Intro The local franchise of Jiffy Lube is thinking of buying a new lift for $80,000 that would make it easier to access the oil filter in customers' cars and save labor. The savings would increase over the project's 3-year life, in line with the projected growth of the business: A Part 1 What is the project cash flow in year 3? 0+ decimals Submit Part 2 What is the NPV? 0+ decimals B 1 Year 1 2 Cost savings 20,000 The machine is to be linearly depreciated to zero and will have no resale value after 3 years. The company uses a discount rate of 11% and has a tax rate of 21%. Submit с 2 22,000 D 3 26,400 BAttempt 1/5 BAttempt 1/5

Intro The local franchise of Jiffy Lube is thinking of buying a new lift for $80,000 that would make it easier to access the oil filter in customers' cars and save labor. The savings would increase over the project's 3-year life, in line with the projected growth of the business: A Part 1 What is the project cash flow in year 3? 0+ decimals Submit Part 2 What is the NPV? 0+ decimals B 1 Year 1 2 Cost savings 20,000 The machine is to be linearly depreciated to zero and will have no resale value after 3 years. The company uses a discount rate of 11% and has a tax rate of 21%. Submit с 2 22,000 D 3 26,400 BAttempt 1/5 BAttempt 1/5

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 1PA: Your company is planning to purchase a new log splitter for is lawn and garden business. The new...

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3. A company is planning to purchase a new machine to expand its production and to start anew project. There are two brand available A and B in the market. Both the machines are costing RO 70,000. The following cash inflows are expected to come for both the machines. Advise which machines will be better if the discounting rate is 10% for expansion of this project. Years Machine A Machine B A B 15,000 17,600 20,200 22,000 18,500 20,000 21,500 23,000 14,800 10,600 11,700 11,000 6.
Axel Industries is considering investing in a new machine. It will generate revenues of $100,000 each year and the cost of goods sold will be 60% of sales. The net working capital requirements of the project is 72 days of the sale revenue from year 1 to year 3. What are the NWC needs in Year 0? Select one: a. $0 b. $20 000 c. $400 000 d. $40 000
You have just been offered a contract worth $ 1.15 million per year for 7 years. However, to take the contract, you will need to purchase some new equipment. Your discount rate for this project is 12.4%. You are still negotiating the purchase price of the equipment. What is the most you can pay for the equipment and still have a positive NPV? Question content area bottom Part 1 The most you can pay for the equipment and achieve the 12.4% annual return is $ enter your response here million. Round to two decimal places.)
Give typing answer with explanation and conclusion You have decided to renovate your suites in order to capture more revenue. If it costs $1,000,000 to renovate and you expect to achieve $200,000 in incremental profit per year, what is the net present value of this project over 10 years at a discount rate of 8%?
) Dowling Sportswear is considering building a new factory to produce aluminum baseball bats. This project would require an initial cash outlay of $6,000,000 and would generate annual net cash inflows of $1,100,000 per year for 9 years. Calculate the project's NPV using a discount rate of 7 percent. Question content area bottom Part 1 If the discount rate is 7 percent, then the project's NPV is $enter your response here. (Round to the
The problem A young engineer is considering to built a 25unit apartment near a commercial center. Because of the location, the investment can guarantee a 90% occupancy rate. So then, the project can have an earnings of 20% annually. Other data are the following: Land P10M Building cost Projected Useful life Cost of land after 20 years Cost of Building after 20 years Rent/unit/month 14M 20 years 38M 3.8M 13,000.00 Maintenance/unit/year Property Taxes Building Insurance 2,200.00 2% 0.7% Is this a good investment? Apply the methods of economic studies.
Give me right solution according to the question.... Help me urgenttttttttt Installing an automated production system costing $278,000 is initially expected to save Zia corporation $52,000 in expenses annually. If the system needs $5000 in operating and maintenance costs each year and has a salvage values of $25,000 at Year 10, what is the IRR of this system? If the company wants to earn at least 12% on all investments, should this system be purchased?
Your company is considering undertaking a project to expand an existing product line. The required rate of return on the project is 8% and the maximum allowable payback period is 3 years. Time 0 1 2 3 4 5 6 Cash Flow $(10,000) $2,400 $4,800 $3,200 $3,200 $2,800 $2,400 Questions Evaluate the project using the following method Internal Rate of Return (IRR) should the project be accepted or rejected?
Your company is planning to purchase a new log splitter for is lawn and garden business. The new splitter has an initial investment of $180,000. It is expected to generate $25,000 of annual cash flows, provide incremental cash revenues of $150,000, and incur incremental cash expenses of $100,000 annually. What is the payback period and accounting rate of return (ARR)?
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Gina Ripley, president of Dearing Company, is considering the purchase of a computer-aided manufacturing system. The annual net cash benefits and savings associated with the system are described as follows: The system will cost 9,000,000 and last 10 years. The companys cost of capital is 12 percent. Required: 1. Calculate the payback period for the system. Assume that the company has a policy of only accepting projects with a payback of five years or less. Would the system be acquired? 2. Calculate the NPV and IRR for the project. Should the system be purchasedeven if it does not meet the payback criterion? 3. The project manager reviewed the projected cash flows and pointed out that two items had been missed. First, the system would have a salvage value, net of any tax effects, of 1,000,000 at the end of 10 years. Second, the increased quality and delivery performance would allow the company to increase its market share by 20 percent. This would produce an additional annual net benefit of 300,000. Recalculate the payback period, NPV, and IRR given this new information. (For the IRR computation, initially ignore salvage value.) Does the decision change? Suppose that the salvage value is only half what is projected. Does this make a difference in the outcome? Does salvage value have any real bearing on the companys decision?
The Ulmer Uranium Company is deciding whether or not to open a strip mine whose net cost is $4.4 million. Net cash inflows are expected to be $27.7 million, all coming at the end of Year 1. The land must be returned to its natural state at a cost of $25 million, payable at the end of Year 2. Plot the project’s NPV profile. Should the project be accepted if r = 8%? If r = 14%? Explain your reasoning. Can you think of some other capital budgeting situations in which negative cash flows during or at the end of the project’s life might lead to multiple IRRs? What is the project’s MIRR at r = 8%? At r = 14%? Does the MIRR method lead to the same accept-reject decision as the NPV method?