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- Current Attempt in Progress Blossom Oil Company is considering investing in a new oil well. It is expected that the oil well will increase annual revenues by $122,610 and will increase annual expenses by $72,000 including depreciation. The oil well will cost $471,000 and will have a $11,000 salvage value at the end of its 10-year useful life. Calculate the annual rate of return. (Round answer to O decimal places, e.g. 13%.) Annual rate of return %View Policies Current Attempt in Progress Culver Company is considering investing in a new facility to extract and produce salt. The facility will increase revenues by $240,900, but it will also increase annual expenses by $181,215. The facility will cost $999,000 to build, and it will have a $39,000 salvage value at the end of its useful life. Calculate the annual rate of return on this facility. (Round answer to 2 decimal places, e.g. 52.75.) Annual rate of return eTextbook and Media Save for Later % Attempts: 0 of 3 used Submit AnswerWeek 7 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 below. Project 1 Project 2 Cost $175,000 $185,000 Future Cash flow Year1 76,000 87,000 Year2 83,000 78,000 Year3 67,000 69,000 Year4 65,000 65,000 Year5 55,000 57,000 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.
- QUESTION 1 A new production system for a factory is to be purchased and installed for $115,042. This systom will save approximately 300,000 kWh of electric power each year for a6- year period. Assume the cost of electricity is $0.10 per kWh, and factory MARR is 15% per year, and the salvage value of the system wil be $9,196 at year 6. Using the PW method to analyzes if this investment is economically justified A- calculate the PW of the above investment and insert the result belowQuestion 5 An investment of $50,000 is made to purchase machinery that will allow us to manufacture a new product. The annual expenses to make the product are (5,000 + 5x) and the revenues from the product are 30 x, where x = the number of products sold each year. How many products must be sold per year, x, to break even? Consider a 7 year project life and an MARR of 12%.Question a .A mining company plans to mine a beach for rutile. To do so will cost $14 million up front and then produce cash flows of $7 million per year for five years. At the end of the sixth year the company will incur shut-down and clean-up costs of $6 million. If the cost of capital is 13%, then what is the MIRR for this project? A) -70% B) -90% C) -100% D) -110% Full explain this question and text typing work only We should answer our question within 2 hours takes more time then we will reduce Rating Dont ignore this line
- Question 2: SABIRCO wants to investigate the following project. Initial investment $1,000,000 Annual income $200,000 in year 1 and increase every year by 40,000. No salvage value MARR = 10% a) What is the discounted payback period? b) Assuming the project to be used for 8 years. What is the end balance of the project at end of year 8?QUESTION 7 Ten years ago, an investor purchased a project for $265,000 .He anticipated a salvage value of $50,000 after 10 years. During this time, his average annual revenue totaled $52,000. (a) Did he recover his investment and a 12% per year return? Assume the annual M&O cost was $10,000 the first year and increased by a constant $1000 per year. The recovery cost is closest to: O A. -44251 O B. -44151 O C.-44351 O D.-44051QUESTION 10 A project will produce operating cash flows of $57,000 a year for 3 years. During the life of the project, inventory will be lowered by $10,000 and accounts receivable will increase by $20,000. Accounts payable will decrease by $5,000. The project requires the purchase of equipment at an initial cost of $90,000. The equipment will be salvaged at the end of the project creating a $17,000 after-tax cash inflow. At the end of the project, net working capital will return to its normal level. What is the net present value of this project given a required return of 12%? $48,772.08 $54,681.35 $56,209.19 $42,908.17 $44,141.41
- QUESTION 1 Frank Einstein Co. is a firm that specializes in selling Halloween decorations. It is evaluating a new project that requires an initial investment of $1.42 million. The asset will be depreciated to zero over its 3-year life. The company's analysts estimate that in the first year, the project will generate $1.09 million in revenues. The revenue will increase by 7% per year in the following two years. The costs in the first year will be $475,000 and they will increase by 5% per year thereafter. The corporate tax rate is 25% and the required return is 12%. What is the NPV of the project?Use the following information to answer questions 15-18 A company is considering investing in two projects; Classy and Sassy with initial investments of $200,000 and $80,000, respectively. Each project is expected to have a life of five (5) years and an ending book value of $120,000. The expected profits generated by the projects are as follows: Profits after tax and depreciation Project Classy Project Sassy $ $ 60,000 20,000 60,000 40,000 30,000 80,000 30,000 22,000 60,000 38,000 240,000 200,000 15. The average profit per annum for project Classy would be? a. $60,000 b. $48,000 c. $240,000 d. $200,000 16. The average profit per annum for project Sassy would be? a. $40,000 b. $38,000 c. $80,000 d. $20,000 17. he accounting rate of return (ARR) on average capital for project Classy would be? a. 20% b. 12.5% c. 30% d. 40% 18. The accounting rate of return (ARR) on average capital…Question 6 (B/C Analysis): A) Construction Project You are planning to invest your money in a new project that will have a first cost of $1 million and an annual maintenance cost of $50,000 per year. The income of the project is expected to be $300,000 per year. The project will have an 10-year life. At an interest rate of 10% per year compounded, should the project be undertaken (Perform B/C Analysis)? B /C = B )Alternative Investment If there is another option which, is you invest the same amount (1,000,000) in an investment company that gives 3% per year rate of return, The investment will will be for 10-year . How much the investment company will give every year? Which option would be better?