3. On January 1, 2022, JPIA Company capitalized a new word processing software package that it had developed. The total cost recorded was P9, 000, 000 and the product is expected to generate revenue for three years. Revenue from the sale of software for 2022 was P24, 000, 000 and the total expected revenue for the three years is P80, 000, 000. The net realizable value of the software was P7, 200, 000 on December 31, 2022. What amount should be charged to software amortization expense for the year ended December 31, 2022?

3. On January 1, 2022, JPIA Company capitalized a new word processing software package that it had developed. The total cost recorded was P9, 000, 000 and the product is expected to generate revenue for three years. Revenue from the sale of software for 2022 was P24, 000, 000 and the total expected revenue for the three years is P80, 000, 000. The net realizable value of the software was P7, 200, 000 on December 31, 2022. What amount should be charged to software amortization expense for the year ended December 31, 2022?

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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The Janna Company is planning to purchase a new machine. The payback period will be six years. The cash flow from operation , net of income taxes, will be P20,000 a year for each of the first three years of the payback period and P30,000 a year for each of the last three years of the payback period. Depreciation of P15,000 a year will be charged to income for each of the six years of the payback period. How much will the machine cost?
The NUBD Co. is planning to purchase a new machine for P300,000. The payback period is expected to be five years. The new machine is expected to produce cash flow from operations, net of income taxes, of P70,000 a year in each of the next three years and P50,000 in the fourth year. Depreciation of P50,000 a year will be charged to income for each of the five years of the payback period. What is the amount of cash flow from operations, net of taxes, that the new machine is expected to produce in the last (fifth) year of the payback period?
APJ, Inc. is planning to purchase a new machine that will take six years to recover the cost. The new machine is expected to produce cash flow from operations, net of income taxes, of P4,500 a year for the first three years of the payback period and P3,500 a year of the last three years of the payback period. Depreciation of P3,000 a year shall be charged to income of the six years of the payback period. How much shall the machine cost? * A. P12,000 B. P18,000 C. P24,000 D. P36,000
The JessT Company is considering the acquisition of an automatic 3D printer machine for it assemble operation of production line. The project investment of RM35,000 will produce a uniform annual revenue of RM5,310 for seven years and then have a market (salvage) value of RM6,000. Expenses will be RM3,100 in second years and RM2,000 in third years. One-off revenue of RM4, 000 in fifth years will give additional profit to the company. The company is willing to accept any project that will earn 10% per year or more before incomes taxes, on all invested capital. Evaluate whether this project is desirable investment by using the Annual Worth method.
A company is planning to spend P60,000 for a machine which will be depreciated on a straight-line basis over 10 year period. the machine will generate additional cash revenues of P12,000 a year. It will incur additional costs except for depreciation. the income tax rate is 35%. Determine the accounting rate of return.
The Libby & Lacy Company is considering a new construction project for the new manufacturing plant and ask you to calculate a Net Present Value analysis. The investment for the land parcel is $235,000. The manufacturing plant will be completed at the end of year 1 and costs $388,000. The company expects to increase revenue for the next ten years, : (Yr 1) $225,000, (Yr 2) $328,000, (Yr 3) $164,000, (Yr 4) $143,000, (Yr 5) $116,000, (Yr 6) $110,000, (Yr 7) $95,000, (Yr 8) 74,000, (Yr 9) $40,000, and (Yr 10) $15,000. The roadway to the plant will need to be repaved twice and will cost: (Yr 4) $38,000, and (Yr 8) $67,000. The fixed manufacturing overhead for the company will cost an additional $44,000 each year for the 10 years. Prepare a Net Present Value table using a 12% factor.
Company ABC is introducing a new product to the market that is expected to bring $50k annual revenue with a $25k annual cost for 6 years. The initial cost that is required for acquiring an equipment is $120,000. This equipment will be used for 6 years with an annual depreciation of $15,000 (note that $30,000 will be the book value of the equipment at the end of the lifetime of the project). The net working capital will be increased by $2k per year from year 0 through year 5. In year 6, the total increase in NWC will be recovered. The tax rate is 30% and the market rate is 12%. What should be the minimum 12. market value of the equipment at year 6 for the NPV of this operation to be positive?
Jitihadi Itd intends to invest in a project whose cost is sh 1,200,000. The project is expected to have a useful life of 5 years with a residual value of shs 200,000. The following are the expected profits before depreciation and taxes for 5 years. Year Profit before depreciation and tax (shs) 1 480,000 2 320,000 600,000 4 450,000 500,000 Additional information: i. The company uses straight line method in calculating depreciation. ii. The corporation tax rate is 30% iii. The cost of capital is 12% Required: i. Calculate the net present value of the project ii. Advice the management whether the project is viable
Astor Industries plans to automate its production process. The new equipment will cost $460,000 and will provide net cash inflows in the form of annual cost savings of $110,000 each year for 6 years. At the end of year 6, Astor will spend $50,000 to refurbish the equipment so that it can be used for one more year. The equipment will provide cost savings of $65,000 in year 7 and will have a salvage value of $30,000 at the end of year 7. Astor uses a discount rate of 10% to make capital budgeting decisions. What is the net present value of this project? O $24,195 O $39.585 O $67,785 O $125.685 pts O None of the above
4. We-Clean-U, Inc., expects to receive $65,000 each year for 5 years from the sale of its newest soap, OnGuard. There will be an initial investment in new equipment of $150,000. The expenses of manufacturing and selling the soap will be $17,500 per year. Straight-Line Depreciation is to be used with $5,000 Salvage Value. Annual income tax rate is at 30%. a. Compute the ATCF for the 5-year period using the tabular method (Show YEAR, BTCF, DEPRECIATION, TAXABLE INCOME, INCOME TAX, ATCF). b. If the MARR for We-Clean-U is 12%, is OnGuard a worthwhile investment?
Business Monkey is evaluating a 3-year project that would involve buying a new piece of equipment for $364,000.00 today. The equipment would be depreciated straight-line to $22,000.00 over 2 years. In 3 years, the equipment would be sold for an after-tax cash flow of $30,000.00. In each of the 3 years of the project, relevant revenues are expected to be $278,000.00 and relevant costs are expected to be $89,700.00. The tax rate is 52.00% and the cost of capital for the project is 16.49 %. What is the NPV of the project? $48,069.66 (plus or minus $10) -$1,788.58 (plus or minus $10) -$100,052.07 (plus or minus $10) -$77,944.35 (plus or minus $10) None of the above is within $10 of the correct answer
The Bread Company is planning to purchase a new machine that it will depreciate on straight-line basis over a ten year period. A full year's depreciation will be taken in the year of acquisition. The machine is expected to produce cash flow, net of income taxes, of P30,000 in each of the ten years. The accounting (book value) rate of return is expected-to be 10% on the initial increase in required investment. The cost of the new machine will be

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