Please help me. Thankyou. Exercise 16-36 Payback Period; Uneven Cash Flows (Section 3) (LO 16-1, 16-6, 16-8)Allegience Insurance Company's management is considering an advertising program that would require an initial expenditure of$185,360 and bring in additional sales over the next five years. The projected additional sales revenue in year 1 is $87,000, withassociated expenses of $31,000. The additional sales revenue and expenses from the advertising program are projected to increaseby 10 percent each year. Allegience's tax rate is 30 percent. (Hint: The $185,360 advertising cost is an expense.)Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.)Required:1. Compute the payback period for the advertising program.2. Calculate the advertising program's net present value, assuming an after-tax hurdle rate of 10 percent. (Round your intermediatecalculations and final answer to the nearest whole dollar.)1Payback period2. Net present valueyears

The payback period of a project is used to assess how long or how many years it will take a project…

Answered: Exercise 16-36 Payback Period; Uneven…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 2PB

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Tips ips Project Cash Flow The financial staff of Cairn Communications has identified the following information for the first year of the roll-out of its new proposed service: Projected sales Operating costs (not including depreciation) Depreciation $24 million $11 million $4 million Interest expense $5 million The company faces a 25% tax rate. What is the project's operating cash flow for the first year (t = 1)? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as $1,200,000. Round your answer to the nearest dollar.
Exercise 16-36 Payback Period; Uneven Cash Flows (Section 3) (LO 16-1, 16-6, 16-8) Alleglence Insurance Company's management is considering an advertising program that would require an initial expenditure of $180,395 and bring in additional sales over the next five years. The projected additional sales revenue in year 1 is $84,000, with associated expenses of $29,500. The additional sales revenue and expenses from the advertising program are projected to increase by 10 percent each year. Alleglence's tax rate is 30 percent. (Hint: The $180,395 advertising cost is an expense.) Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.) Required: 1. Compute the payback period for the advertising program. 2. Calculate the advertising program's net present value, assuming an after-tax hurdle rate of 10 percent. (Round your Intermediate calculations and final answer to the nearest whole dollar) 1. Payback period 2. Net present value years A
Exercise 16-36 Payback Period; Uneven Cash Flows (Section 3) (LO 16-1, 16-6, 16-8) Allegience Insurance Company's management is considering an advertising program that would require an initial expenditure of $165,500 and bring in additional sales over the next five years. The projected additional sales revenue in year 1 is $75,000, with associated expenses of $25,000. The additional sales revenue and expenses from the advertising program are projected to increase by 10 percent each year. Allegience's tax rate is 40 percent. (Hint: The $165,500 advertising cost is an expense.) Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.) Required: 1. Compute the payback period for the advertising program. 2. Calculate the advertising program's net present value, assuming an after-tax hurdle rate of 10 percent. (Round your intermediate and final answers to the nearest whole dollar.) 1. Payback period years 2. Net present value
NEED PART 4 & 5 ANSWERED ONLY Boston Cola is considering the purchase of a special-purpose bottling machine for $35,000. It is expected to have a useful life of 4 years with no terminal disposal value. The plant manager estimates the following savings in cash operating costs: Boston Cola uses a required rate of return of 14% in its capital budgeting decisions. Ignore income taxes in your analysis. Assume all cash flows occur at year-end except for initial investment amounts. Data Table Year Amount Year 1 $15,000 Year 2 11,000 Year 3 10,000 Year 4 8,000 Total $44,000 (Use factor amounts rounded to three decimal places. Round your answers to the nearest whole dollar. Use a minus sign or parentheses for a negative net present value.) Calculate the following for the special purpose bottling machine: 1. Net present value = -1900 2. Payback period = 2.90 3. Discounted payback period: Amount can not be determined…
Homework, Chapter 26 Cash Payback Period for a Service Company Jane's Clothing Inc. is evaluating two capital investment proposals for a retail outlet, each requiring an investment of $150,000 and each with an eight-year life and expected total net cash flows of $240,000. Location 1 is expected to provide equal annual net cash flows of $30,000, and Location 2 is expected to have the following unequal annual net cash flows: Year 1 $68,000 Year 2 51,000 Year 3 31,000 Year 4 29,000 Year 5 22,000 Year 6 16,000 Year 7 13,000 Year 8 10,000 Determine the cash payback period for both location proposals. Location 1 years Location 2 years
