FUNDAMENTAL ACCOUNTING PRINCIPLES
25th Edition
ISBN: 9781264303236
Author: Wild
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 26, Problem 20QS
To determine
Concept Introduction:
The net present value for the investment with salvage value using the information in exercises 26-19.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
See image for MACRS table
1) What is the Ending Book Value at the end of year 3 using MACRS: $
2) What is the Net cash flow from salvage at the end of year 3? $
What Salvage value will equate the Following Cash flow to
FW = 6,723 assuming i = 10%
ΕΟΥ CF
17,323
1
4,965
4,965
4,965
Required information
[The following information applies to the questions displayed below.]
Following is information on an investment in a manufacturing machine. The machine has zero salvage value. The company
requires a 3% return from its investments.
Initial investment
Net cash flows:
Year 1
Year 2
Year B
Year 1
Year 2
Year 3
Totals
Initial investment
Net present value
Compute this machine's net present value. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables
provided. Round all present value factors to 4 decimal places. Round present value amounts to the nearest dollar.)
Net Cash Flow
LUD
$
$ (230,000)
0
190,000
96,000
123,000
Present Value Present Value of Net
Factor
Cash Flows
$
09
0
0
Chapter 26 Solutions
FUNDAMENTAL ACCOUNTING PRINCIPLES
Ch. 26 - Prob. 1QSCh. 26 - Prob. 2QSCh. 26 - Prob. 3QSCh. 26 - Prob. 4QSCh. 26 - Prob. 5QSCh. 26 - Prob. 6QSCh. 26 - Prob. 7QSCh. 26 - Prob. 8QSCh. 26 - Prob. 9QSCh. 26 - Prob. 10QS
Ch. 26 - Prob. 11QSCh. 26 - Prob. 12QSCh. 26 - Prob. 13QSCh. 26 - Prob. 14QSCh. 26 - Prob. 15QSCh. 26 - Prob. 16QSCh. 26 - Prob. 17QSCh. 26 - Prob. 18QSCh. 26 - Prob. 19QSCh. 26 - Prob. 20QSCh. 26 - Prob. 21QSCh. 26 - Prob. 22QSCh. 26 - Prob. 23QSCh. 26 - Prob. 24QSCh. 26 - Prob. 1ECh. 26 - Prob. 2ECh. 26 - Prob. 3ECh. 26 - Prob. 4ECh. 26 - Prob. 5ECh. 26 - Prob. 6ECh. 26 - Prob. 7ECh. 26 - Prob. 8ECh. 26 - Prob. 9ECh. 26 - Prob. 10ECh. 26 - Prob. 11ECh. 26 - Prob. 12ECh. 26 - Prob. 13ECh. 26 - Prob. 14ECh. 26 - Prob. 15ECh. 26 - Prob. 16ECh. 26 - Prob. 17ECh. 26 - Prob. 18ECh. 26 - Prob. 19ECh. 26 - Prob. 20ECh. 26 - Prob. 21ECh. 26 - Prob. 22ECh. 26 - Prob. 23ECh. 26 - Prob. 1PSACh. 26 - Prob. 2PSACh. 26 - Prob. 3PSACh. 26 - Prob. 4PSACh. 26 - Prob. 5PSACh. 26 - Prob. 6PSACh. 26 - Prob. 1PSBCh. 26 - Prob. 2PSBCh. 26 - Prob. 3PSBCh. 26 - Prob. 4PSBCh. 26 - Prob. 5PSBCh. 26 - Prob. 6PSBCh. 26 - Prob. 26SPCh. 26 - Prob. 1AACh. 26 - Prob. 2AACh. 26 - Prob. 3AACh. 26 - Prob. 1DQCh. 26 - Prob. 2DQCh. 26 - Prob. 3DQCh. 26 - Prob. 4DQCh. 26 - Prob. 5DQCh. 26 - Prob. 6DQCh. 26 - Prob. 7DQCh. 26 - Prob. 8DQCh. 26 - Prob. 9DQCh. 26 - Google managers must select depredation methods....Ch. 26 - Prob. 11DQCh. 26 - Prob. 12DQCh. 26 - Prob. 13DQCh. 26 - Prob. 1BTNCh. 26 - Prob. 2BTNCh. 26 - Prob. 3BTNCh. 26 - Prob. 4BTN
Knowledge Booster
Similar questions
- Using Declining Balance Method, a machine with an initial cost of $200,000 and a life of 10 years. What must be the minimal salvage value, usch that its book value after 5 years does not fall below $10,000? Show complete solution.arrow_forwardGiven the following data of equipment A and B. A First Cost P 50 000 P 150 000 2000 Salvage Value Annual Maintenance 6000 Economic life 6000 3000 5 15 The MARR is 12%. Use sinking fund depreciation. What is the rate of return for the additional initial investment on equipment B?arrow_forwardRequired information [The following Information applies to the questions displayed below] Following is information on an investment in a manufacturing machine. The machine has zero salvage value. The company requires a 6% return from its investments. Initial investment Net cash flowS Year 1 Year 2 Year 3 Compute this machine's net present value (PV of $1. FV of $1. PVA of $1. and EVA of S1) (Use appropriate factor(s) from the tables provided. Round all present value factors to 4 decimal places. Round present value amounts to the nearest dollar.) Year 1 Year 2 Year 3 Totals Initial investment Net present value Net Cash Flow $ (360,000) 120,000 126,000 87,000 $ 0 Present Value Factor Present Value of Net Cash Flows $ $ 0arrow_forward
