The Galley purchased some 3-year MACRS property two years ago at 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 $300,000. Fair value method c. Historical cost m, Blue Fin Inc. requires all capital investments to generate a minimum internal rate of return of 15%. Determine the net present value, and ind. The company is expected to add $9,000 per year to the net income. The current value of the building is estimated to be $120,000. Each investment costs $1,000, and the firm's cost of capital is 10%. The asset has no salvage value. Peng Company is considering an investment expected to generate an average net income after taxes of. QS 24-8 Net present value LO P3 Assume Peng requires a 15% return on its investments. What is the present value, Strauss Corporation is making a $87,550 investment in equipment with a 5-year life. 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. The management of Samsung is planning to invest in a new companywide computerized inventory tracking system. What is the investment's payback period? Management predicts this machine has a 10-year service life and a $100,000 salvage value, and it uses straight-line depreciation. Compute the net present value of this investment. Assume the company uses straight-line depreciation. The company uses the straight-line method of depreciation and has a tax rate of 40 per cent. TABLE B.4 f= [(1 + i)"-1Vi Future Value of an Annuity of 1 Rate Periods 1% 2% 3% 6% 7% 8% 9% 10% 12% 15% 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 0000 .0000 1.0000 10000 2.0100 2.0200 2.0300 2.0400 2.0500 2.0600 2.0700 2.0800 2.0900 2.1000 2.1200 3.0301 3.0604 3.0909 3.1216 3.1525 3.1836 3.2149 3.2464 3.2781 3.3100 3.3744 4.0604 4.1216 4.1836 4.2465 4.3101 4.3746 4.4399 5.1010 5.2040 5.3091 5.4163 5.5256 5.6371 5.7507 5.8666 5.9847 6.1051 6.3528 6.1520 6.3081 6.4684 6.6330 6.8019 6.9753 7.1533 7.3359 7.5233 7.7156 8.1152 7.2135 7.4343 7.6625 7.8983 8.1420 8.3938 8.6540 8.9228 9.2004 9.4872 10.0890 8.2857 8.5830 8.8923 9.2142 9.5491 9.8975 10.2598 10.6366 11.0285 11.4359 12.2997 9.3685 9.7546 10.1591 10.5828 11.0266 11.4913 11.9780 12.4876 13.0210 13.5795 14.7757 1.0000 2.1500 3.4725 4.9934 6.7424 8.7537 11.0668 4.5061 4.5731 4.6410 4.7793 16.7858 10 10.4622 10.9497 11.4639 12.0061 12.5779 13.1808 13.8164 14.4866 15.1929 15.9374 17.5487 20.3037 11.5668 12.1687 12.8078 13.4864 14.2068 14.9716 15.7836 16.6455 7.5603 18.5312 20.6546 24.3493 12.6825 13.4121 14.1920 15.0258 15.9171 16.8699 17.8885 18.9771 20.1407 21.3843 24.1331 12 13 13.8093 14.6803 15.6178 16.6268 17.7130 18.8821 20.1406 21.4953 22.9534 24.5227 28.0291 14 14.9474 15.9739 17.0863 18.2919 19.5986 21.0151 22.5505 24.2149 26.0192 27.9750 32.3926 40.5047 15 16 17.2579 18.6393 20.1569 21.8245 23.6575 25.6725 27.8881 30.3243 33.0034 35.9497 42.7533 55.7175 17 18.4304 20.0121 21.7616 23.6975 25.8404 28.2129 30.8402 33.7502 36.9737 40.5447 48.8837 65.0751 18 19 20.8109 22.8406 25.1169 27.6712 30.5390 33.7600 37.3790 41.4463 46.0185 51.1591 63.4397 88.2118 20 22.0190 24.2974 26.8704 29.7781 33.0660 36.7856 40.9955 45.7620 51.1601 57.2750 72.0524 102.4436 25 30 35 41.6603 49.9945 60.4621 73.6522 90.3203 111.4348 138.2369 172.3168 215.7108 271.0244 431.6635 40 48.8864 60.4020 75.4013 95.0255 120.7998 154.7620 199.6351 259.0565 337.8824 442.5926 767.0914 1,779.0903 29.0017 34.3519 16.0969 7.2934 18.5989 20.0236 21.5786 23.2760 25.1290 27.1521 29.3609 31.7725 37.2797 47.5804 19.6147 21.4123 23.4144 25.6454 28.1324 30.9057 33.9990 37.4502 41.3013 45.5992 55.7497 75.8364 28.2432 32.0303 36.4593 41.6459 47.7271 54.8645 63.2490 73.1059 84.7009 98.3471 133.3339 212.7930 34.7849 40.5681 47.5754 56.0849 66.4388 79.0582 94.4608 113.2832 136.3075 164.4940 241.3327 434.7451 881.1702 Used to calculate the future value of a series of equal payments made at the end of each period. Compute the payback period. The Longlife Insurance Company has a beta of 0.8. Get access to this video and our entire Q&A library, How to Calculate Net Present Value: Definition, Formula & Analysis. b) Ignores estimated salvage value. Peng Company is considering an investment expected to generate Assume the company uses straight-line depreciation. The equipment has a useful life of 5 years and a residual value of $60,000. Assume Pang requires a 5% return on its investments. 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. Assume Peng requires a 15% return on its investments. Management predicts this machine has a 9-year service life and a $80,000 salvage value, and it uses strai, A machine costs $200,000 and is expected to yield an after-tax net income of $5,000 each year. The machine will cost $1,824,000 and is expected to produce a $206,000 after-tax net income to be re. a) construct an influence diagram that relates these variables Ferrell, Liang and Renneboog (2016) as well as Chang, Chen, Chen and Peng (2019) . 