Answered: A Company sets aside Peso 200,000 at…

A Company sets aside Peso 200,000 at the end of each year for plant expansion. If the fund draws 8% compounded annually, how long will it take before Peso 2,500,000 can be saved?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 3EA: If a copy center is considering the purchase of a new copy machine with an initial investment cost...

See similar textbooks

Related questions

Q: Starr Company decides to establish a fund that it will use 10 years from now to replace an aging…

A: Future value is the value of the present cash flows in future. Value of the funds in 10 years is the…

Q: Project A costs $4,800 and will generate annual after-tax net cash inflows of $1,700 for five years.…

A: Net Present value = Present Value of Cash Flow - Initial Investment

Q: stment of 100,000 is to be used to make payments of 4,000 at the end of each quarter for as long as…

A: The payments are made periodically that carry the payment of principal amount and payment of…

Q: local University is planning to invest $500,000 every 3 months in an investment which earns interest…

A: By compounding current cash flows with a specified interest rate, future value determines the future…

Q: A person invests $50,000 in an investment that earns 6 percent. If $6,340 is withdrawn each year,…

A: Given: Present value = $50,000 Interest rate = 6% Amount = $6,340

Q: Buckeye Healthcare Corp. is proposing to spend $186,725 on an eight-year project that has estimated…

A: a. Calculation of Net Present Value, using rate of return 12%

Q: A company project needs to establish a fund within a ten-year period by making annual deposits of…

Q: A company makes fixed annual payments to a sinking fund to replace equipment in five years’ time.…

A: Future Value of Money Required = 200,000 Time Period = 5 years Interest Rate = 10% Future Value…

Q: Project L costs $40,000, its expected cash inflows are $12,000 per year for 11 years, and its WACC…

A: The payback period is the time taken by the investment to recover the cost of the investment.

Q: Project A costs $4,700 and will generate annual after-tax net cash inflows of $1,800 for five years.…

A: Given: Cost = $4,700 Net cash inflows = $1,800 Period = 5years rate = 12%

Q: An investment project provides cash inflows of $1325 per year for eight yea payback period if the…

A: Year cash flow 1 1 1,325.00 2…

Q: Crane Company will invest $830000 today. The investment will earn 4% for 6 years, with no funds…

A: Investment fund at the end of 6 years = Initial invetment x Future value factor (4%, 6 years)

Q: mpany estimates that it will need $66,000 in 7 years to replace a computer. If it establishes a…

A: A sinking fund is an account in which the amount is deposited after the regular period by setting…

Q: re to made to the fund

A: Money Required (Future Value) = 40,000 Present Value (value at start) = 0 N = 3 years Quarterly…

Q: Acceleron is planning future expansion with a new facility in Indianapolis. The company will make…

A: Total value = $1.2 million Rate of interest = 10% Present value = $400000

Q: Project L costs $40,000, its expected cash inflows are $12,000 per year for 7 years, and its WACC is…

A: Payback period is the amount of time taken by the project to recover its initial cash invested.…

Q: An investment opportunity has the following characteristics: payments of $10,000 will be made to you…

A: In order to find the purchase price of investment opportunity the present value of the opportunity…

Q: Ikhwan's Sports Store needs RM840,000 in 6 years. If funds are invested an account earning 8% per…

A: Sinking fund is a system which is used by the bussiness to arrange funds for some future objectives…

Q: A project will cost $10,000 up front and $1,000 each year thereafter. The project will bring in…

A: Breakeven point refers to the point at which total cost equals total revenue. The payback period is…

Q: How much would a business have to invest in a high-growth fund to receive $22,000 every month for 5…

A: Solution:- When an equal amount is receivable each period, it is called annuity. So, present value…

Q: You deposit $50,000 into a fund that pays 5% per year compounded annually. You plan to make the…

A: Time value of money (TVM) refers to the method or technique which is used to measure the amount of…

Q: Sevim wants to create a savings of 95,000 TL at the end of 30 years. For this purpose, it plans to…

A: This question had two parts we had to find future value of both parts.

Q: If P20,000 is invested in a fund that pays 10% compounded annually, how much money will be in the…

A: Answer - Part 1 - If P20,000 is invested in a fund that pays 10% compounded annually, how much…

Q: How much must be deposited

A: An Annuity is a series of payments of fixed amounts and at fixed intervals. These can be of two…

Q: At present, a foundation who has 6 million deposit in bank with interest of 10% compounded annually,…

A: As we can see that the cost part comes only within the 4th year and we only have 5 years once the…

Q: The payback period of a project that costs $1,000 initially and promises after-tax cash inflows of…

A: Here, Cash Inflow is $3000 each year Initial Investment is $1,000

Q: How much would a business have to invest in a high-growth fund to receive $14,000 every month for 6…

A: Investments are the ways by which individuals and corporations park or save their money and funds in…

Q: If $90,000 is invested in a fund on December 31, 2019, and 5 equal annual withdrawals of $23,138.32…

A: solution: Let interest rate earned = i Annual withdrawls = $23,138.32 Amount invested (Present value…

Q: Abc plans to construct an adiitional building at the end of 10 years at an estimated cost of…

A: first calculate the payments for the first 5 years N = 10, FV = 5,000,000, rate = 13%, PV = 0 use…