- 52. Equipment will be purchased at a cost of P250,000. It will have no salvage value. The cash flows are expected to be: P37,000, P48,000, P65,000, P71,000, P73,000, and P53,000 over the life of the equipment. What is the payback period? Group of answer choices 3.43 years 6.00 years 5.25 years 4.40 yearsarrow_forwardThe following relates to a proposed equipment purchase: Cost $126,900 Salvage value $ 3,100 Estimated useful life 4 years Annual net cash flows $ 45,200 Depreciation method Straight-line The annual average investment amount used to calculate the accounting rate of return is: Multiple Choice $40,850 $63,450 $31,725 $61,900arrow_forward[The following information applies to the questions displayed below.] Following is information on an investment in a manufacturing machine. The machine has zero salvage value. The company requires a 6% return from its investments. Initial investment Net cash flows: Year 1 Year 2 Year 3 QS 11-20 (Algo) Net present value with uneven cash flows and salvage value LO P3 $ (220,000) 175,000 128,000 89,000 Assume that instead of a zero salvage value, as shown above, the machine has a salvage value of $20,500 at the end of its three-year life. Compute the machine's net present value. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round all present value factors 4 decimal places. Round present value amounts to the nearest dollar.) Year 1 Year 2 Year 3 Year 3 salvage value Totals Initial investment Net present value Net Cash Flows Present Value Factor Present Value of Net Cash Flowsarrow_forward
- Given the two machines' data Machine A Machine B First Cost P8,000.00 P14,000.00 Salvage value Annual operation 2,000.00 3.000.00 2,400.00 Annual maintenance 1,200.00 1.000.00 Taxes and insurance 3% 3% Life, years 10 15 Money is worth at least 16%. What is the exact rate of return?arrow_forwardn/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSession Locator=&inprogress=false eBook Pitt Company is considering two alternative investments. The company requires a 12% return from its investments. Neither option has a salvage value. Project X Project Y $242,311 Initial investment Net cash flows anticipated: Year 1 Year 2 82,000 58,000 93,000 81,000 75,000 A. Compute the IRR for both projects using the IRR spreadsheet function. Project X Project Y B. Which project should be recommended. Year 3 Year 4 Year 5 Project X Feedback Check My Work % 2 % $175,063 C Remember that all amounts need to be used in the formula in Excel. Follow the examples given for using the formula using the Help function in Excel. Compare the two amounts you calculate. Which amount would be better over the other? A 35,000 54,000 72,000 67,000 28,000 A 76 00 Incognito Aa TH 3arrow_forwardGiven the two machines' data Machine A Machine B First Cost P8,000.00 P14,000.00 Salvage value Annual operation 2,000.00 3,000.00 2,400.00 Annual maintenance 1,200.00 1,000.00 Taxes and insurance 3% 3% Life, years 10 15 Money is worth at least 16% Using equivalent uniform annual cost method, determine the value of alternative A and alternative B: ANSWER for ALTERNATIVE A: Blank 1 ANSWER for ALTERNATIVE B: Blank 2arrow_forward
- A machine gives annual benefits of 1000$ and have no salvage value with annual maintenance of 750$, if the rate of interest is 9% and number of years are 6 then what will be the present worth? Select one: a. 1209$ b. 1122$ c. 1193$arrow_forwardInstructions are down below the chart is provided with the information My Question: Can you provide the net present value of the New and old backhoes including the salvage value. My Question - Please leave the calculations of the Pv factor six digits after the decimal point for example. 0.925925 My Question- Can you also show the math equation for the calculations in the out flow and inflows of the New and Old Back hoes for example. Value of Cash flows and Outflows of the New and Old Backhoes= (...,... + ...,... +etc...... My Question: Can you provide in detail the profitability index of New and Old backhoes My Question: Can you provide the pay back period fro the New and old Backhoes. 1. Evaluate, discuss, and compare whether to purchase the new equipment or overhaul the old equipment. (Hint: For the old machine, the initial investment is the cost of the overhaul. For the new machine, subtract the salvage value of the old machine to determine the initial cost of the…arrow_forwardPC Shopping Network may upgrade its modem pool. It last upgraded 1 year ago, when it spent $114 million on equipment with an assumed life of 4 years and an assumed salvage value of $22 million for tax purposes. The firm uses straight-line depreciation. The old equipment can be sold today for $86 million. A new modem pool can be installed today for $156 million. This will have a 3-year life, and will be depreciated to zero using straight-line depreciation. The new equipment will enable the firm to increase sales by $15 million per year and decrease operating costs by $12 million per year. At the end of 3 years, the new equipment will be worthless. Assume the firm's tax rate is 35% and the discount rate for projects of this sort is 13%. (Enter your answers in millions. For example, an answer of $13,000,000 should be entered as 13. Use minus sign to enter cash outflows, if any.) a. What is the net cash flow at time 0 if the old equipment is replaced? (Do not round intermediate…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education