Determine the capitalized cost of a research laboratory which requires P5,000, e00 for original construction; P100,000 at the end of every year for the first 5 years and then P120, e00 each year thereafter f or operating expenses, and P500, 000 every 6 years for replacement of equipment with interest at 12% per annum? OA. 6,441,350 OB. 6,067,015 OC6,632,445 OD.6,573,650 O E. None of the above

Determine the capitalized cost of a research laboratory which requires P5,000, e00 for original construction; P100,000 at the end of every year for the first 5 years and then P120, e00 each year thereafter f or operating expenses, and P500, 000 every 6 years for replacement of equipment with interest at 12% per annum? OA. 6,441,350 OB. 6,067,015 OC6,632,445 OD.6,573,650 O E. None of the above

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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36 Determine the capitalized cost of a research laboratory which requires P5,000,000 for original construction; P100,000 at the end of every year for the first 5 years and then P147,980 each year thereafter for operating expenses, and P500,000 every 6 years for replacement of equipment with interest at 12% per annum? A. 6,441,350 B. 6,067,015 C. 6,632,445 D. 6,573,650 E. None of the above
21 What is the equivalent annual cost for a project that requires a $40,000 investment at time-period zero, and a $10,000 annual expense during each of the next 4 years, if the opportunity cost of capital is 10%? g OD A $20,000.00 B. $21,356.95 С. $22,618.83 D. $25,237.66 O A OB ос
QUESTION 3 Capitalized cost is an application of perpetuity. It is the sum of the first cost and the present worth of all future payments and replacements. A machine costs P300,000 new, and must be replaced at the end of each 15 years. If the annual maintenance required is P5,000, find the capitalized cost, if money is worth 5% and the salvage value is P50,000. First Cost Present worth of the annual maintenance cost *Letters only Perpetuity of the depreciation cost Capitalized cost a. 178,700 b. 231,700 c. 321,500 d. 400,500 e. 127,700 a. 372,700 b. 441,700 c. 529,500 d. 609,500 e. 631,700
7 Compute the payback statistic for Project A if the appropriate cost of capital is 9 percent and the maximum allowable payback period is four years. (Round your answer to 2 decimal places.) Project A ts Time: 1 2 3 4 5 Cash flow: -$2,400 $910 $900 $800 $580 $380 Print Payback years ferences Should the project be accepted or rejected? аccepted rejected
QUESTION 4 J'adore Corporation is in the process of deciding to purchase new equipment. The cost of capital is 10 percent and expected cash flows for each equipment are given as follows: a) b) Year 0 1 2 3 Calculate the following: c) d) 4 5 Equipment AAA (RM) 10,000 7,000 3,500 3,000 1,500 2,500 Payback period for the two projects. Net present value for the two projects. Internal rate of return for Project BBB only. Which project would be selected? State your reason. Equipment BBB (RM) 10,000 4,000 4,000 4,000 4,000 4,000
QUESTION 25 A new project will generate $190,000 in new sales per year. The project costs $1,000,000 and will be depreciated using a 7-year MACRS schedule. The cash operating costs are $76,000. If the tax rate is 37%, what is the third year's ONOCFt? $419,287 $173,290 $154,199 $136,533 Onone of the above
Year 0 2 Project A -$50,000 $24,200 $16,800 $46,500 Project B -$45,000 $39,000 $18,000 $18,000 Assume these projects are mutually exclusive and the cost of capital is 12.6%. Which of the following statements are true? A. The payback period of project A is 2.19 years. B. You'll accept project A since its NPV is about $872.85 greater than that of project B. C. You'll accept project B since its payback period is shorter than project A. D. Both (A) and (B) are true. E. Both (A) and (C) are true.
Finance Machine X has an intial cost of $10,000. It is expected to last 12 years, to cost $200 per year to maintain and to have a salvage value of $1,000 at the end of its useful life. The equivalent uniform annual cost of the machine at 8% interest is most nearly ___________. A. $1,160 B. $1,507 C. $1,580 D. $1,475 E. None of the above Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Do not provide Excel Screet shot rather use tool table Answer completely.
Question 1- A $12,000 investment will return annual benefit for six yearswith no salvage value at the end of six years. Assumestraight line depreciation and a 46% tax rate and the inflationrate is 5%. What is the inflation free after tax rate ofreturn on the investment if the annual benefits are $2,918 intoday’s dollars? a. 10.18% b. 4.94% c. 5% d. 8.20%
Project x... Useful life 9years Initial cost : 286000 Annual revenues : 125000 Annual O&M cost: 73000 Salvage value:28600 Project Y Useful life 18years Initial cost: 184000 Annual revenues: 107000 Annual O&M cost:68000 Upgrade cost at the Th7 year :69000 Q1: Draw cash flow of the two projects and recommend one of the projects using Annual Worth method using i:6%.
Answer all the questions QUESTION 1 Questions a. After-tax cash flows for two mutually exclusive projects (with economic lives of four years each) are: Y Year Project X Project K(12,000) 5,000 01234 5,000 5,000 5,000 i. ii. iii. K(12,000) 0 0 0 25,000 The company's cost of capital is 10 percent. Compute the following: The internal rate of return for each project. The net present value for each project. Which project should be selected? Why? b. A firm is considering the purchase of an automatic machine for K6,200. The machine has an installation cost of K800 and zero salvage value at the end of its expected life of five years. Depreciation is by the straight-line method with the half-year convention. The machine is considered a five-year property. Expected cash savings before tax is K1,800 per year over the five years. The firm is in the 40 percent tax bracket. The firm has determined the cost of capital (or minimum required rate of return) as 10 percent after taxes. Should the firm…
A4 9a We find the following information on NPNG (No-Pain-No-Gain) Inc.: A4 9a EBIT = $2,000,000Depreciation = $250,000Change in net working capital = $100,000Net capital spending = $300,000 These numbers are projected to increase at the following supernormal rates for the next three years, and 5% after the third year for the foreseeable future: EBIT: 20%Depreciation: 10%Change in net working capital: 15%Net capital spending: 10% The firm’s tax rate is 35%, and it has 1,000,000 outstanding shares and $8,000,000 in debt. We have estimated the WACC to be 15%. a. Calculate the EBIT, Depreciation, Changes in NWC, and net capital spending for the next four years.

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