SURVEY OF ACCOUNTING 360DAY CONNECT CAR
5th Edition
ISBN: 9781260591811
Author: Edmonds
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 16, Problem 4E
a.
To determine
Calculate the maximum amount of cash that the dean should be willing to pay for a copy machine using the present value appendix in table 1.
b.
To determine
Calculate the maximum amount of cash that the dean should be willing to pay for a copy machine using the present value appendix in table 2.
c.
To determine
Explain the consistency or lack of consistency for the answers in requirements “a” and “b”.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Problem 6 - Shirt Corporation is considering purchasing equipment that costs $60,000 and is expected to provide
the following cash inflows over its five-year useful life:
Year
Cash Inflow
1
$18,000
2
$22,000
3
$24,000
4
$16,000
5
$ 9,000
Calculate the payback period for this investment.
Ch 25 pro 8
Please provide instructions.
Cash Payback Period, Net Present Value Analysis, and Qualitative Considerations
The plant manager of Shannon Electronics Company is considering the purchase of new automated assembly equipment. The new equipment will cost $48,000. The manager believes that the new investment will result in direct labor savings of $16,000 per year for 10 years.
Present Value of an Annuity of $1 at Compound Interest
Year
6%
10%
12%
15%
20%
1
0.943
0.909
0.893
0.870
0.833
2
1.833
1.736
1.690
1.626
1.528
3
2.673
2.487
2.402
2.283
2.106
4
3.465
3.170
3.037
2.855
2.589
5
4.212
3.791
3.605
3.353
2.991
6
4.917
4.355
4.111
3.785
3.326
7
5.582
4.868
4.564
4.160
3.605
8
6.210
5.335
4.968
4.487
3.837
9
6.802
5.759
5.328
4.772
4.031
10
7.360
6.145
5.650
5.019
4.192
a. What is the payback period on this project? years
b. What is the net present value, assuming a 10% rate of return? Use the table provided above. Round to the nearest whole dollar.…
Part 1
You have P10,000 to invest. You do not want to take any risk, so you will put the funds in a savings account at the local bank. Of the following choices, which one will produce the largest sum at the end of 22 years? An account that compounds interest. please explain
1.1 Annually
1.2 Daily
1.3 Quarterly
1.4 Monthly
2. The company is setting aside funds to acquire a property for its new warehouse. The company needs P74,735 to make the down payment. The company deposits P5,000/month in the fund account which pays 1% per month. As the financial manager you have been tasked to determine how long it will take to accumulate enough funds to acquire the property?
3. Suppose you are 40 years old and plans to retire in exactly 20 years. Twenty one years from now you will need to withdraw P50,000 per year from your retirement fund to add to your SSS pension. Assume you are to live for 85 years, how much money should you place in the retirement fund each year for the next 20…
Chapter 16 Solutions
SURVEY OF ACCOUNTING 360DAY CONNECT CAR
Ch. 16 - Prob. 1QCh. 16 - Prob. 2QCh. 16 - Prob. 3QCh. 16 - 4. Define the term return on investment. How is...Ch. 16 - Prob. 5QCh. 16 - Prob. 6QCh. 16 - Prob. 7QCh. 16 - Prob. 8QCh. 16 - Prob. 9QCh. 16 - Prob. 10Q
Ch. 16 - 11. Maria Espinosa borrowed 15,000 from the bank...Ch. 16 - Prob. 12QCh. 16 - 13. What criteria determine whether a project is...Ch. 16 - Prob. 14QCh. 16 - Prob. 15QCh. 16 - Prob. 16QCh. 16 - 17. What is the relationship between desired rate...Ch. 16 - Prob. 18QCh. 16 - Prob. 19QCh. 16 - Prob. 20QCh. 16 - Prob. 21QCh. 16 - Prob. 22QCh. 16 - Prob. 23QCh. 16 - Exercise 10-1A Identifying cash inflows and...Ch. 16 - Exercise 10-2A Determining the present value of a...Ch. 16 - Prob. 3ECh. 16 - Prob. 4ECh. 16 - Exercise 10-5A Determining net present value...Ch. 16 - Exercise 10-6A Determining net present value Aaron...Ch. 16 - Exercise 10-7A Using the present value index Rolla...Ch. 16 - Exercise 10-8A Determining the cash flow annuity...Ch. 16 - Prob. 9ECh. 16 - Exercise 10-10A Using the internal rate of return...Ch. 16 - Prob. 11ECh. 16 - Prob. 12ECh. 16 - Exercise 10-13A Determining the payback period...Ch. 16 - Prob. 14ECh. 16 - Prob. 15ECh. 16 - Prob. 16PCh. 16 - Prob. 17PCh. 16 - Problem 10-18A Postaudit evaluation Brett Collins...Ch. 16 - Problem 10-19A Using net present value and...Ch. 16 - Problem 10-20A Using the payback period and...Ch. 16 - Problem 10-21A Using net present value and payback...Ch. 16 - Problem 10-22A Effects of straight-line versus...Ch. 16 - Problem 10-23A Comparing internal rate of return...Ch. 16 - Prob. 1ATCCh. 16 - ATC 10-4 Writing Assignment Limitations of capital...Ch. 16 - Prob. 5ATC
