Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $129,500.Project 2 requires an initial investment of $95,40Q. Assume the company requires a 10% rate of return on its investments.Annual AnountsSales of new productExpensesHaterials, labor, and overhead (except dapreciation)Depreciation-MachinerySelling, general, and administrative expensesProject 2$ 81,000Project 1$ 103,50068,90018,500,48033,92019,08021,200$ 6,800Income$7,620Compute the net present value of each potential investment. Use 7 years for Project 1 and 5 years for Project 2. (Negative net presentvalues should be indicated with a minus sign. Round your present value factor to 4 decimals. Round your answers to the nearestwhole dollar.)Present ValueNet Cash Flowsx of Annulty at10%Present Value ofNet Cash FlowsProject 1Years 1-7Net present valuePresent Valueof Annulty at10%Project 2Present Value ofNet Cash FlowsNet Cash Flowrs xYears 1-5Net present value

Capital budgeting is the process by which a corporation examines potential large projects or…

Compute the net present value of each potential investment. Use 7 years for Project 1 and 5 years for Project 2. (Negative net presem values should be indicated with a minus sign. Round your present value factor to 4 decimals. Round your answers to the nearest whole dollar.) Project 1 Present Value Net Cash Flows x of Annulty at Present Value of Net Cash Flows 10% Years 1-7 Net present value Present Value of Annulty at 10% Present Value of Net Cash Flows Project 2 Net Cash Flowsx Years 1-5 Net present value

Compute the net present value of each potential investment. Use 7 years for Project 1 and 5 years for Project 2. (Negative net presem values should be indicated with a minus sign. Round your present value factor to 4 decimals. Round your answers to the nearest whole dollar.) Project 1 Present Value Net Cash Flows x of Annulty at Present Value of Net Cash Flows 10% Years 1-7 Net present value Present Value of Annulty at 10% Present Value of Net Cash Flows Project 2 Net Cash Flowsx Years 1-5 Net present value

