A new project has an initial cost of $250,000. The equipment will be depreciated on a straight-line basis to a zero book value over the five-year life of the project. The projected net income each year is $13,250, $18,000, $20,240, $15,150, and $11,900, respectively. What is the average accounting return? Multiple Choice 11.52% 8.95% 13.46% 12.57% 5.33%

A new project has an initial cost of $250,000. The equipment will be depreciated on a straight-line basis to a zero book value over the five-year life of the project. The projected net income each year is $13,250, $18,000, $20,240, $15,150, and $11,900, respectively. What is the average accounting return? Multiple Choice 11.52% 8.95% 13.46% 12.57% 5.33%

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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Average Rate of Return Determine the average rate of return for a project that is estimated to yield total income of $467,480 over four years, has a cost of $725,400, and has a $80,600 residual value. Round to the nearest whole number.
A project is expected to generate annual revenues of $ 119, 300, with variable costs of $75, 400, and fixed costs of $15,900. The annual depreciation is $3,950 and the tax rate is 34 percent. What is the annual operating cash flow? Multiple Choice $61, 143 $19, 823 $45, 243 $ 28,000 $31,950
Determine the average rate of return for a project that is estimated to yield total income of $460,320 over 3 years, has a cost of $964,500, and has a $131,500 residual value. Round to the nearest whole number. fill in the blank 1 of 1%
Pls help cslculate the asked part in both
Subject: accounting
You are considering the following project. What is the NPV of the project? WACC of the project: 0.10 Revenue growth rate: 0.05 Tax rate: 0.40 Revenue for year 1: 13,000 Fixed costs for year 1: 3,000 variable costs (% of revenue): 0.30 project life: 3 years Economic life of equipment: 3 years Cost of equipment: 20,000 Salvage value of equipment: 4,000 Initial investment in net working capital: 2,000
A 5-year project is estimated to cost $700,000 and have no residual value. If the straight-line depreciation method is used and estimated total income is $231,000, determine the average rate of return giving effect to depreciation on the investment. Round your percentage answer to one decimal place (for example, a value of .1048 rounds to 10.5%).fill in the blank 1 %
A project produces annual net incomes of $300, $400, and $500 over the three years of its life, respectively. The initial cost of the project is $2000. The cost is depreciated straight-line for accounting purposes to a book value of $1000 over three years. What is the average accounting rate of return if the required discount rate is 5%? A 40.0% B 25.2% C 63.4% D 80.0% E 26.7%
Consider a project with a life of 3 years with the following information: initial fixed asset investment = salvage value; price = $35; variable costs $13; fixed costs = $112,000; quantity sold = 53,760 units; tax rate = 23 percent. How sensitive is OCF to changes in quantity sold? $320,000; straight-line depreciation to zero over the 3-year life; zero Multiple Choice $21.85 $0.06 $19.31
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Required information A project has a first cost of $670,000, a salvage value of 27% of the first cost after 3 years, and annual (GI-OE) of $275,000. Assume the company has a Te of 37%. Determine the approximate after-tax rate of return (ROR). The after-tax rate of return (ROR) is determined to be

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