The investment costs $45,000 and has an estimated $6,000 salvage value. Ignore income taxes. Assume the company uses straight-line depreciation. value. The investment costs$45,000 and has an estimated $6,000 salvage value. The management of Bischke Corporation is investigating an investment in equipment that would have a useful life of 8 years. 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. 45,000+6000=51,000. Good estimates are available for the initial investment and the a, Pito Company has been in operation for several years. What is the annual depreciation expense using the straight line method? Cash flow On whether to accept or reject a project, the NPV is interpreted on the result of the calculation. Free and expert-verified textbook solutions. 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. ), 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? The investment has zero salvage value. The company uses the straight-line method of d, Determine Present Value: You can invest in a machine that costs $500,000. Talking on the telephon d. Loss on investment. (Round answer to 2 decimal places. The investment costs $54,000 and has an estimated $7,200 salvage value. (20-year, 12% pr, What is the NPV and IRR for the two investments options below? Let us assume straight line method of depreciation. During those years the company has been profitable, and it expects to continue to be profitable in the foreseeable future. $40,000 Economic life 5 years Salvage value Zero Tax rate payable (assume paid in year of income) 30, A machine costs $500,000, has a $28,700 salvage value, is expected to last eight years, and will generate an after-tax income of $72,000 per year after straight-line depreciation. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. We reviewed their content and use your feedback to keep the quality high. It is considering investing in a project which costs $350,000 and is expected to generate cash inflows of $140,000 at the end of each year for three years. Compute this machines accounting rate of return. The investment costs $54,000 and has an estimated $7,200 salvage value. A company is considering investing in a new machine that requires a cash payment of $47,947 today. 94% of StudySmarter users get better grades. Experts are tested by Chegg as specialists in their subject area. 15900 The investment costs $45,600 and has an estimated $8,700 salvage value. It expects the free cash flow to grow at a constant rate of 5% thereafter. What is Roni, You are considering an investment in First Allegiance Corp. Calculate its book value at the end of year 10. The building is expected to generate net cash inflows of $20,000 per year for the next 30 years. Management predicts this machine has a 10-year service life and a $100,000 salvage value, and it uses straight-line depreciation. Assume the company uses straight-line depreciation. 17 US public . What amount should Crane Company pay for this investment to earn an 9% return? The lease term is five years. investment costs $48,900 and has an estimated $12,000 salvage The related cash flows, net of taxes, are ex, You have the following information on a potential investment. ROI is equal to turnover multiplied by earning as a percent of sales. X 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 $2,100 for three years. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. Compute the net present value of this investment. B. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. The firm is in, A large, profitable corporation with net income exceed $20 million is considering the installation of a new machine that cost $100,000 with the expected salvage value of $20,000 after 4 years of usefu, A company buys a machine for $69,000 that has an expected life of 7 years and no salvage value. The estimated life of the machine is 5yrs, with no salvage value. The investment costs $45,000 and has an estimated $6,000 salvage value. The present value of the future cash flows is $225,000. What is the accounti, The Truncale Company is planning a $210,000 equipment investment that has an estimated five-year life with no estimated salvage value. What is the accounting rate of return? Multiple Choice, returns on investment is computed in the following manner. 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. Required information Use the following information for the Quick Study below. Compute. turnover is sales div Compute the payback period. The fair value of the equipment is $476,000. Peng Company is considering an investment expected to generate an average net income after taxes of $2,500 for three years. The company uses straight-line depreciation. Assume the company requires a 12% rate of return on its investments. All rights reserved. Ass, Peng Company is considering an Investment expected to generate an average net income after taxes of $3,000 for three years. The investment costs $54,900 and has an estimated $8,100 salvage value. The investment costs $45,600 and has an estimated $8,700 salvage value. FV of $1. 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. 2.72. 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. The company has projected the following annual cash flows f, Lt. Dan Corporation invested $80,000 in a manufacturing equipment. Learn about what net present value is, how it is calculated both for a lump sum and for a stream of income over multiple years. Peng Company is considering an investment expected to generate an average net income after taxes of. Peng Company is considering an investment expected to generate The firm has two possible investments with the following cash inflows: A B Year 1 $300 $200 2 200 200 3 100 200 a. Compute the accounting rate of return for this investment assume the company uses straight-line depreciation BOOK Accounting Rate of Return Choose Denominator: Choose Numerator = = Accounting Rate of Return Accounting rate of retum Print teferences. Required information [The following information applies to the questions displayed below.) Using the original cost of the asset, what will be the unadjusted rat, A company can buy a machine that is expected to have a three-year life and a $31,000 salvage value. Assume Peng requires a 5% return on its investments. 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. If a potential investments internal rate of return is above the companys hurdle rate, should the investment be made? If the accounting ra, A company buys a machine for $76,000 that has an expected life of 7 years and no salvage value. 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 $1,950 for three years. 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 project is expected to have an after-tax return of $250,000 in each of years 1 and 2. The net cash flows are estimated to be $7,610 per year for the next 5 years and no salvage value is anticipated. (Negative amounts should be indicated by a minus sign.). a. Compute Loon s taxable inco. See Answer. Assume Peng requires a 10% return on its investments. Negative amounts should be indicated by a minus sign.) Footnote 7 Although DS567 refers to paragraph (b)(iii) of article 73 of the TRIPS, considering its high coincidence with the text of article XXI of the GATT and the consistency of "judicial practice" of the panel in the specific trial process, Footnote 8 this chapter will categorize both sources as a security . Currently, U.S. Treasury bills are yielding 6.75% and the expected return for the S & P 500 is 18.2%. The investment costs $49,800 and has an estimated $11,400 salvage value. The building is expected to generate net cash inflows of $15,000 per year for the next 30 years. Assume Peng requires a 15% return on its investments. The investment costs $48,600 and has an estimated $6,300 salvage value. 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. Required information Use the following information for the Quick Study below. Assume Peng requires a 15% return on its investments. The company's required rate of return is 12 percent. The product line is estimated to generate cash inflows of $300,000 the first year, $250,000 the second year, and $200,000 each year thereafter for ten more years. 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%. an average net income after taxes of $3,200 for three years. The The investment costs $59.100 and has an estimated $6.900 salvage value. 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. 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. Compute the net present value of this investment. Explain. Assume Peng requires a 10% return on its investments. Compute the net present value of this investment. The expected future net cash flows from the use of the asset are expected to be $580,000. (1) Determine whet, Lt. Dan Corporation invested $80,000 in a manufacturing equipment. 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 salvage value of the asset is expected to be $0. The asset has no salvage value. Assume the company uses straight-line depreciation. For example: How much would you need to invest today at 10% compounded semiannually to accumulate $5,000 in 6 years from today? The investment costs $45,000 and has an estimated $6,000 salvage value. Assu, Peng Company is considering an investment expected to generate an average net income after taxes of $3,000 for three years. (For calc, Natt Company is considering undertaking a project that would yield annual profits (after depreciation) of $68,000 for 5 years. 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. a. The amount to be invested is $210,000. Flower Company is considering an investment which will return a lump sum of $2,500,000 six years from now. The business environment, namely market uncertainty and competition intensity, is also analysed in association with the firm's strategic orientation.