Compute the net present value of this investment. It expects to generate $2 million in net earnings after taxes in the coming year. The investment costs $54,900 and has an estimated $8,100 salvage value. Avocado Company has an operating income of $100,000 on revenues of $1,000,000. The company requires a 10% rate of return on its investments. $2,000 per year for 10 years is the equivalent of $12,835 today ($2,000 6.4177) Using the orig, A building has a cost of $500,000 and accumulated depreciation of $40,000. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. Common stock. 6 years c. 7 years d. 5 years. (PV of. Peng Company is considering an investment expected to generate an average net income after taxes of $2,900 for three years. The investment costs $57.600 and has an estimated $8,400 salvage value. Compute the net present value of this investment. Calculate its book value at the end of year 10. Compute this machine's accounti, On 1/1, a company buys equipment with a cost of $8,100, an estimated salvage value of $1,100, and an estimated useful life of 7 years. Compute the net present value of this investment. The company uses straight-line depreciation. The investment costs $48,600 and has an estimated $6,300 salvage value. The present value of an annuity due for five years is 6.109. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. Assume Peng requires a 15% return on its investments. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. To find the NPV using a financial calacutor: 1. Management predicts this machine has a 10-year service life and a $100,000 salvage value, and it uses straight-line depreciation. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. Peng Company is considering an investment expected to generate an average net income after taxes Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. The company uses straight-line depreciation. The IRR on the project is 12%. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. value. The fair value. a) construct an influence diagram that relates these variables Compute the accounting sane of return for this investment assume the company uses straight-line depreciation. What method, A machine costs $400,000 and is expected to yield an after-tax net income of $9,000 each year. Peng Company is considering an investment expected to generate an average net income after taxes of $3,300 for three years. The investment costs $45,300 and has an estimated $7,500 salvage value. The purpose of this study is to empirically examine the influence of firm characteristics (size, age, industry type, and ownership) on a firm's strategic orientation. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. negative? copyright 2003-2023 Homework.Study.com. What is the accounting rate of return? Present value Management predicts this machine has a 10-year service life and a $120,000 salvage value, and it uses straight-line depreciation. What is the present value, Strauss Corporation is making a $91,800 investment in equipment with a 5-year life. It is considering investing in a project that costs $50,000 and is expected to generate cash inflows of $20,000 at the end of each year for 3 years. A company invests $175,000 in plant assets with an estimated 25-year service life and no salvage value. The approximate net present value of this project, The Zinger Corporation is considering an investment that has the following data: Year 1 Year 2 Year 3 Year 4 Year 5 Investment $17,500 $4,900 Cash inflow $3,900 $3,900 $10,000 $5,900 $5,900 Cash inflows occur evenly throughout the year. 8. Option 1 generates $25,000 of cash inflow per year and has zero residual value. What is the current value of the company? The cost of capital is 6%. ), The net present value of the investment is -$6,921. Input the cash flow values by pressing the CF button. Compute the net present value of this investment. A company buys a machine for $76,000 that has an expected life of 6 years and no salvage value. The excess cost over the book value of an investment that is due to expected above-average earnings is labeled on the consolidated balance sheet as: a. Compute the net present value of this investment. If the weighted average cost of capital is 10% and the cost of equity is 15%, what is the horizon value, to the ne, Management of a firm with a cost of capital of 12 percent is considering a $100,000 investment with annual cash flow of $44,524 for three years. c. Retained earnings. Explain. We reviewed their content and use your feedback to keep the quality high. The Controller asks you to use a depreciation method that would produce the highest charge against income after three years. The investment costs$45,000 and has an estimated $6,000 salvage value. Financial projections for the investment are tabulated here. The company s required rate of return is 14 percent. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. The investment costs $48,600 and has an estimated $6,300 salvage value. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. Assume the company requires a 12% rate of return on its investments. Enter the email address you signed up with and we'll email you a reset link. The a. The investment costs $47,400 and has an estimated $8,400 salvage value. The equipment has a five-year life and an estimated salvage value of $50,000. Ass, Peng Company is considering an Investment expected to generate an average net income after taxes of $3,000 for three years. Everything you need for your studies in one place. QS 24-8 Net present value LO P3 Assume Peng requires a 15% return on its investments. The investment costs $45,000 and has an estimated $6,000 salvage value. Required information [The following information applies to the questions displayed below.) Required information [The following information applies to the questions displayed below.) Assume Peng requires a 5% return on its investments. The cash inflow of each investment is as follows: Year Cash inflow A Cash inflow B Cash inflow C 1 $300 $500 $100 2 $300 $400 $2, Jimmy Co. is considering a 12-year project that is estimated to cost $1,050,000 and has no residual value. At the beginning of 2007, the company has a deferred tax asset of $360 pertain, Your company has been presented with an opportunity to invest in a project that is summarized as follows: Investment required $60,000,000 Annual gross income $14,000,000 Annual operating Costs 5,500,000 Salvage Value after 10 years 0 The project is expec, 1. Peng Company is considering an investment expected to generate an average net income after taxes of $2, 400 for three years. The You would need to invest S2,784 today ($5,000 0.5568). Management predicts this machine has a 10-year service life and a $100,000 salvage value, and it uses straight-line depreciation. a) Prepare the adjusting entries to report 1. During those years the company has been profitable, and it expects to continue to be profitable in the foreseeable future. Createyouraccount. The investment costs $45,000 and has an estimated $6,000 salvage value. Determine. Compute this machines accounting rate of return. This investment will produce certain services for a community such as vehicle kilometres, seat . b. The present value of the future cash flows at the company's desired rate of return is $100,000. Peng Company is considering an investment expected to generate an average net income after taxes of $2,900 for three years. Management predicts this machine has an 8-year service life and a $40,000 salvage value, and it uses straight-line depreciation. Cash Flow Annual cash flow Present Value of an Annuity of1 Residual value Present Value of 1 Select Chart Amount x PV FactorPresent Value $ 8,700 x Present value of cash inflows Immediate cash outflows Net present value 45,600 (The following information applies to the questions displayed below) Part 1 of 2 Peng Company is considering an investment expected to generate an average net income after taxes of $2,100 for three years. an average net income after taxes of $3,200 for three years. Assume Peng requires a 5% return on its investments. Negative amounts should be indicated by a minus sign.) Coins can be redeemed for fabulous Fair value method c. Historical cost m, Blue Fin Inc. requires all capital investments to generate a minimum internal rate of return of 15%. c) Only applies to a business organized as corporations. Assume Peng requires a 5% return on its investments. Use the following table: | | Present Value o. The company anticipates a yearly net income of $3,800 after taxes of 16%, with the cash flows to be received evenly throughout each year. The company's desired rate of return used in the present value calculations was, A company is considering investment in a project that costs Rs. criteria in order to generate long-term competitive financial returns and . Peng Company is considering an investment expected to generate an average net income after taxes of $3,100 for three years. Yearly net cash inflows (before taxes) from the machine are estimated at $140,000. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. (1) Determine wheth, Dartis Company is considering investing in a specialized equipment costing $600,000. a. What is the most that the company would be willing to invest in this project? The estimated cash flow for the investment are as follows: N Description Cash flow ($) 0 price of the system Fo 1-4 revenue per, Joe Sixpack Inc. is considering an investment that will cost is $400,000. The Action Plan for Soil Pollution Prevention and Control ("10-point Soil Plan") provides the top-level design for soil environmental protection in China and motivates heavy polluters to participate in soil pollution prevention and control. We reviewed their content and use your feedback to keep the quality high. Compute the net present value of this investment. The new present value of after tax cash flows from