Knowledge Booster
Similar questions
- EQUIVALENT ANNUAL ANNUITY Corcoran Consulting is deciding which of two computer systems to purchase. It can purchase state-of-the-art equipment (System A) for 20,000, which will generate cash flows of 6,000 at the end of each of the next 6 years. Alternatively, the company can spend 12,000 for equipment that can be used for 3 years and will generate cash flows of 6,000 at the end of each year (System B). If the companys WACC is 10% and both projects can be repeated indefinitely, which system should be chosen, and what is its EAA?arrow_forwardExercise A-12 (Algo) Present Value of Cash Flows Star City is considering an investment in the community center that is expected to return the following cash flows. Use Exhibit A.8. Year Net Cash Flow 1 $ 38,000 2 68,000 3 98,000 4 98,000 5 118,000 This schedule includes all cash inflows from the project, which will also require an immediate $218,000 cash outlay. The city is tax-exempt; therefore, taxes need not be considered. Required: a. What is the net present value of the project if the appropriate discount rate is 25 percent? Net present value b) b. What is the net present value of the project if the appropriate discount rate is 12 percent? What is the net present value of the project if the appropriate discount rate is 12 percent? (Round PV factor to 3 decimal places.) Net present valuearrow_forward6.17 A permanent endowment at the University of Alabama is to award scholarships to engineering students two times per year (end of June and end of December). The first awards are to be made beginning 5-1/2 years after the $20 million lump- sum donation is made. If the interest from the endowment is to fund 100 students each semester (i.e., twice a year) in the amount of $5000 each semester, what semiannual rate of return must the endowment fund earn? 6.18 Identify three possible difficulties with rate of return analyses compared to PW, AW, or FW analyses.arrow_forward
- 12. I need help with finance home work question asap please An investment that would require an initial cash outflow of $360,000 at the beginning is expected to produce cash inflows of $70,000 at the end of each of the investment's 7 years. Assume the required return is 13% and you wanted to determine the investment's discounted paypack period. What amount would you subtract from the investment's initial cash outflow of $360,000 when determining how much of the initial cost would be left to recover on a discounted basis at the beginning of the second year?arrow_forward11. Uneven cash flows A series of cash flows may not always necessarily be an annuity. Cash flows can also be uneven and variable in amount, but the concept of the time value of money will continue to apply. Consider the following case: The Purple Lion Beverage Company expects the following cash flows from its manufacturing plant in Palau over the next six years: Annual Cash Flows Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 $400,000 $20,000 $180,000 $300,000 $350,000 $725,000 A. The CFO of the company believes that an appropriate annual interest rate on this investment is 9%. What is the present value of this uneven cash flow stream, rounded to the nearest whole dollar? $1,975,000 $1,395,097 $1,775,000 $600,000 B. Identify whether the situations described in the following table are examples of uneven cash flows or annuity payments: Description Uneven Cash Flows Annuity Payments Debbie has…arrow_forwardCh 25 - Capital Investment Problem Bradley company is looking