Q: Project P has a cost of $1,000 and cash flows of $300 per year for three years plus another $1,000…

A: Time required of an investment to cover the investor’s expectation without considering time value…

Q: Beene Distributing is considering a project that will return $150,000 annually at the end of each…

Q: Tyu plans to construct an adiitional building at the end of 10 years at an estimated cost of…

A: Use PMT function in Excel with the following inputs N = 10, PV = 0, FV = 5000000, rate = 13% annual…

Q: Project L costs $45,000, its expected cash inflows are $15,000 per year for 11 years, and its WACC…

A: The payback period refers to the time required by an investment to cover its initial investment.…

Q: Dave put $22,000 in an investment that is compounded yearly at a rate of 7%. The investment is over…

A: Future Value refers to the value of the current asset or investment or of cash flows at a specified…

Q: In order to have ₱1 million in a fund at the end of 15 years, how much must be deposited in the fund…

A: Amount to be deposited per quarter can be calculated using PMT function in excel. PMT(rate, nper,…

Q: ter's Shop wants to start a fund to accumulate half of the expected P600,000 cost of expanding their…

A: As the money is being deposited than money growth with time and amount of compounding and grow to…

Q: A capital budgeting project has a net investment of $550,000 and is expected to generate net cash…

A: Payback period is the capital budgeting tool that is used to evaluate the investment proposal. The…

Q: Ayayai Corporation wants to withdraw $125,900 (including principal) from an investment fund at the…

A: The question is related to Presnt Value. In the given question the company wants to withdraw $125900…

Q: A year-end bonus of $23,000 will generate how much money at the beginning of each month for the next…

A: Present Value: The present value is the value of cash flow stream or the fixed lump sum amount at…

Q: How much would a business have to invest in a high-growth fund to receive $13,000 every month for 7…

A: An annuity is the total of regular payments made over a period of time at a specific date, at a…

Q: An investment project provides cash inflows of $3,000 per year for five years. What is the payback…

A: Pay back period is the time period in which the project will pay back the initial investment with…

Q: $3000 into the fund. If the investments grew at a rate of 8% per year over the 15 years, how much is…

A: Information Provided: Present value = $10,000 Interest rate = 8% Term = 15 years Annual deposit =…

Q: A pension fund is making an investment of $100,000 today and expects to receive $1,600 at the end of…

A: The internal rate of return is the rate at which the present value of cash inflows is equals to the…

Q: Second Hand Software needs to accumulate $12,000 in 3 years to meet future needs. What sinking fund…

A: Sinking fund is defined as the method of the funds repayment, which borrows by the bond issue by the…

Q: Your RRSP savings of $35,000 are converted to a RRIF at 3.25% compounded monthly that pays $5,100 at…

A: The amount in retirement fund will be depleted after some period of time due to payment and interest…

Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

A Company sets aside Peso 200,000 at the end of each year for plant expansion. If the fund draws 8% compounded annually, how long will it take before Peso 2,500,000 can be saved?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Project X costs $10,000 and will generate annual net cash inflows of $4,800 for five years. What is the NPV using 8% as the discount rate?
If a copy center is considering the purchase of a new copy machine with an initial investment cost of $150,000 and the center expects an annual net cash flow of $20,000 per year, what is the payback period?
A restaurant is considering the purchase of new tables and chairs for their dining room with an initial investment cost of $515,000, and the restaurant expects an annual net cash flow of $103,000 per year. What is the payback period?
How much must be invested now to receive $50,000 for 8 years if the first $50,000 is received in one year and the rate is 10%?
Beene Distributing is considering a project that will return $150,000 annually at the end of each year for the next six years. If Beene demands an annual return of 7% and pays for the project immediately, how much is it willing to pay for the project?
Drexter's Shop wants to start a fund to accumulate half of the expected P600,000 cost of expanding their facilities in 8 years. What semiannually account must be paid into the fund earning 6% compounded quarterly in order to reach the target?
If a donation of $100,000 is expected to pay out scholarships of $10,000 every year and the funds earn 7.5% compounded annually, how long will it be before the first annual payment can be made?
A business sets up a sinking fund so they will have a $49,000.00 to pay for a replacement piece of equipment in 7 years when the current equipment will be sold for scrap. If they make deposits at the end of each month for 7 years in the investment that pays 7.4% compounded monthly, what size should each payment be?
An investment project provides cash inflows of $3,000 per year for five years. What is the payback period if the project requires $5,000 at the beginning of the project?
Your company wants to create a scholarship program that will cost $17,000 dollars a year. They will begin annually starting one year from now. 1) What amount must be invested today at 8.5% compounded annually to fund the scholarship program in perpetuity?
We are funding an organization for ten years. The first payment will be made one year from today (end of year one) and will be $8,350. Each year after that, the organization will receive payment from us annually. The payment will increase at a rate of 2% per year after the second payment. If the annual interest rate is 15%, what is the present value of this endowment?
5. A company is trying to consider buying an equipment with an initial cost of $80,000. The salvage value is expected to be $20,000 after 20 years. A fund is set up to replace it at the end of 20 years. What is the uniform annual deposit that should be made to the fund? Money is worth 10% per annum.