Bartlett Car Wash Company is considering the purchase of a new facility. It would allow Bartlett to increase its netincome by $98,389 per year. Other information about this proposed project follows:Initial investment$461,920Useful lifeSalvage value9 years$40,000Assume straight line depreciation method is used.Required:1. Calculate the accounting rate of return for Bartlett.Note: Round your percentage answer to 2 decimal places.2. Calculate the payback period for Bartlett.Note: Round your answer to 2 decimal places.Answer is complete but not entirely correct.20.52 X %4.90 x years1. Accounting Rate of Return2. Payback Period

Accounting rate of return (ARR) can be calculated as - ARR = Average annual profit Initial…

Answered: Bartlett Car Wash Company is…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Bartlett Car Wash Company is considering the purchase of a new facility. It would allow Bartlett to increase its net income by $106,439 per year. Other information about this proposed project follows: Initial investment $ 514,200 Useful life 10 years Salvage value $ 45,000 Assume straight line depreciation method is used. Required: 1. Calculate the accounting rate of return for Bartlett. Note: Round your percentage answer to 2 decimal places. 2. Calculate the payback period for Bartlett. Note: Round your answer to 2 decimal places. 1. Accounting Rate of Return 2. Payback Period % years
Bartlett Car Wash Co. is considering the purchase of a new facility. It would allow Bartlett to increase its net income by $107,868 per year. Other information about this proposed project follows: Initial investment Useful life $521,100 10 years Salvage value $ 52,000 Assume straight line depreciation method is used. Required: 1. Calculate the accounting rate of return for Bartlett. (Round your percentage answer to 2 decimal places.) 2. Calculate the payback period for Bartlett. (Round your answer to 2 decimal places.) 1. Accounting Rate of Return 2. Payback Period years
Bartlett Car Wash Co. is considering the purchase of a new facility. It would allow Bartlett to increase its net income by $113,216 per year. Other information about this proposed project follows: Initial investment $ 524,150 Useful life 10 years Salvage value $ 55,000 Assume straight line depreciation method is used. Required: 1. Calculate the accounting rate of return for Bartlett. (Round your percentage answer to 2 decimal places.) 2. Calculate the payback period for Bartlett. (Round your answer to 2 decimal places.)
Harwell Printing Co. is considering the purchase of new electronic printing equipment. It would allow Harwell to increase its net income by $52,734 per year. Other information about this proposed project follows: Initial investment $ 282,000 Useful life 5 years Salvage value $ 97,000 Assume straight line depreciation method is used. Required:1. Calculate the accounting rate of return for Harwell. (Round your percentage answer to 1 decimal place.) 2. Calculate the payback period for Harwell. (Round your answer to 2 decimal places.)
A real estate development company is considering the purchase of a new piece parcel of land in manhattan that will cost $34,000,000. The land will generate $6,500,000 of rent each year for the next 20 years. what is the IRR for this new investment? NOTE: enter amount to two decimal (e.g., 78.76 or 40.00) IRR= ______ %
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Giant Machinery Ltd is considering to invest in one of the two following Projects to buy a new equipment. Each project will last 5 years and have no salvage value at the end. The company’s required rate of return for all investment projects is 9%. The cash flows of the projects are provided in the picture. Required:a) Identify which project should the company accept based on NPV method. (Note: Please round up the result of each calculation of PV to 2 decimal places only for simplification)b) Identify which project should the company accept based on simple pay back method if the payback criteria is maximum 2 years. c) Which project Giant Machinery should choose if two methods are in conflict.
Dobson Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net income of $59,000. The equipment will have an initial cost of $507,000 and have an seven year life. There is no salvage value of the equipment. The hurdle rate is 14%. Ignore income taxes. a. Calculate accounting rate of return. (Round your answer to 2 decimal places.) Rate of Return b. Calculate payback period (Round your answer to one decimal place.) Years Payback Period
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Baird Rentals can purchase a van that costs $110,000; it has an expected useful life of five years and no salvage value. Baird uses straight-line depreciation. Expected revenue is $40,425 per year. Assume that depreciation is the only expense associated with this Investment. Required a. Determine the payback period. Note: Round your answer to 1 decimal place. b. Determine the unadjusted rate of return based on the average cost of the investment. Note: Round your answer to 1 decimal place. (l.e., .234 should be entered as 23.4). a. Payback period b. Unadjusted rate of return years %
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