into investing in the purchase of a new building for $250,000. The building is expected to have a 10-year life with $30,000 salvage value. Annual net cash flows are expected to be $60,000 and Net Income is expected to be $40,000. The company's required rate of return is 12%. Using the information above, compute the following (round all answers to 1 decimal place): Calculate the Cash Payback Period Calculate the Net Present Value Compute the NPV of another similar building with a cost of $300,000, with 10-year life, salvage value of $20,000, which can generate $65,000 in annual cash flows, compute the profitability index of the two buildings. Compute the Profitability Index of both buildings and state which building is a better investment and why? Compute the Annual Rate of Return, assuming the company uses Straight-Line depreciation The company accepts investments with Cash Payback period of less than the half of the…arrow_forward
- SUBJECT: ENGINEERING ECONOMICS INSTRUCTION: Answer the following questions by including the appropriate cash flow diagrams, solution, and final answer. 1. You are planning to save enough money to buy a brand new car five years from now. You are setting a budget of Php 1,000,000 for this purchase. Your plan is to accumulate the amount by making three savings deposits at an interest rate of 10%. Deposit 1: Deposit Php 100,000 today, Deposit 2: Deposit Php 150,000 two years from now, Deposit 3: Deposit an amount Php X three years from now. How much do you need to invest in year three to ensure that you have the necessary fund to buy the new car at the end of year five?arrow_forwardQuestion 13 You have just completed a $24,000 feasibility study for a new coffee shop in some retail space you own. You bought the space two years ago for $101,000, and if you sold it today, you would net $111,000 after taxes. Outfitting the space for a coffee shop would require a capital expenditure of $28,000 plus an initial investment of $4,900 in inventory. What is the correct initial cash flow for your analysis of the coffee shop opportunity? Identify the relevant incremental cash flows below: (Select all the choices that apply.) A. Price you paid for the space two years ago. B. Feasibility study for the new coffee shop. C. Initial investment in inventory. D. Amount you would net after taxes should you sell the space today. E. Capital expenditure to outfit the space. Calculate the initial cash flow below: (Round to the nearest dollar.) 1 (1) $ 2 (2) $ 3 (3) $ 4…arrow_forwardQuestion 2 - UNIT 2: CAPITAL BUDGETTING PROCESS UNIT 3: CASH FLOW ESTIMATION Adler is replacing its old packing line with a more efficient line. The old line was being depreciated on a straight-line basis at a rate of $20,000 per year. The old machine has a current book value of $100,000. The new line, which costs $910,000, will be depreciated on a 10-year MACRS schedule. The more efficient operation is expected to increase revenues by $50,000 per year and reduce annual operating costs by $80,000. a) Compute the net cash flows for Adler in year Assume Adler has a marginal tax rate of 40%. Use the rounded MACRS schedule listed below: (10-Year Depreciation Schedule: 10%, 18%, 14%, 12%, 9%, 7%, 7%, 7%, 7%, 6%, 3%) Kaneb is evaluating two alternative pipeline welders. Welder A costs $310,000, has a 7-year life, and is expected to generate net cash inflows of $78,000 in each of the 7 years. Welder B costs $320,000, has a 5-year life, and is expected to generate annual net…arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
Survey of Accounting (Accounting I)AccountingISBN:9781305961883Author:Carl WarrenPublisher:Cengage Learning
Fundamentals of Financial Management (MindTap Cou...FinanceISBN:9781285867977Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage Learning
Survey of Accounting (Accounting I)
Accounting
ISBN:9781305961883
Author:Carl Warren
Publisher:Cengage Learning
Fundamentals of Financial Management (MindTap Cou...
Finance
ISBN:9781285867977
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning