Net present value methodThe following data are accumulated by Geddes Company in evaluating the purchase of $150,000 of equipment, having a four-year useful life:Year 1Year 2DONet IncomeNet present value$44,00027,500Year 3.13,500Year 44,000This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, andinput your answers in the questions below.Net Cash Flow$81,50065,00051,00041,500XOpen spreadsheeta. Assuming that the desired rate of return is 10%, determine the net present value for the proposal. If required, round to thenearest dollar.b. Would management be likely to look with favor on the proposal?Yes✔, the net present value indicates that the return on the proposal is greaterrate of return of 10%.than the minimum desired

The net present value indicates whether the project is giving a profit or loss. in which we can…

Net present value method The following data are accumulated by Geddes Company in evaluating the purchase of $150,000 of equipment, having a four- year useful life: Net Cash Flow Year 1 $44,000 $81,500 Year 21 27,500 65,000 Year 3 13,500 51,000 Year 4 4,000 41,500 This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. X Open spreadsheet Net Income a. Assuming that the desired rate of return is 10%, determine the net present value for the proposal. If required, round to the nearest dollar. Net present value b. Would management be likely to look with favor on the proposal? Yes the net present value indicates that the return on the proposal is greater rate of return of 10%. ✔than the minimum desired

Net present value method The following data are accumulated by Geddes Company in evaluating the purchase of $150,000 of equipment, having a four- year useful life: Net Cash Flow Year 1 $44,000 $81,500 Year 21 27,500 65,000 Year 3 13,500 51,000 Year 4 4,000 41,500 This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. X Open spreadsheet Net Income a. Assuming that the desired rate of return is 10%, determine the net present value for the proposal. If required, round to the nearest dollar. Net present value b. Would management be likely to look with favor on the proposal? Yes the net present value indicates that the return on the proposal is greater rate of return of 10%. ✔than the minimum desired

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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Consider the following two machines a company can purchase. The following table provides the costs of the machines and the annual cash flows obtained from the machines over their lifetimes. Machine A Initial Cost $19,000 Cash Inflows per year Years of Service Machine B $9,000 $6,000 $10,000 6 5 The discount rate is 7%. What is the net present value for each machine? Machine A Number Machine B = Number Click "Verify" to proceed to the next part of the question. This question has 3 parts (i.e., you will need to click "verify" 3 times)
The following data are accumulated by Lingle Company in evaluating the purchase of $180,000 of equipment having a 4-year useful life: Net Income Net Cash Flow Year 1 $51,000 $96,000 Year 2 33,000 78,000 Year 3 15,000 60,000 Year 4 3,000 48,000 Assuming that the desired rate of return is 15%, determine the net present value for the proposal. Use the table of the present value of $1 appearing in Exhibit 2 of this chapter.
Determine cash flows Natural Foods Inc. is planning to invest in new manufacturing equipment to make a new garden tool. The new garden tool is expected to generate additional annual sales of 5,000 units at 18 each. The new manufacturing equipment will cost 120,000 and is expected to have a 10-year life and a 17,000 residual value. Selling expenses related to the new product are expected to be 3% of sales revenue. The cost to manufacture the product includes the following on a per-unit basis: Determine the net cash flows for the first year of the project, Years 29, and for the last year of the project.
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