FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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A (181,600)

B (1,350)

C (81,600)

D 181,600

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Assume the following information for a capital budgeting proposal with a five-year time horizon:
Initial investment:
Cost of equipment (zero salvage value)
$470,000
Annual revenues and costs:
Sales revenues
Variable expenses
Depreciation expense
Fixed out-of-pocket costs
$300,000
$130,000
$ 50,000
$ 40,000
Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided.
If the company's discount rate is 12%, then the net present value for this investment is closest to:
Multiple Choice
$(181,600).
$(1350).
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Transcribed Image Text:Saved Assume the following information for a capital budgeting proposal with a five-year time horizon: Initial investment: Cost of equipment (zero salvage value) $470,000 Annual revenues and costs: Sales revenues Variable expenses Depreciation expense Fixed out-of-pocket costs $300,000 $130,000 $ 50,000 $ 40,000 Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. If the company's discount rate is 12%, then the net present value for this investment is closest to: Multiple Choice $(181,600). $(1350).
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Follow-up Question

Assume the following information for a capital budgeting proposal with a five-year time horizon:

Initial investment:  
Cost of equipment (zero salvage value) $ 460,000
Annual revenues and costs:  
Sales revenues $ 300,000
Variable expenses $ 130,000
Depreciation expense $ 50,000
Fixed out-of-pocket costs $ 40,000

Click here to view Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using the tables provided.

This proposal’s internal rate of return is closest to:

 

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Follow-up Questions
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Follow-up Question

Assume the following information for a capital budgeting proposal with a five-year time horizon:

Initial investment:  
Cost of equipment (zero salvage value) $ 460,000
Annual revenues and costs:  
Sales revenues $ 300,000
Variable expenses $ 130,000
Depreciation expense $ 50,000
Fixed out-of-pocket costs $ 40,000

Click here to view Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using the tables provided.

This proposal’s internal rate of return is closest to:

 

Solution
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by Bartleby Expert
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