
Q: What is the Times-interest·earned ratio?
A: It is important to analyze whether a company has ability to pay off its debts. Means, it is…
Q: e average rate of return on investment,
A: Average rate of return of investment = Average net income * 100/(Initial investment-Salvage value)
Q: What is the effective annual rate (EAR) and what is the purpose.
A: The effective Annual Rate (EAR) is the rate of interest actually earned on an investment or paid on…
Q: Which are the two computational schemes for calculating this earned interest yield?
A: The two computational schemes for calculating the earned interest yield are compound interest scheme…
Q: What is the Net Present Value (NPV) of the yearly (annual) capital budgeting cost?
A: While choosing which investment project will be undertaken, different appraisal techniques are used.…
Q: Compute the average rate of return for each investment. If required, round your answer to one…
A: 1a) Computation:
Q: What is Internal Rate of Return - Monthly Fixed Cash Flows with Reversions? Please provide…
A: The internal rate of return is the one of the discounted techniques of capital budgeting which is…
Q: What was her dollar-weighted annual yield rate? Compute it exactly, and compare to using the…
A: Dollar weighted annual rate is that rate of return where present cash inflows are same as present…
Q: What should be multiplied to the quantity of final products of the current year if we want to…
A: National income at constant prices: If goods and services produced in a year are valued at fixed…
Q: general expenses, what must be the new annual sales to achieve the same gross profit?
A: Q1. Gross profit = Annual revenue - Direct cost of production. Annual revenue $700,000…
Q: Describe the annual cash flow analysis, which presents measures of investment worth based on yield?
A: The question is based on the concept of cash flow and its analysis in terms of discounted value of…
Q: What annual rate of return is earned on a $3,300 investment when it grows to $7,100 in nineteen…
A: 4.11%
Q: How much is the investment income for the current year?
A: Net income refers to the income earned after deducting the company’s expenditures from the company’s…
Q: Compute the quarterly monetary value.
A: Quarterly monetary value is the proportionate value of the amount paid for the said period…
Q: What is an “equivalent annual annuity (EAA)”? When and how are EAAs used in capital budgeting?
A:
Q: Give an example on annual rate of return method
A:
Q: How much is the return on plan assets during the year?
A: Formula for Closing Balance of Plan Assets = Opening value of plan assets…
Q: Find the total number of compounding periods and the interest rate per period for the investment.
A: Effective interest rate is also called as effective annual interest rate. It is the real return of…
Q: .Calculate (a) net present value, (b) payback period, and (c) internal rate of return.
A: Net Present Value is the excess of present value of cash inflow to that of present value of cash…
Q: What will an investment or a series of investment be worth after a period of time?
A: The time value of money states that an amount of money is worth more now than it will be in the…
Q: Calculate the Payback period, Accounting Rate of Return and the Net Present Value (using a 17%…
A: Given:
Q: ired: Compute the average rate of return for each investment. If required, round your answer to one…
A: The Net Present Value (NPV) is a financial analysis technique for assessing the viability of an…
Q: First holding period return need to be calculated, then annualized return.
A: Annual rate of return for first 10 years (r1) = 0.12 or 12% Annual rate of return for 10 to 15 years…
Q: what is the difference between a required rate of return and an expected rate of return?
A: Rate of return (ROR) is a value at which an investor earns additional amount on invested amount…
Q: total return will you have earned over the year? What was your dividend yield? Your capital gain…
A: Given Information: Purchase Price (Po) = $101 Expected Dividend (D1) = $7 Expected Price after 1…
Q: What is the annual percentage yield (APY) for money invested at an annual rate of 5% compounded…
A: Annual Percentage Yield (APY):APY is an effective annual return rate that takes compounding…
Q: Explain the Annual Effective Yields at Various Compounding Intervals?
A: The effective annual rate of interest is the actual or the real rate of interest paid or received…
Q: (Profitability Ratio) What is the Return on Investment Ratio in 2019?
A: Profitability Ratio: This ratio has measured the effectiveness of the firm through analysis of the…
Q: a) What is the net present value of the proposed investment, assuming Daneche uses a 12% discount…
A: Net Present Value = Present Value of all Cash Inflows - Present Value of all Cash Outflows…
Q: Which of the following affects the present value of an investment? The type of investment (annuity…
A: Present value of the investment: Present value of the investment is calculated using the cash flows…
Q: compute each investment payback period.
A: Payback Period: It is a method used in capital budgeting to determine the time it will take for the…
Q: Profitability Ratio) What is the Return on Asset Ratio in 2020?
A: Ratio Analysis - The ratio is the technique used by the prospective investor or an individual or…
Q: What is the carrying amount of the investment at the end of the current year?
A: Solution Given Face value 3000000 Cost 2820750 Coupon rate 12% Effective…
Q: Calculate the present value PV (in dollars)
A: Today’s worth of dollars at a later date is the Present Value of the dollar. For example, the value…
Q: In what year will the investment be expected to double?
A: The ‘rule of 72’ is an important numerical concept in finance. The concept is based on the principle…
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- Alfredo Company purchased a new 3-D printer for $900,000. Although this printer is expected to last for ten years, Alfredo knows the technology will become old quickly, and so they plan to replace this printer in three years. At that point, Alfredo believes it will be able to sell the printer for $15,000. Calculate yearly depreciation using the double-declining-balance method.The Scampini Supplies Company recently purchased a new delivery truck. The new truck cost $22,500, and it is expected to generate net after-tax operating cash flows, including depreciation, of $6,250 per year. The truck has a 5-year expected life. The expected salvage values after tax adjustments for the truck are given here. The company’s cost of capital is 10%. Should the firm operate the truck until the end of its 5-year physical life? If not, then what is its optimal economic life? Would the introduction of salvage values, in addition to operating cash flows, ever reduce the expected NPV and/or IRR of a project?Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of $6,000 and is expected to be driven for 125,000 miles. Montello uses the units-of-production depreciation method, and in year one the company expects the truck to be driven for 26,000 miles; in year two, 30,000 miles; and in year three, 40,000 miles. Consider how the purchase of the truck will impact Montellos depreciation expense each year and what the trucks book value will be each year after depreciation expense is recorded.
- Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of $6,000 and is expected to be driven for 125,000 miles. Montello uses the units-of-production depreciation method, and in year one it expects to use the truck for 26,000 miles. Calculate the annual depreciation expense.Filkins Fabric Company is considering the replacement of its old, fully depreciated knitting machine. Two new models are available: Machine 190-3, which has a cost of $190,000, a 3-year expected life, and after-tax cash flows (labor savings and depreciation) of $87,000 per year; and Machine 360-6, which has a cost of $360,000, a 6-year life, and after-tax cash flows of $98,300 per year. Knitting machine prices are not expected to rise because inflation will be offset by cheaper components (microprocessors) used in the machines. Assume that Filkins’ cost of capital is 14%. Should the firm replace its old knitting machine? If so, which new machine should it use? By how much would the value of the company increase if it accepted the better machine? What is the equivalent annual annuity for each machine?Dauten is offered a replacement machine which has a cost of 8,000, an estimated useful life of 6 years, and an estimated salvage value of 800. The replacement machine is eligible for 100% bonus depreciation at the time of purchase- The replacement machine would permit an output expansion, so sales would rise by 1,000 per year; even so, the new machines much greater efficiency would cause operating expenses to decline by 1,500 per year The new machine would require that inventories be increased by 2,000, but accounts payable would simultaneously increase by 500. Dautens marginal federal-plus-state tax rate is 25%, and its WACC is 11%. Should it replace the old machine?
- Urquhart Global purchases a building to house its administrative offices for $500,000. The best estimate of the salvage value at the time of purchase was $45,000, and it is expected to be used for forty years. Urquhart uses the straight-line depreciation method for all buildings. After ten years of recording depreciation, Urquhart determines that the building will be useful for a total of fifty years instead of forty. Calculate annual depreciation expense for the first ten years. Determine the depreciation expense for the final forty years of the assets life, and create the journal entry for year eleven.Montezuma Inc. purchases a delivery truck for $15,000. The truck has a salvage value of $3,000 and is expected to be driven for eight years. Montezuma uses the straight-line depreciation method. Calculate the annual depreciation expense. After three years of recording depreciation, Montezuma determines that the delivery truck will only be useful for another three years and that the salvage value will increase to $4,000. Determine the depreciation expense for the final three years of the assets life, and create the journal entry for year four.Colquhoun International purchases a warehouse for $300,000. The best estimate of the salvage value at the time of purchase was $15,000, and it is expected to be used for twenty-five years. Colquhoun uses the straight-line depreciation method for all warehouse buildings. After four years of recording depreciation, Colquhoun determines that the warehouse will be useful for only another fifteen years. Calculate annual depreciation expense for the first four years. Determine the depreciation expense for the final fifteen years of the assets life, and create the journal entry for year five.
- Utica Machinery Company purchases an asset for 1,200,000. After the machine has been used for 25,000 hours, the company expects to sell the asset for 150,000. What is the depreciation rate per hour based on activity?Dunedin Drilling Company recently acquired a new machine at a cost of 350,000. The machine has an estimated useful life of four years or 100,000 hours, and a salvage value of 30,000. This machine will be used 30,000 hours during Year 1, 20,000 hours in Year 2, 40,000 hours in Year 3, and 10,000 hours in Year 4. With DEPREC5 still on the screen, click the Chart sheet tab. This chart shows the accumulated depreciation under all three depreciation methods. Identify below the depreciation method that each represents. Series 1 _____________________ Series 2 _____________________ Series 3 _____________________ When the assignment is complete, close the file without saving it again. Worksheet. The problem thus far has assumed that assets are depreciated a full year in the year acquired. Normally, depreciation begins in the month acquired. For example, an asset acquired at the beginning of April is depreciated for only nine months in the year of acquisition. Modify the DEPREC2 worksheet to include the month of acquisition as an additional item of input. To demonstrate proper handling of this factor on the depreciation schedule, modify the formulas for the first two years. Some of the formulas may not actually need to be revised. Do not modify the formulas for Years 3 through 8 and ignore the numbers shown in those years. Some will be incorrect as will be some of the totals. Preview the printout to make sure that the worksheet will print neatly on one page, and then print the worksheet. Save the completed file as DEPRECT. Hint: Insert the month in row 6 of the Data Section specifying the month by a number (e.g., April is the fourth month of the year). Redo the formulas for Years 1 and 2. For the units of production method, assume no change in the estimated hours for both years. Chart. Using the DEPREC5 file, prepare a line chart or XY chart that plots annual depreciation expense under all three depreciation methods. No Chart Data Table is needed; use the range B29 to E36 on the worksheet as a basis for preparing the chart if you prepare an XY chart. Use C29 to E36 if you prepare a line chart. Enter your name somewhere on the chart. Save the file again as DEPREC5. Print the chart.Montezuma Inc. purchases a delivery truck for $20,000. The truck has a salvage value of $8,000 and is expected to be driven for ten years. Montezuma uses the straight-line depreciation method. Calculate the annual depreciation expense. After five years of recording depreciation, Montezuma determines that the delivery truck will be useful for another five years (ten years in total, as originally expected) and that the salvage value will increase to $10,000. Determine the depreciation expense for the final five years of the assets life, and create the journal entry for years 6–10 (the entry will be the same for each of the five years).