an investment less the amount invested. The initial cost and estimates of the book value of the investment at the end of the year, the net cash flows for each year, and the net income, Crane Company is considering an investment that will return a lump sum of $898, 900, 6 years from now. Carmino Company is considering an investment in equipment that is expected to generate an after-tax income of $5,000 for each year of its four-year life. Peng Company is considering an investment expected to generate an average net income after taxes of $2,000 for three years. Required information [The folu.ving information applies to the questions displayed below.) The company anticipates a yearly net income of $3,300 after taxes of 30%, with the cash flows to be rece, A company bought a machine that has an expected life of seven years and no salvage value. Let us assume straight line method of depreciation. What amount should Crane Company pay for this investment to earn an 9% return? A novel dynamic modeling method for a multi-product production line is developed to investigate dynamic properties of the system under random disruptions such as machine failures and market demand . A company has three independent investment opportunities. Management predicts this machine has a 9-year service life and a $60,000 salvage value, and it uses strai, A machine costs $700,000 and is expected to yield an after-tax net income of $52,000 each year. a. Assume Peng requires a 5% return on its investments. EV of $1. A machine costs $190,000, has a $10,000 salvage value, is expected to last nine years, and will generate an after-tax income of $30,000 per year after straight-line depreciation. You have the following information on a potential investment. The investment costs $45,000 and has an estimated $6,000 salvage value. Talking on the telephon A machine costs $180,000, has a $12,000 salvage value, is expected to last eight years, and will generate an after-tax income of $39,000 per year after straight-line depreciation. Assume the company uses straight-line depreciation. A. What amount should Elmdale Company pay for this investment to earn a 8% return? What is the payback period in years ap, The Montana Company has decided to invest in a project that is expected to produce the following cash flows: $12,500 (year 1), $14,000 (year 2) and $9,000 (year 3). Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. Using the original cost of the asset, the unadjusted rate of return on, A machine costs $600,000 and is expected to yield an after-tax net income of $23,000 each year. The company is considering an investment that would yield a cash flow of $20,000 in 5 years. (20-year, 12% pr, What is the NPV and IRR for the two investments options below? Management estimates the machine will yield an after-tax net income of $12,500 each year. Compute the net present value of this investment. It is mainly used to evaluate a prospective project whether it would be profitable to the investor or not. Peng Company is considering an investment expected to generate an average net income after taxes of $3,200 for three years. Assume Peng requires a 5% return on its investments. Assume Peng requires a 10% return on its investments. Negative amounts should be indicated by #12 If the accounting ra, A company buys a machine for $76,000 that has an expected life of 7 years and no salvage value. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. The company uses a discount rate of 16% in its capital budgeting. Securities Cost Fair Value Trading 120,000 124,000 Non-trading 100,000 94,000 The non-trading securities are held as long-term investments. The initial cost and estimates of the book value of the investment at the end of each year, the net cash flows for each year, and the net income for each year are presented in the schedule below. Peng Company is considering an investment expected to generate If t, Your company just bought an asset for $200,000 with an estimated useful life of 5 yrs, and a salvage value of $10,000. The fair value of the equipment is $464,000. Assume Peng requires a 15% return on its investments. All rights reserved. 2003-2023 Chegg Inc. All rights reserved. Tradin, Drake Corporation is reviewing an investment proposal. The management of Samsung is planning to invest in a new companywide computerized inventory tracking system. 