Crane Manufacturing Company acquired a patent on a manufacturing process on January 1, 2020 for $5550000. It was expected to have a 10 year life and no residual value. Crane uses straight-line amortization for patents. On December 31, 2021, the future cash flows expected from the patent were $510000 per year for the next eight years. The present value of these cash flows, discounted at Crane's market interest rate, is $2675000. At what amount should the patent be carried on the December 31, 2021 balance sheet? O $4080000. O $5550000. O $4440000. O $2675000.
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- Bi-Coastal Railroad Inc. is considering acquiring equipment at a cost of $544,000. The equipment has an estimated life of 10 years and no residual value. It is expected to provide yearly net cash flows of $68,000. The company’s minimum desired rate of return for net present value analysis is 15%. 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 Compute the following: a. The average rate of return, assuming the annual earnings are equal to the net cash flows less the annual depreciation expense on the equipment. If required, round your answer to one decimal place. % b. The cash payback period. years c. The net…Spanish Peaks Railroad Inc. is considering acquiring equipment at a cost of $305,000. The equipment has an estimated life of 10 years and no residual value. It is expected to provide yearly net cash flows of $61,000. The company's minimum desired rate of return for net present value analysis is 15%. 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 Compute the following: a. The average rate of return, giving effect to straight-line depreciation on the investment. If required, round your answer to one decimal place.fill in the blank 1 % b. The cash payback period. years c. The net present value. Use the above…Spanish Peaks Railroad Inc. is considering acquiring equipment at a cost of $248,000. The equipment has an estimated life of 10 years and no residual value. It is expected to provide yearly net cash flows of $62,000. The company's minimum desired rate of return for net present value analysis is 10%. 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 Compute the following: a. The average rate of return, giving effect to straight-line depreciation on the investment. If required, round your answer to one decimal place.% b. The cash payback period. c. The net present value. Use the above table of the present value…
- Spanish Peaks Railroad Inc. is considering acquiring equipment at a cost of $68,000. The equipment has an estimated life of 10 years and no residual value. It is expected to provide yearly net cash flows of $34,000. The company's minimum desired rate of return for net present value analysis is 12%. 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 Compute the following: a. The average rate of return, giving effect to straight-line depreciation on the investment. If required, round your answer to one decimal place. c. The net present value. Use the above table of the present value of an annuity of $1. Round to…Cross Country Railroad Inc. is considering acquiring equipment at a cost of $840,000. The equipment has an estimated life of 8 years and no residual value. It is expected to provide yearly net cash flows of $168,000. The company’s minimum desired rate of return for net present value analysis is 10%. 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 Compute the following: a. The average rate of return, assuming the annual earnings are equal to the net cash flows less the annual depreciation expense on the equipment.fill in the blank 1% b. The cash payback period. c. The net present value. Use the above table…Spanish Peaks Railroad Inc. is considering acquiring equipment at a cost of $132,000. The equipment has an estimated life of 10 years and no residual value. It is expected to provide yearly net cash flows of $33,000. The company's minimum desired rate of return for net present value analysis is 10%. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 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 4.212 3.791 3.605 3.353 2.991 4.917 4.355 4.111 3.785 3.326 7 5.582 4.868 4.564 4.160 3.605 6.210 5.335 4.968 4.487 3.837 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 Compute the following: The average rate of return, giving effect to straight-line depreciation on the investment. If required, round your answer to one decimal place. % b. The cash payback period. c. The net present value. Use the above table of the present value of an annuity of $1. Round to the nearest…
- The Grace Company purchased equipment for $14,000 on January 1, 2022 and estimates that it will increase net cash flows by the following amounts Year 1 $5,800 Year 2 4,200 Year 3 3,100 Year 4 1,900 Year 5 800 At the end of that time the equipment will be worthless. Assuming an interest rate of three percent, what is the NPV for the equipment? Use time value of money factors with at least four decimal places and then round your final answer to the nearest whole dollar.A company buys an oil rig for P1,200,000 on January 1, 2020. The life of the rig is 12 years and the expected cost to dismantle the rig at the end of 12 years is P300,000 (present value factor of 1, 12% for 12 years is 0.2567). 12% is an appropriate interest rate for this company. What is the total expense should be recorded for 2020 as a result of these events?Baird Bros. Construction is considering the purchase of a machine at a cost of $202,000. The machine is expected to generate cash flows of $37,000 per year for 10 years and can be sold at the end of 10 years for $27,000. Interest is at 11%. Assume the machine purchase would be paid for on the first day of year one, but that all other cash flows occur at the end of the year. Ignore income tax considerations. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required:a. What is the net present value of the cash flows?b. Determine whether Baird should purchase the machine.
- Thompson Corporation is considering the purchase ofa new piece of machinery. Thompson expects the new machinery toincrease its revenues by $70,000 at the end of year 1, S60,000 atthe end of year 2, and $50,000 at the end of year 3 at which point the machinery will have exhausted its useful life. If the interestrate is 4%, what is the most Thompson should be willing to paytoday for this piece of machinery? ExplainationGold Inc. sold the rights to use one of its patented processes that will result in cash receipts of $2,500 at the end of each of the next four years and a lump sum receipt of $4,000 at the end of the fifth year. The total present value of these payments if interest is at 9% is: Choose the closest answer. A) $14,000. B) $11,468. C) $12,100. D) $10,699. PVA 9% 4 pds 3.23972, PVA 9% 5 pds 4,58720 PV 1 9% 4 pds .72451 . PV 1 % 5 pds .64993Redstock Plc had acquired a machine on 1 January 2019 at a cost of £100,000 with an estimated useful economic life of ten years. The fair value of the machine is £52,000 and the selling costs are £4,000. The expected future cash flows are £10,000 per annum for the next five years. The current cost of capital is 10%. An annuity factor for this rate over this period is 3.791. Required: Prepare extracts from the financial statement for the year-ended 31 December 2019. Show all your workings.