Exercise 9-9 (Algo) Return on investment analysis LO A1 A growing chain is trying to decide which store location to open. The first location (A) requires a $500,000 investment in average assets and is expected to yield annual income of $65,000. The second location (B) requires a $200,000 investment in average assets and is expected to yield annual income of $42,000. (1) Compute the expected return on investment for each location. (2) Using return on investment, which location (A or B) should the company open?

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Problem 10-3 Sensitivity Analysis (LO2) A project currently generates sales of $5.3 million, variable costs equal to 50% of sales, and fixed costs of $2.1 million. The firm's tax rate is 35% What are the effects of the following changes on after-tax profits and cash flows? a. Sales increase from $5.3 million to $8.3 million (Round your answers to 3 decimal places. Enter your answers in millions of dollars) After-tax profits After-tax cash flow by by After tax profits After-tax cash flow b. Variable costs increase to 59% of sales (Round your answers to 3 decimal places. Enter your answers in millions of dollars.) milion million bry by million million

Exercise 24-20A (Algo) IRR for investment using Excel LO P4 OptiLux is considering investing in an automated manufacturing system. The system requires an initial investment of $5.0 million, has a 20-year life, and will have zero salvage value. If the system is implemented, the company will save $780,000 per year in direct labor costs. The company requires a 12% return from its investments. Using Excel, compute the internal rate of return for the proposed investment. (Round your answer to 2 decimal places.) Internal rate of return

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Problem 2-19A (Algo) Context-sensitive nature of cost behavior classifications LO 2-1 Vernon Bank's start-up division establishes new branch banks. Each branch opens with three tellers. Total teller cost per branch is $96,000 per year. The three tellers combined can process up to 85,000 customer transactions per year. If a branch does not attain a volume of at least 55,000 transactions during its first year of operations, it is closed. If the demand for services exceeds 85,00O transactions, an additional teller is hired and the branch is transferred from the start-up division to regular operations. Required a. What is the relevant range of activity for new branch banks? b. Determine the amount of teller cost in total and the average teller cost per transaction for a branch that processes 55,000, 65,000, 75,000, or 85,000 transactions. In this case (the activity base is the number of transactions for a specific branch), is the teller cost a fixed or a variable cost? c. Determine the…

Exercise 6-17 (Algo) Goodwill effect on ROI LO 9 Assume that fast-food restaurants generally provide an ROI of 16%, but that such a restaurant near a college campus has an ROI of 18% because its relatively large volume of business generates an above-average turnover (sales/assets). The replacement value of the restaurant’s plant and equipment is $200,000. If you were to invest that amount in a restaurant elsewhere in town, you could expect a 16% ROI.Required:a-1. Would you be willing to pay more than $200,000 for the restaurant near the campus? multiple choice Yes No a-2. What is the maximum price you would be willing to pay for the business? (Do not round intermediate calculations.)   b. If you purchased the restaurant near the campus for $225,000 and the fair value of the assets you acquired was $200,000, identify the account along with its balance, that is used to record the additional amount paid over the fair value of the assets.

Ch 25 Pro. 2 Please give me step by step instructions to calculate the answer. Average Rate of Return—Cost Savings Master Fab Inc. is considering an investment in equipment that will replace direct labor. The equipment has a cost of $99,000 with a $9,000 residual value and a 10-year life. The equipment will replace one employee who has an average wage of $22,950 per year. In addition, the equipment will have operating and energy costs of $4,770 per year. Determine the average rate of return on the equipment, giving effect to straight-line depreciation on the investment. If required, round to the nearest whole percent.__________________ % Liz C

Problem 9-34 Project Evaluation (LO4) The following table presents sales forecasts for Golden Gelt Giftware. The unit price is $40. The unit cost of the giftware is $25. Year 1 2 3 4 Thereafter Unit Sales 25,000 45,000 29,000 5,000 0 It is expected that net working capital will amount to 20% of sales in the following year. For example, the store will need an initial (Year O) investment in working capital of .20 × 25,000 × $40 = $200,000. Plant and equipment necessary to establish the giftware business will require an additional investment of $275,000. This investment will depreciate on the MACRS schedule over 3 years. After 4 years, the equipment will have an economic and book value of zero. The firm's tax rate is 30%. The discount rate is 20%. Use the MACRS depreciation schedule. a. What is the net present value of the project? Note: Do not round intermediate calculations. Round your answer to the nearest whole dollar amount. a. Net present value b. Increase in NPV

137 Exercise 4-24 The Sonia Company has two product lines, high-speed printers and electronic typewriters. The company's market rescarch department prepared the following sales forecast for the coming year, 2021. High-speed Printers Electronic Typewriters 170,000 40,000 Industry's total sales forecast Company's share in the market Sales price per unit 10% 25% P3,000 P5,000 The sales force submitted the following estimates: High-speed Printers 2,400 6,000 3,600 12,000 Electronic Typewriters Luzon 3,600 Visayas Mindanao 8,400 3,000 15,000 Total To establish an acceptable forecast, the budget director averages the two estimates. The resulting forecast is then broken down by territories in the same ratio as reflected in the estimates of the sales forecast. REQUIRED: 1. Prepare a sales budget by sales territory and by product lines for the year 2021. Use the following format: Sonia Company Sales Budget For the Year Ending Dec. 31, 2021 Electronic Typewriters High-speed Printers Units Amount…