"A fırm is considering purchasing an automated computer system to handle its back-office operations. The following data has been collected. - Cost of the system: $138,000 - Project life: 6 years - Salvage value at the end of year 6: $14,000 - Depreciation method: five-year MACRS - Tax rate: 21% - Annual cost savings from the system: $110,000 - Annual expenses (not including depreciation): $80,000 The firm will borrow the entire $138,000 at 7.6% interest to be repaid in 2 annual payments. The firm's MARR is 12%. Determine the IRR for this new system. Enter your answer as a percentage rounded to the nearest tenth of a percent."

"A fırm is considering purchasing an automated computer system to handle its back-office operations. The following data has been collected. - Cost of the system: $138,000 - Project life: 6 years - Salvage value at the end of year 6: $14,000 - Depreciation method: five-year MACRS - Tax rate: 21% - Annual cost savings from the system: $110,000 - Annual expenses (not including depreciation): $80,000 The firm will borrow the entire $138,000 at 7.6% interest to be repaid in 2 annual payments. The firm's MARR is 12%. Determine the IRR for this new system. Enter your answer as a percentage rounded to the nearest tenth of a percent."

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Description: "A firm is considering purchasing an automated computer system to handle its back-officeoperations. The following data has been collected.- Cost of the system: $138,000- Project life: 6 years- Salvage value at the end of year 6: $14,000- Depreciatio

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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I need the solution in handwriting The following are the cost of a system and the useful life is five years. The salvage value for depreciation purpose is equal to 25% of the hardware cost Item Cost Hardware $170,000 Training Installation $18,000 $18,000 a) What is the book value of the system at the end of year three if Straight line method is used? b) Suppose that after depreciation of the system for two years with straight line, the company decides to switch to the decline method for the reminder of the system life (depreciation rate 30%). What is the system Book Value at the end of four years? (
Required Information [The following information applies to the questions displayed below.] Project A requires a $365,000 initial investment for new machinery with a five-year life and a salvage value of $42,000. The company uses straight-line depreciation. Project A is expected to yield annual net income of $25,300 per year for the next five years. Compute Project A's accounting rate of return. Choose Numerator: Accounting Rate of Return I Choose Denominator: = Accounting Rate of Return Accounting rate of return
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[The following information applies to the questions displayed below.] Project Y requires a $306,000 investment for new machinery with a five-year life and no salvage value. The project yields the following annual results. Cash flows occur evenly within each year. (PV of $1, FV of $1, PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Project Y $ 390,000 174,720 61,200 28,000 $ 126,080 2. Determine Project Y's payback period. Project Y Payback Period Numerator: 1 Denominator: = = Payback Period 0
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