2003-2023 Chegg Inc. All rights reserved. Year 0 ($400,000) initial investment Year 1 $140,000 Year 2 120,000 Year 3 100,000 Year 4 80,000, A company has a minimum required rate of return of 10%. The expected net cash inflows from, A building has a cost of $750,000 and accumulated depreciation of $125,000. You have the following information on a potential investment. Assume Peng requires a 15% return on its investments. Assume Peng requires a 10% return on its investments. Capital investment - $100,000 Estimated useful life - 3 years Estimated salvage value - zero Estimated net cash inflow Year 1 - $50,000 Year 2 - $47,000 Year 3 - $44,000 Required rate, You have the following information on a potential investment: Capital Investment - $100,000 Estimated useful life - 3 years Estimated salvage value - zero Estimated net cash inflow: Year 1 - $50,000 Y, Lt. Dan Corporation invested $90,000 in manufacturing equipment. Peng Company is considering an investment expected to generate an average net income after taxes of $3,100 for three years. The, Shep Corp. is considering a 20-year investment with a net present value of cash flows of -$20,800 and an uncertain salvage value. Required information (The following information applies to the questions displayed below.] The investment costs $45,000 and has an estimated $6,000 salvage value. X Peng Company is considering an investment expected to generate an average net income after taxes of. It gives us the profitability and desirability to undertake the project at our required rate of return. distributed with a mean of 78 when mixing oil and water is the change in entropy positive or Select chart Question. A company is considering investing in a new machine that requires a cash payment of $47,947 today. View some examples on NPV. The company anticipates a yearly net income of $3,700 after taxes of 20%, with the cash flows to be received evenly throughout each year. Accounting Rate of Return = Net Income / Average Investment. 2.72. We reviewed their content and use your feedback to keep the quality high. Good estimates are available for the initial investment and the a, Pito Company has been in operation for several years. The company anticipates a yearly after-tax net income of $1,805. [22] also highlight the importance of power companies improving investment portfolio planning for various energy production resources to ensure expected production value and reduce risk. The salvage value of the asset is expected to be $0. A company is investing in a solar panel system to reduce its electricity costs. Peng Company is considering an investment expected to generate an average net income after taxes of $3,250 for three years. The investment costs $45,000 and has an estimated $6,000 salvage value. Flower Company is considering an investment which will return a lump sum of $2,500,000 six years from now. The investment costs $51,600 and has an estimated $10,800 salvage value. Management predicts this machine has a 10-year service life and a $105,000 salvage value, and it uses straight-line depreciation. Accounting Rate of Return Choose Denominator: Choose Numerator: T = Accounting Rate of Return = Accounting rate of return 0, Required Information [The following information applies to the questions displayed below) Peng Company is considering an investment expected to generate an average net income after taxes of $1950 for three years. Peng Company is considering an investment expected to generate an average net income after taxes of $2,200 for three years. This site is using cookies under cookie policy . The company is expected to add $9,000 per year to the net income. The initial cost and estimates of the book value of the investment at the end of each year, the net cash flows for each year, and the net income, Drake Corporation is reviewing an investment proposal. , e following two costs of production, respectively: (1) the paper; and (2) the authors' one-time fees. value. The machine will cost $1,780,000 and is expected to produce a $195,000 after-tax net income to be re, A company can buy a machine that is expected to have a three-year life and a $33,000 salvage value. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. Compute the net present value of this investment. d) 9.50%. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. The current value of the building is estimated to be $120,000. Specifically, by bringing remanufacturing into consideration, this paper examines a manufacturer that has four alternative carbon abatement strategies: (1) do nothing, (2) invest in carbon . If the hurdle rate is 6%, what is the investment's net present value? Assume Peng requires a 15% return on its investments. Accounting 202 Final - Formulas and Examples. What amount should Cullumber Company pay for this investment to earn a 12% return? Compute the accounting rate of return for this. Compute the net present value of this investment. Assume that the company can invest m, For the year 2015, Ronis Corporation earned a profit of $360,000 on total sales revenue of $2,000,000. Compute the net present value of this investment. (Round each present value calculation to the nearest dollar. The company is expected to add $9,000 per year to the net income. What is the annual depreciation expense using the straight line method? Compute the net present value of this investment. 8 years b. The investment costs $48,600 and has an estimated $6,300 salvage value. 