roject Cash Flow The financial staff of Cairn Communications has identified the following information for the first year of the roll-out of its new proposed service: Projected sales $24 million Operating costs (not including depreciation) $13 million Depreciation $5 million Interest expense $4 million The company faces a 25% tax rate. What is the project's operating cash flow for the first year (t = 1)? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as $1,200,000. Round your answer to the nearest dollar. $
Project Cash Flow The financial staff of Cairn Communications has identified the following information for the first year of the roll-out of its new proposed service: $18 million $7 million $4 million $4 million 1)? Enter your answer in dollars. For example, a Projected sales Operating costs (not including depreciation) Depreciation Interest expense The company faces a 25% tax rate. What is the project's operating cash flow for the first year (t = answer of $1.2 million should be entered as $1,200,000. Round your answer to the nearest dollar. LA
2. Calculating Project NPV The Fleming Company is considering a new investment. Financial projections for the investment are tabulated below. The corporate tax rate is 22 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project. Investment Sales revenue Operating costs Depreciation Net working capital spending Year 0 $32,800 450 Year 1 Year 2 Year 3 Year 4 $14,200 2,100 8,200 175 $15,900 $15,700 2,100 2,100 8,200 8,200 250 275 $12,900 2,100 8,200 ? a. Compute the incremental net income of the investment for each year. b. Compute the incremental cash flows of the investment for each year. c. Suppose the appropriate discount rate is 12 percent. What is the NPV of the project?
Question list ✔Question 1 Data table A 1 2 Projected cash outflow 3 Net initial investment 4 Projected cash inflows 5 Year 1 6 Year 2 7 Year 3 8 Year 4 9 Required rate of return ↑ Lulus Construction is analyzing its capital expenditure proposals for the purchase of equipment in the coming year. The capital budget is limited to $12,000,000 for the year. Lyssa Bickerson, staff analyst at Lulus, is preparing an analysis of the three projects under consideration by Caden Lulus, the company's owner. (Click the icon to view the data for the three projects.) Present Value of $1 table Read the requirements. B Project A с Project B Present Value of Annuity of $1 table Future Value of $1 table Future Value of Annuity of $1 table D Project C $ 6,000,000 $ 4,000,000 $8,000,000 8% $ 2,050,000 $ 1,100,000 $4,700,000 2,050,000 2,300,000 4,700,000 2,050,000 700,000 50,000 2,050,000 25,000 8% 8% Requirements 1. Because the company's cash is limited, Lulus thinks the payback method should be used to…
Aa.14 Allegience Insurance Company’s management is considering an advertising program that would require an initial expenditure of $177,085 and bring in additional sales over the next five years. The projected additional sales revenue in year 1 is $82,000, with associated expenses of $28,500. The additional sales revenue and expenses from the advertising program are projected to increase by 10 percent each year. Allegience’s tax rate is 30 percent. (Hint: The $177,085 advertising cost is an expense.)Required:1. Compute the payback period for the advertising program.2. Calculate the advertising program’s net present value, assuming an after-tax hurdle rate of 10 percent. (Round your intermediate calculations and final answer to the nearest whole dollar.)
K Operating cash inflows A firm is considering renewing its equipment to meet increased demand for its product. The cost of equipment modifications is $1.97 million plus $108,000 in installation costs. The firm will depreciate the equipment modifications under MACRS, using a 5-year recovery period (see table B) Additional sales revenue from the renewal should amount to $1.18 million per year, and additional operating expenses and other costs (excluding depreciation and interest) will amount to 43% of the additional sales. The firm is subject to a tax rate of 21%. (Note: Answer the following questions for each of the next 6 years.) a. What net incremental eamings before depreciation, interest, and taxes will result from the renewal? b. What net incremental operating profits after taxes will result from the renewall? c. What net incremental operating cash inflows will result from the renewal? a. The net incremental profits before depreciation and tax are $ (Round to the nearest dollar.)…
Project Cash Flow The financial staff of Cairn Communications has identified the following information for the first year of the roll-out of its new proposed service: Projected sales Operating costs (not including depreciation) Depreciation $22 million $7 million $4 million $4 million Interest expense The company faces a 25% tax rate. What is the project's operating cash flow for the first year (t = 1)? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as $1,200,000. Round your answer to the nearest dollar. $

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