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 net present value (NPV) is a capital budgeting tool. The management of Bischke Corporation is investigating an investment in equipment that would have a useful life of 8 years. The investment costs $45,600 and has an estimated $8,700 salvage value. Zhang et al. The investment costs $45,000 and has an estimated $6,000 salvage value. Which of, Fraser Company will need a new warehouse in eight years. A bond that has a $1,000 par value (face value) and a con, Strauss Corporation is making a $70,000 investment in equipment with a 5-year life. The investment costs $45,000 and has an estimated $6,000 salvage value. Assume Peng requires a 5% return on its investments. Assume Peng requires a 5% return on its investments. A. Assume the company uses straight-line . 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. All rights reserved. What is the NPV of the investment, The Zinger Corporation is considering an investment that has the following data: Year 1 Year 2 Year 3 Year 4 Year 5 Investment $8,000 $3,000 Cash inflow $2,000 $2,000 $5,000 $4,000 $4,000 Cash inflows occur evenly throughout the year. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. Free and expert-verified textbook solutions. Transcribed image text: Peng Company is considering an investment expected to generate an average net income after taxes of $2, 400 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 investment costs $49,000 and has an estimated $8,800 salvage value. PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. For example: What is the future value of $4,000 per ye ar for 6 years assuming an annual interest rate of 8%. Createyouraccount. 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 $3,300 for three years. Yokam Company is considering two alternative projects. The project would require a $28,000 initial investment and has a salvage value of $2,000, A company has a minimum required rate of return of 9%. Management predicts this machine has a 10-year service life and a $105,000 salvage value, and it uses straight-line depreciation. Best study tips and tricks for your exams. Calculate the payback period for the proposed e, You have the following information on a potential investment. Present value of an annuity of 1 O, Reece Manufacturing Company is considering the following investment proposal: The firm uses the straight-line method of depreciation with no mid-year convention. Compute this machine's accoun, A machine costs $300,000 and is expected to yield an after-tax net income of $9,000 each year. Compute the accounting rate of return for, The following data concerns a proposed equipment purchase: Cost - $159,200 Salvage value - $4,800 Estimated useful life - 4 years Annual net cash flows - $46,900 Depreciation method - Straight-line The annual average investment amount used to calcul. Peng Company is considering an investment expected to generate an average net income after taxes of $2,900 for three years. The company's required r, Strauss Corporation is making an $85,900 investment in equipment with a 5-year life. Assume Peng requires a 10% return on its investments. Assume Peng requires a 5% return on its investments. What is the average amount invested in a machine during its predicted five-year life if it costs $200,000 and has a $20,000 salvage value? The company s required rate of return is 13 percent. What method, A machine costs $400,000 and is expected to yield an after-tax net income of $9,000 each year. The company's required, Crispen Corporation can invest in a project that costs $400,000. The machine will cost $1,812,000 and is expected to produce a $203,000 after-tax net income to be re, A company can buy a machine that is expected to have a three-year life and a $23,000 salvage value. On whether to accept or reject a project, the NPV is interpreted on the result of the calculation. $2,000 per year for 10 years is the equivalent of $12,835 today ($2,000 6.4177) b) define symbols and develop mathematical model, how does a change in each variable affect demand. The company's required, A company is considering a proposal that requires an initial investment of $91,100, has predicted net cash inflows of $30,000 per year for four years and no salvage value. a. Get access to this video and our entire Q&A library, How to Calculate Net Present Value: Definition, Formula & Analysis. Choose Numerator: Accounting Rate of Return Choose Denominator: = Accounting Rate of Return = Accounting rate of return, Required information [The following information applies to the questions displayed below.) View some examples on NPV. You can specify conditions of storing and accessing cookies in your browser, Peng Company is considering an investment expected to generate an average net income after taxes of $2,600 for three years. 