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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Information for two alternative projects involving machinery Investments follows. Project 1 requires an initial Investment of $256,500. Project 2 requires an initial Investment of $174,000. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income (a) Compute each project's annual net cash flow. (b) Compute payback period for each Investment. Required A Required B Compute each project's annual net cash flow. Complete this question by entering your answers in the tabs below. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery Selling, general, and administrative expenses Income Net cash flow $ $ Income Project 1 160,000 Project 1 $ 160,000 80,000 35,000 23,000 22,000 80,000 35,000 23,000 $ 22,000 Cash Flow $ $ Project 2 $ 140,000 47,000 33,000 35,000 $ 25,000 Income Project 2 140,000 47,000 33,000 35,000…
Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $229,500. Project 2 requires an initial investment of $156,000. Annual Amounts Project 1 Project 2 Sales of new product $ 148,000 $ 128,000 Expenses Materials, labor, and overhead (except depreciation) 77,000 44,000 Depreciation—Machinery 32,000 30,000 Selling, general, and administrative expenses 20,000 32,000 Income $ 19,000 $ 22,000 (a) Compute each project’s annual net cash flow.(b) Compute payback period for each investment.
[The following information applies to the questions displayed belad Project Y requires a $321,000 investment for new machinery wityy vifour-year life and no salvage value. The project yield owing annual results. Cash flows occur evenly withit veach year. ( Annual Asounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Incone 2. Determine Project Y's payback period Project Y Project Y Numerator: Initial investment $ 3. Compute Project Y's accounting rate of return Not present value Payback Period T Denominator: 7 Annual net cash flow Numerator 321,000 $ 180,000 Accounting Rate of Return Denominator Net Cash Flows Present Value of Annuity at a Project Y $ 375,000 80,250 4. Determine Project Y's net present value using 7% as the discount rate. (Do not round intermediate calculations. Round your present value factor to 4 decimals and final answers to the nearest whole dollar) S $ 99,750…
Quary Company is considering an investment in machinery with the following information. Initial investment $ 308,000 Materials, labor, and overhead (except depreciation) $ 69,300 Useful life 9 years Depreciation—Machinery 32,000 Salvage value $ 20,000 Selling, general, and administrative expenses 7,700 Expected sales per year 15,400 units Selling price per unit $ 10 (a) Compute the investment’s annual income and annual net cash flow.(b) Compute the investment’s payback period. Please also help with what I need to use to fill in the blanks on the first image. "Required A"
Quary Company is considering an investment in machinery with the following information. Initial investment Useful life Salvage value Expected sales per year (a) Compute the investment's annual income and annual net cash flow. (b) Compute the investment's payback period. Required A Required B Complete this question by entering your answers in the tabs below. $ 335,000 9 years $ 20,000 16,750 units Annual Amounts Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Selling price per unit Compute the investment's annual income and annual net cash flow. Expenses Income Net cash flow $ 75,375 35,000 8,375 $ 10
Required information A project has a first cost of $670,000, a salvage value of 27% of the first cost after 3 years, and annual (GI-OE) of $275,000. Assume the company has a Te of 37%. Determine the approximate after-tax rate of return (ROR). The after-tax rate of return (ROR) is determined to be
Quary Company is considering an investment in machinery with the following information. Initial investment $ 254,000 Materials, labor, and overhead (except depreciation) $ 57,150 Useful life 9 years Depreciation—Machinery 26,000 Salvage value $ 20,000 Selling, general, and administrative expenses 6,350 Expected sales per year 12,700 units Selling price per unit $ 10 (a) Compute the investment’s annual income and annual net cash flow.(b) Compute the investment’s payback period.
In an energy systems installation, following financial requirement was identified. Capital cost of equipment and installation - $ 150,000 Recurrent cost of maintenance Replacement of parts Life time of the system Income through energy generation i. iii. -$5,000 per year -$4,000 per year - 12 years - $ 22,000 per year Calculate the payback period of the system. If the scarp value of the equipment is $ 5,000, determine is the net profit expected to be collected for the investment? Explain how this profit is affected by "cost of money" or "interest". No calculations needed.
Quary Company is considering an investment in machinery with the following information. Initial investment Useful life Materials, labor, and overhead (except depreciation) Depreciation-Machinery $ 254,000 9 years Salvage value Expected sales per year $ 20,000 12,700 units Selling, general, and administrative expenses Selling price per unit $ 57,150 26,000 6,350 $ 10 (a) Compute the investment's annual income and annual net cash flow. (b) Compute the investment's payback period. Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Compute the investment's annual income and annual net cash flow. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Selling, general, and administrative expenses Depreciation-Machinery Income Net cash flow Income Cash Flow $ 127,000 (57,150) (6,350) (26,000) $ 89,500 $ 127,000
B2B Co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is expected to cost $369,600 with a 8-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 147,840 units of the equipment's product each year. The expected annual income related to this equipment follows. Sales Costs Materials, labor, and overhead (except depreciation on new equipment) Depreciation on new equipment Selling and administrative expenses Total costs and expenses Pretax income Income taxes (30%) Net income Chart Values are Based on: If at least an 10% return on this investment must be earned, compute the net present value of this investment. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Select Chart n= j= Amount % X PV Factor = $
heavy equipment for a certain project and the details are as follows: ITEM: MACHINE A: MACHINE B: First Cost P2,000,000.00 P3,000,000.00 Annual operating P325,000.00 P250,000.00 cost Annual labor cost Insurance and taxes Payroll taxes Estimated life P500,000.00 P320,000.00 4% 10% 12 yrs. 4% 10% 12 yrs. If the minimum ROR is 25%, What is the annual cost of Machine A & B using present worth method?
Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $132,300. Project 2 requires an initial investment of $99,000. Assume the company requires a 10% rate of return on its investments. (PV of $1. FV of $1. PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery Selling, general, and administrative expenses Income Years 1-7 Project 1 Net present value Years 1-5 Compute the net present value of each potential investment. Use 7 years for Project 1 and 5 years for Project 2. (Negative net present values should be indicated with a minus sign. Round your present value factor to 4 decimals. Round your answers to the nearest whole dollar.) Project 2 Net present value $ Project 1 $ 107,100 Present Value Net Cash Flows x of Annuity at 10% (132,300) 71,500 18,900 8,800 $ 7,900 Net…

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