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Name: How long would it take to breakeven an investment of $350,000, if the
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Description: How long would it take to breakeven an investment of $350,000, if the associated income is $120,000 per year and the total annual operating cost is $55,000 per year? Use a MARR of 10% per year. Assume no salvage value. Between 8 and 9 years Betwe

Business

Accounting

breakeven an investment

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Alternative X has a first cost of $30,000, an operating cost of $9,000 per year, and a $5,000 salvage value after 5 years. Alternative Y will cost $45,000 at nO with an operating cost of $4,000 per year after that and a salvage value of $7,000 after 5 years. At an MARR of 12% per year, what is the present worth far alternative X2 $49,606 $58,777 $59,606 -$32,443
A man invests in a project that requires a fixed capital of P 2.5 M with no salvage, and life of 12 years. During its life an estimated maintenance cost of P 280, 000 will be spent each year. Taxes and insurance will be 5 % of the first cost. The project will yield a uniform annual revenue of P 1M. The company expects to earn 20% before income taxes. Compute the rate of return. Select one: a. 8.38% b. 6.54% c. 5.65% d. 7.12%
2. Now assume the company is considering two methods: automated method and manual system. The estimates for each method are shown below. Automated 400,000 30,000 (per 3 years) 150,000 (per year) 200,000 9 Manual 0 200,000 (per 6 years) 100,000 (per year) 500,000 Infinite First cost, $ Operating cost, $ Revenue, $ Salvage value Life, years The effective interest rate is 3% per quarter. Which alternative should be selected? Use Capitalized Cost Approach.
Please answer if you conform and give correct answer.
onsider the following financial informationabout a retooling project at a computer manufacturing company:• The project costs $2.5 million and has a five-yearservice life.• The retooling project can be classified as sevenyear property under the MACRS rule.• At the end of the fifth year, any assets held for theproject will be sold. The expected salvage valuewill be about 10% of the initial project cost.• The firm will finance 40% of the project moneyfrom an outside financial institution at an interestrate of 10%. The firm is required to repay the loanwith five equal annual payments.• The firm’s incremental (marginal) tax rate on theinvestment is 35%.• The firm’s MARR is 18%.With the preceding financial information,(a) Determine the after-tax cash flows.(b) Compute the annual equivalent worth for thisproject.
What is the bail-out period for this project in years?
Compare two alternatives, 1 and 2, on the basis of a present worth evaluation using 10% per year and a study period of 8 years. Alternative First Cost Annual Operating Cost Overhaul in Year 4 Salvage Value Life Answer to the nearest whole dollars for currency, and the nearest percentage (no decimals) for interest, and a whole number for the number of years. Do NOT enter commas. DO enter minus signs for negative values. 1) What is the Present Worth of Project 1? $ 1 2 ($13,000) ($49,000) ($6,000) ($5,000) $0 ($3,350) $1,800 $6,800 4 years 8 years
XYZ company has A piece of new equipment will cost $70,000. The equipment will provide a cost savings of $15,000 per year for ten years, after which it will have a $3,000 salvage value. If the required rate of return is 14%, the equipment's net present value is: a. (8240) b. None of answers are correct c. 9050 d. 23888
A five-year project has an initial fixed asset investment of $355,000, an initial NWC investment of $39,000, and an annual OCF of −$38,000. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required return is 11 percent, what is this project’s equivalent annual cost, or EAC? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
A five - year project has an initial fixed asset investment of $335,000, an initial NWC investment of $35,000, and an annual OCF of -$34,000. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required return is 10 percent, what is this project's equivalent annual cost, or EAC? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.)
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 %
$500,000 is invested in equipment having a negligible salvage value regardless of the number of years used. O&M costs equal $125,000 the first year and increase $25,000 per year. Based on a MARR of 10%, what are the optimum replacement interval and minimum EUAC?