During those years the company has been profitable, and it expects to continue to be profitable in the foreseeable future. Management predicts this machine has a 10-year service life and a $100,000 salvage value, and it uses straight-line depreciation. Management predicts this machine has an 8-year service life and a $60,000 salvage value, and it uses straight-line depreciation. Required information [The following information applies to the questions displayed below.) The amount to be invested is $210,000. The founder asked you for $220,000 today and you expect to get $1,070,000 in 9 years. The expected future net cash flows from the use of the asset are expected to be $595,000. (before depreciation and tax) $90,000 Depreciation p.a. 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. Compute the, A company is considering the following investment project: Capital outlay $200,000 Net Profit p.a. 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. Assume the company uses straight-line depreciation. The present value of the future cash flows at the company's desired rate of return is $100,000. The net cash flows are estimated to be $7,610 per year for the next 5 years and no salvage value is anticipated. It is expected that the rate of utilization of inputs should not exceed the corresponding outputs being produced if the efficiency of the system concerned is to be maximized. Compute the net present value of this investment. investment costs $51,600 and has an estimated $10,800 salvage You'll get a detailed solution from a subject matter expert that helps you learn core concepts. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. The Annual cash flow An asset costs $70,000 and is expected to have a $10,000 salvage value at the end of its 10-year life. 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. Depreciation is calculated using the straight-line method. The related cash flows, net of taxes, are ex, You have the following information on a potential investment. The firm has a beta of 1.62. 1. a. 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 building is expected to generate net cash inflows of $20,000 per year for the next 30 years. QS 25-7 Computation of accounting rate of return LO P2 Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. Peng Company is considering an investment expected to generate an average net income after taxes of $3,100 for three years. What is the accounti, A company buys a machine for $70,000 that has an expected life of 6 years and no salvage value. Management predicts this machine has a 10-year service life and a $120,000 salvage value, and it uses straight-line depreciation. Compute the net present value of this investment. Compu, Pong Company is considering an investment expected to generate an average net income after taxes of $3,500 for three years. Peng Company is considering an investment expected to generate an average net income after taxes of $3,500 for three years. D. Representing a taxpayer at a hearing, Take a single physical copy of a book as a cost object. (Do not round intermediate calculations.). turnover is sales div We reviewed their content and use your feedback to keep the quality high. What is the minimum salvage value that would make the investment attractive assuming a discount rate of 12%? The company is considering an investment that would yield a cash flow of $20,000 in 5 years. Req, A company is contemplating investing in a new piece of manufacturing machinery. 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. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. What investment(s) should the firm make according to net present v, Unrealized gains or losses on available-for-sale investments occur when a company adjusts the investment to : A) average value when an asset is disposed B) average value but has not yet disposed of the asset C) fair value when an asset is disposed D) f, Finnegan Company plans to invest in a new operating plant that is expected to cost $500,000. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. The investment costs $45,000 and has an estimated $10,800 salvage value. Required information (The following information applies to the questions displayed below.) 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. Compu, A company constructed its factory with a fixed capital investment of P120M. A. Everything you need for your studies in one place. Compute this machine's accounti, A machine costs $500,000 and is expected to yield an after-tax net income of $19,000 each year. Question. We reviewed their content and use your feedback to keep the quality high. Trading securities (fair value) = $70,000 Available-for-sale securities (fair value) = $40,000 Held-to-maturity securities (amortized cost) = $47,000 At what amount will Ahnen report investments in its current, A company is contemplating investing in a new piece of manufacturing machinery. Assume Peng requires a 5% return on its investments. 2003-2023 Chegg Inc. All rights reserved. The investment costs $48,000 and has an estimated $10,200 salvage value. Talking on the telephon The security exceptions clause in the WTO legal framework has several sources. A new operating system for an existing machine is expected to cost $690,000 and have a useful life of six years. This site is using cookies under cookie policy . Compu, Lanyard Company is considering an investment that will generate $600,000 in cash inflows per year for 7-years and has $240,000 of cash outflows for the same period (before income taxes). Get access to this video and our entire Q&A library, How to Calculate Net Present Value: Definition, Formula & Analysis. The investment costs$45,000 and has an estimated $6,000 salvage value. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. What is the present valu, Strauss Corporation is making an $85,200 investment in equipment with a 5-year life. What is the depreciation expense for year two using the straight-line method? Negative amounts should be indicated by a minus sign. Assume the company uses straight-line . The investment is expected to return the following cash flows, discounts at 8%. You have the following information on a potential investment. The company currently has no debt, and its cost of equity is 15 percent. The company is expected to add $9,000 per year to the net income. The Controller asks you to use a depreciation method that would produce the highest charge against income after three years. Transcribed image text: Peng Company is considering an investment expected to generate an average net income after taxes of $2, 400 for three years. [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. Required information [The folu.ving information applies to the questions displayed below.) Which of the following functional groups will ionize in Management predicts this machine has an 11-year service life and a $60,000 salvage value, and it uses straight-line depreciation. Management estimates that this machine will generate annual after-tax net income of $540. Solution: Annual depreciation = (Cost - Salvage value) / useful life = ($45,600 - $8,700) / 3 = $12,300 Annual cash i. Axe anticipates annual net income after taxes of $1,500 from selling the product produced by the new machin, A company can buy a machine that is expected to have a three-year life and a $21,000 salvage value. What is the present value, Strauss Corporation is making a $91,800 investment in equipment with a 5-year life. The investment costs $45,000 and has an estimated $6,000 salvage value. The facts on the project are as tabulated. The corporate tax rate is 35 percent. The investment costs $45,000 and has an estimated $6,000 salvage value. 8 years b. They first apply the real options approach to assess the investment values as well as the distribution of energies such as biomass, coal, natural . The investment costs $48,600 and has an estimated $6,300 salvage value. It generates annual net cash inflows of $10,000 each year. Compute this machines accounting rate of return. The investment costs $54,000 and has an estimated $7,200 salvage value. The Galley purchased some 3-year MACRS property two years ago at The firm has two possible investments with the following cash inflows: A B Year 1 $300 $200 2 200 200 3 100 200 a. What amount should Flower Company pay for this investment to earn an 11% return? The investment costs $45,000 and has an estimated $6,000 salvage value. Management predicts this machine has a 10-year service life and a $100,000 salvage value, and it uses straight-line depreciation. Assume Peng requires a 15% return on its investments. 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. 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.) copyright 2003-2023 Homework.Study.com. The company anticipates a yearly net income of $2,950 after taxes of 34%, with the cash flows to be received evenly throughout each year. 94% of StudySmarter users get better grades. 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). (PV of $1. What is the accounti, A company buys a machine for $79,000 that has an expected life of 4 years and no salvage value. Compute the net present value of this investment. 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. negative? The company uses a discount rate of 16% in its capital budgeting. The building is expected to generate net cash inflows of $15,000 per year for the next 30 years. The asset has an estimated salvage value of $12,000, and an estimated useful life of 10 years. Peng Company is considering an investment expected to generate an average net income after taxes of $2, 400 for three years. The investment costs $45,600 and has an estimated $6,600 salvage value. , e following two costs of production, respectively: (1) the paper; and (2) the authors' one-time fees. 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. Assume Peng requires a 10% return on its investments.
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