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. Capital investment - $15,000 Estimated useful life - 3 years Estimated salvage value - zero Estimated net cash inflow: -Year 1 - $7,00, Compute the net present value of each potential investment. Talking on the telephon The investment costs $45,000 and has an estimated $6,000 salvage value. Assume Peng requires a 5% return on its investments. (For calc, Natt Company is considering undertaking a project that would yield annual profits (after depreciation) of $68,000 for 5 years. Assume Peng requires a 15% return on its investments. You have the following information on a potential investment. The business environment, namely market uncertainty and competition intensity, is also analysed in association with the firm's strategic orientation. Assume Peng requires a 10% return on its investments, compute the net present value of this investment. The asset is recorded at $810,000 and has an economic life of eight years. 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. The investment costs $45,600 and has an estimated $6,600 salvage value Compute the accounting rate of return for this investment, assume the company uses straight-line depreciation. Management predicts this machine has a 10-year service life and a $100,000 salvage value, and it uses st, A machine costs $700,000 and is expected to yield an after-tax net income of $30,000 each year. In the next using the GC how can i determine the ratio of diastereomers. The company anticipates a yearly after-tax net income of $1,805. projected GROSS cash flows from the investment are $150,000 per year. The company's required rate of return is 11 percent. The equipment will be depreciated on a straight-line basis over a five-year life and is expected to generate net cash inflows of $120,000 the first year, $140,000 the second, Assume the company requires a 10% rate of return on its investments. Capital investment $900,000 Estimated useful life 6 years Estimated salvage value zero Estimated annual net cash inflow $213,000 Required, Sparky Company invested in an asset with a useful life of 5 years. Compute the, A company is considering the following investment project: Capital outlay $200,000 Net Profit p.a. Peng Company is considering an investment expected to generate an average net income after taxes of $3,300 for three years. The investment costs $45,000 and has an estimated $6,000 salvage value. Select Chart Amount * PV Factor - Present Value Cash Flow Annual cash flow Residual value. Req, A company is contemplating investing in a new piece of manufacturing machinery. The investment costs $49,800 and has an estimated $11,400 salvage value. Assume the company uses straight-line . Find step-by-step Accounting solutions and your answer to the following textbook question: Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. For (n= 10, i= 9%), the PV factor is 6.4177. The investment costs $45,600 and has an estimated $8,700 salvage value. Compute the net present value of this investment. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. The building has an estimated useful life of 40 years and an expected salvage value of $550,000. The investment costs $45,000 and has an estimated $6,000 salvage value. criteria in order to generate long-term competitive financial returns and . a. Assume the company uses straight-line . Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. The cost of the asset is $120,000, Babirusa Company is considering the following investment: Assume straight-line depreciation is used. The asset is expected to have a fair value of $270,000 at five years, and a fair value of $90,000 at the e, Horak Company accumulates the following data concerning a proposed capital investment: cash cost $219,620, net annual cash flow $34,932, present value factor of cash inflows for 10 years 6.71 (rounded). You'll get a detailed solution from a subject matter expert that helps you learn core concepts. What amount should Crane Company pay for this investment to earn an 9% return? 