2. Apex Industries expects to earn $25 million in operating profit next year. Assume Peng requires a 10% return on its investments. The investment is expected to return the following cash flows, discounts at 8%. Ferrell, Liang and Renneboog (2016) as well as Chang, Chen, Chen and Peng (2019) . What is Ronis' Return on Investment for 2015? earnings equal sales minus the cost of sales Assume Peng requires a 15% return on its investments. Experts are tested by Chegg as specialists in their subject area. Assume Peng requires a 5% return on its investments. A machine costs $210,000, has a $16,000 salvage value, is expected to last nine years, and will generate an after-tax income of $47,000 per year after straight-line depreciation. Peng Company is considering an investment expected to generate an average net income after taxes of $3,300 for three years. ROI is equal to turnover multiplied by earning as a percent of sales. Its aim is the transition to a climate-neutral and . (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Assume Peng requires a 10% return on its investments, compute the net present value of this investment. What is the most that the company would be willing to invest in this, A company has a minimum required rate of return of 9%. Negative amounts should be indicated by a minus sign.) Compute the net present value of this investment. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. Compute this machine's accounti, A machine costs $200,000 and is expected to yield an after-tax net income of $5,040 each year. The initial cost and estimates of the book value of the investment at the end of each year, the net cash flows for each year, and the net income, Elmdale Company is considering an investment that will return a lump sum of $725,500, 6 years from now. Assume Peng requires a 10% return on its investments, compute the net present value of this investment. The company anticipates a yearly net income of $3,300 after taxes of 38%, with the cash flows to be received evenly throughout each year. Assume Peng requires a 15% return on its investments. Ignore income taxes. b) 4.75%. Required intormation Use the following information for the Quick Study below. Experts are tested by Chegg as specialists in their subject area. Management predicts this machine has a 12-year service life and a $40,000 salvage value, and it uses straight-line depreciation. Accounting Rate of Return Choose Numerator: Choose Denominator: Accounting Rate of Return nnual after-tax net incomeAnnual average investentAccounting rate of return 3,500S 27,1501= 12.891 % The cost of the investment is. The management predicts that this machine has a 10-year services life and a $100,000 salvage value, and, The Placque Company purchased an office building for $4,555,000. Management predicts this machine has a 8-year service life and a $100,000 salvage value, and it uses str, Carla Company owns equipment that cost $1,044,000 and has accumulated depreciation of $440,800. The following information applies to the questions displayed below.J Peng Company is considering an investment expected to generate an average net income after taxes of $2,800 for three years. Calculate its book value at the end of year 6. The system requires a cash payment of $125,374.60 today. should purchase a used Caterpillar mini excavator, A) The distribution of exam scores for Statistics is normally The investment costs $45,600 and has an estimated $8,700 salvage value. The net present value of the investment is $-1,341.55. The related cash flows, net of taxes, are ex, You have the following information on a potential investment. The NPV is computed as: {eq}\displaystyle \text{Present value of annuity (PVA) } = P * \frac{1 - (1 + r)^{-t}}{r} {/eq}, Become a Study.com member to unlock this answer! QS 11-8 Net present value LO P3Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. A negative NPV would suggest that the project is not worth investing since it will probably yield to a loss while a positive NPV would suggest otherwise. What are the appropriate labels for classifying the relationship between this cost item and th Amount a. The following data concerns a proposed equipment purchase: Cost $136,400 Salvage value $3,600 Estimated useful life 4 years Annual net cash flows $45,700 Depreciation method Straight-line The annual average investment amount used to calculate the accounti, Landmark Company is considering an investment in new equipment costing $500,000. The cost of the asset is $120,000, Babirusa Company is considering the following investment: Assume straight-line depreciation is used. FV of $1. Peng Company is considering an investment expected to generate an average net income after taxes of $2,000 for three years. , e to the IRS about a taxpayer The projected incremental income from the investment is as follows: The unadjusted rate of return on the in, Shields Company has gathered the following data on a proposed investment project: (Ignore income taxes.)
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