1. Calculate the annual income tax expense for each of years 1 through 5 arising from this investment opportunity. 2. Calculate the net present value of this investment opportunity. Note: Negative amounts should be indicated by a minus sign. Round your final answer to the nearest whole dollar.
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- B Assume the following information for a capital budgeting proposal with a five-year time horizon: Initial investment: Cost of equipment (zero salvage value) Annual revenues and costs: Sales revenues Variable expenses Depreciation expense Fixed out-of-pocket costs This proposal's simple rate of return is closest to: Multiple Choice O 27%. 16%. 19% 11% $ 485,000 $ 300,000 $ 130,000 $ 50,000 $ 40,000Assume the following information for a capital budgeting proposal with a five- year time horizon: Initial investment: Cost of equipment (zero salvage value) Annual revenues and costs: Sales revenues Variable expenses Depreciation expense Fixed out-of-pocket costs The payback period for this investment is closest to: Multiple Choice O O 2.71 years. 5.75 years. 3.54 years. 1.21 years. $ 460,000 $ 300,000 $ 130,000 $ 50,000 $ 40,000Required information The following data is provided for a PPP project. To the Government $1.8 milion naw and $200,000 every 3 years To the People Benefits $90,000 per year beginning now Cost $25,000 per year Savings $115,000 per year Disbenefits Calculate the conventional benefit/cost ratios using an interest rate of 7% per year and an infinite project period. The conventional B/C ratio is
- Cardinal Company is considering a five-year project that would require a $3,025,000 investment in equipment with a useful life of five years and no salvage value. The company's discount rate is 16%. The project would provide net operating income in each of five years as follows: Sales Variable expenses Contribution margin Fixed expenses: Advertising, salaries, and other out- of-pocket costs Depreciation Total fixed expenses Net operating income $610,000 605,000 Simple rate of return (Hint: Use Microsoft Excel to calculate the discount factor(s).) % $2,737,000 1,001,000 1,736,000 7. What is the project's simple rate of return for each of the five years? (Round your answer to 2 decimal places. i.e. 0.12342 should be considered as 12.34%.) 1,215,000 $ 521,000Assume that a company is considering a $2,500,000 capital investment in a project that would earn net income for each of the next five years as follows: Sales Variable expenses Contribution margin Fixed expenses: Out-of-pocket operating costs Depreciation Net operating income The project's internal rate of return is closest to: Garrison 17e Rechecks 2021-11-25 Multiple Choice Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. O O 22%. 20%. 18%. $ 300,000 400,000 16%. $ 1,900. 800 1, 100 700 $ 400.Show work Ursus, Incorporated, is considering a project that would have a ten-year life and would require a $2,552,000 investment in equipment. At the end of ten years, the project would terminate and the equipment would have no salvage value. The project would provide net operating income each year as follows (Ignore income taxes.): Sales Variable expenses. Contribution margin Fixed expenses: Fixed out-of-pocket cash expenses Depreciation Net operating income. b. Compute the project's internal rate of return. Note: Round your final answer to the nearest whole percent. c. Compute the project's payback period. Note: Round your answer to 2 decimal place. d. Compute the project's simple rate of return. Note: Round your final answer to the nearest whole percent. a. Net present value b. Internal rate of return c. Payback period d. Simple rate of return All of the above items, except for depreciation, represent cash flows. The company's required rate of return is 14%. Required: a. Compute…
- Required information The following data is provided for a PPP project. Benefits Disbenefits To the People $115,000 per year beginning now $60,000 per year The conventional B/C ratio is .08 Cost Savings Calculate the conventional benefit/cost ratios using an interest rate of 10% per year and an infinite project period. To the Government $1.8 million now and $200,000 every 3 years $105,000 per yearA firm with a 13.5 percent cost of capital is considering a project for this year's capital budget. The project's expected after- tax cash flows are as follows: Year: 1 3 4 Cash flow: -$13,000 $6,400 $4,600 $6,200 $5,900 Calculate the project's net present value (NPV). O a. $7,352.42 b. $4,005.18 Ос. $10,100.00 d. $919.66 e. $3,528.79Assume that a company is considering a $2,400,000 capital investment in a project that would earn net income for each of the next five years as follows: Sales Variable expenses Contribution margin $ 1,900,000 800,000 1,100,000 12:46 Fixed expenses: Out-of-pocket operating costs. $ 300,000 Depreciation 400,000 700,000 Net operating income $ 400,000 Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. If the company's discount rate is 21%, then the project's net present value is closest to
- Required information The following data is provided for a PPP project. Benefits Disbenefits To the People $140,000 per year beginning now $20,000 per year The modified B/C ratio is Cost Savings Calculate the modified benefit/cost ratios using an interest rate of 11% per year and an infinite project period. To the Government $1.8 million now and $200,000 every 3 years $95,000 per yearRequired information [The following information applies to the questions displayed below.] Cardinal Company is considering a five-year project that would require a $2,975,000 investment in equipment with a useful life of five years and no salvage value. The company's discount rate is 14%. The project would provide net operating income in each of five years as follows: $ 2,735,000 1,000,000 1,735,000 Sales Variable expenses Contribution margin Fixed expenses: Advertising, salaries, and other fixed out- of-pocket costs Depreciation Total fixed expenses $ 735,000 595,000 1,330,000 $ 405,000 Net operating income Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using table. 4. What is the project's net present value? (Round final answer to the nearest whole dollar amount.) Net present valueRequired information [The following information applies to the questions displayed below.] Cardinal Company is considering a five-year project that would require a $2,975,000 investment in equipment with a useful life of five years and no salvage value. The company's discount rate is 14%. The project would provide net operating income in each of five years as follows: $ 2,735,000 1,000,000 1,735,000 Sales Variable expenses Contribution margin Fixed expenses: Advertising, salaries, and other fixed out- of-pocket costs Depreciation Total fixed expenses $ 735,000 595,000 1,330,000 $ 405,000 Net operating income Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using table. 10. If the equipment had a salvage value of $300,000 at the end of five years, would you expect the project's payback period to be higher, lower, or the same? O Higher O Lower O Same