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. Assume the company uses straight-line depreciation. What lump-sum amount should the company invest now to have the $370,000 available at the end of the eight-year period? Calculate its book value at the end of year 10. What, Tijuana Brass Instruments Company treats dividends as a residual decision. Tradin, Drake Corporation is reviewing an investment proposal. The expected future net cash flows from the use of the asset are expected to be $580,000. The present value of the future cash flows, at the company's desired rate of re, E company is a lessee with a capital lease. Peng Company is considering an investment expected to generate an average net income after taxes of $2,000 for three years. Sweden, Denmark and Norway, encounter several regulations and initiatives considering CSR and SRI such as the European Green Deal. a. These assets contribute $28,000 to annual net income when depreciation is computed on a straight-line basis. What is the accounting rate of return? Compute the net present value of this investment. Multiple Choice, returns on investment is computed in the following manner. The company's required rate of return is 13 percent. , e following two costs of production, respectively: (1) the paper; and (2) the authors' one-time fees. What is the present value, The Best Manufacturing Company is considering a new investment. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. What rate of return should you expect for your investment in Fir, If a company owns more than 20% of the stock of another company and the stock is being held as a long-term investment, which method would the investor normally use to account for this investment? Peng Company is considering an investment expected to generate an average net income after taxes of $2,000 for three years. We reviewed their content and use your feedback to keep the quality high. negative? 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. The cost of capital is 6%. 6 years c. 7 years d. 5 years. $1,950 for three years. 45,000+6000=51,000. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. The present value of the future cash flows is $225,000. Assume Peng requires a 5% return on its investments. The present value of the future cash flows at the company's desired rate of return is $100,000. C. Appearing as a witness for a taxpayer The company anticipates a yearly net income of $3,650 after taxes of 22%, with the cash flows to be received evenly throughout each year. 8 years b. Compute this machine's accoun, A machine costs $500,000 and is expected to yield an after-tax net income of $15,000 each year. Common stock. The system is expected to generate net cash flows of $13,000 per year for the next 35 years. The expected average rate of return, giving effect to depreciation on investment is 15%. Assume the company uses straight-line depreciation (PV of $1. Capital investment: $15,000 Estimated useful life: 3 years Estimated salvage value: zero Estimated net cash inflow Year 1: $7,000 Year 2: You have the following information on a potential investment. Createyouraccount. Good estimates are available for the initial investment and the a, Pito Company has been in operation for several years. A company purchased a plant asset for $55,000. ), Summary of Strategic Management southern African concepts and case fourth edition, chapters 1 to 4, What of the following is not considered practice before the IRS per Circular 230? What amount should Flower Company pay for this investment to earn an 11% return? 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. 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 10% return on its investments, compute the net present value of this investment. Compute this machine's accou, A machine costs $300,000 and is expected to yield an after-tax net income of $9,000 each year. value. 2003-2023 Chegg Inc. All rights reserved. The income tax depreciation method referred to as CCA: a) Allows a corporation some flexibility in choosing the class an asset is assigned to. 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. the net present value of this investment. Assume the company uses straight-line depreciation. The investment costs $45,000 and has an estimated $6,000 salvage value. Sign up for free to discover our expert answers. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. The security exceptions clause in the WTO legal framework has several sources. Peng Company is considering an investment expected to generate an average net income after taxes of $3,300 for three years. Determine. Assume the company uses straight-line depreciation. c) Only applies to a business organized as corporations. Compute the net present value of this investment. The investment costs $48,000 and has an estimated $10,200 salvage value.

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