Exercise 24-2 (Algo) Payback period, equal cash flows, and depreciation adjustment LO P1Quary Company is considering an investment in machinery with the following information.Initial investmentUseful lifeSalvage valueExpected sales per yearRequired A Required B(a) Compute the investment's annual income and annual net cash flow.(b) Compute the investment's payback period.$ 380,000Complete this question by entering your answers in the tabs below.Annual Amounts9 years$ 20,00019,000 unitsExpensesMaterials, labor, and overhead (except depreciation)Depreciation-MachinerySelling, general, and administrative expensesSelling price per unitCompute the investment's annual income and annual net cash flow.IncomeNet cash flowRequired A$Income0$Cash FlowRequired B>0$ 85,50040,0009,500$ 10 Exercise 24-2 (Algo) Payback period, equal cash flows, and depreciation adjustment LO P1Quary Company is considering an investment in machinery with the following information.Initial investmentUseful lifeSalvage valueExpected sales per year$ 380,000Required A Required B9 years$ 20,00019,000 units(a) Compute the investment's annual income and annual net cash flow.(b) Compute the investment's payback period.Complete this question by entering your answers in the tabs below.Numerator:Compute the payback period for this investment.Materials, labor, and overhead (except depreciation)Depreciation-MachinerySelling, general, and administrative expensesSelling price per unitPayback PeriodDenominator:< Required A= Payback period=Required B >$ 85,50040,0009,500$ 10

A cash flow statement is very important tool used for managing finances by tracking the cash flow…

Quary Company is considering an investment in machinery with the following information. $ 380,000 9 years $ 20,000 19,000 units Initial investment Useful life Salvage value Expected sales per year a) Compute the investment's annual income and annual net cash flow. b) Compute the investment's payback period. Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Selling price per unit Complete this question by entering your answers in the tabs below. Required A Required B Compute the investment's annual income and annual net cash flow. Annual Amounts Income Cash Flow $ 85,500 40,000 9,500 $ 10

Quary Company is considering an investment in machinery with the following information. $ 380,000 9 years $ 20,000 19,000 units Initial investment Useful life Salvage value Expected sales per year a) Compute the investment's annual income and annual net cash flow. b) Compute the investment's payback period. Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Selling price per unit Complete this question by entering your answers in the tabs below. Required A Required B Compute the investment's annual income and annual net cash flow. Annual Amounts Income Cash Flow $ 85,500 40,000 9,500 $ 10

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 14E

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Required information Problem 24-2A (Algo) Payback period, accounting rate of return, net present value, and net cash flow calculation LO P1, P2, P3 [The following information applies to the questions displayed below.] Project Y requires a $331,500 investment for new machinery with a four-year life and no salvage value. The project yields the following annual results. Cash flows occur evenly within eath year. (PV of $1. FV of $1. PVA of $1. and EVA of $1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Problem 24-2A (Algo) Part 2 2. Determine Project Y's payback period. Project Y Numerator: initial investment $ Payback Period 1 331,500/ Denominator: Annual net cash flow Project Y $ 350,000 156,800 82,875 25,000 $ 85,325 Payback Period
eBook Show Me How Print Item Determine Cash Flows Marigold Inc. is planning to invest in new manufacturing equipment to make a new garden tool. The garden tool is expected to generate additional annual sales of 9,700 units at $52 each. The new manufacturing equipment will cost $210,100 and is expected to have a 10-year life and $16,100 residual value. Selling expenses related to the new product are expected to be 4% of sales revenue. The cost to manufacture the product includes the following on a per-unit basis: Direct labor $8.80 Direct materials 28.90 Fixed factory overhead-depreciation 2.00 Variable factory overhead 4.50 Total $44.20 Determine the net cash flows for the first year of the project, Years 2-9, and for the last year of the project. Use a minus sign to indicate cash outflows. Do not round your intermediate calculations but, if required, round your final answer to the nearest dollar. Marigold Inc. Net Cash Flows Year 1 Years 2-9 Last Year Initial investment Operating cash…
Required information Problem 24-2A (Algo) Payback period, accounting rate of return, net present value, and net cash flow calculation LO P1, P2, P3 [The following information applies to the questions displayed below.] Project Y requires a $301,500 investment for new machinery with a four-year life and no salvage value. The project yields the following annual results. Cash flows occur evenly within each year. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Problem 24-2A (Algo) Part 4 Years 1-4 4. Determine Project Y's net present value using 9% as the discount rate. (Do not round intermediate calculations. Round your present value factor to 4 decimals and final answers to the nearest whole dollar.) Initial investment Net present value Net Cash Flows X Present…
Required information Problem 24-2A (Algo) Payback period, accounting rate of return, net present value, and net cash flow calculation LO P1, P2, P3 [The following information applies to the questions displayed below) Project Y requires a $316,500 investment for new machinery with a six-year life and no salvage value. The project yields the following annual results Cash flows occur evenly within each year of $1. EV of $1 PVA of end EVA of Use appropriate factor(s) from the tables provided.) Sales of now product Екрепко Depreciation Machinery Project Problem 24-2A (Algo) Part 3 3. Compute Project Y's accounting rete of retum $137,35 Age of
26 Exercises 3, 5-7, 14 &18 & 15, Tableau D...i bok int rint rences Information for two alternative projects involving machinery investments follows: Initial investment Salvage value Annual income Required A Project 1 $ (122,000) Required B Project 1 Project 2 0 15,250 a. Compute accounting rate of return for each project. b. Based on accounting rate of return, which project is preferred? Complete this question by entering your answers in the tabs below. Project 2 $ (92,000) 12,000 12,480 Compute accounting rate of return for each project. Numerator: Saved Accounting Rate of Return I < Prev Denominator: 3 of 9 IL Next Accounting rate of return
ime Value of Money and CVP Analysis Assignment i Quary Company is considering an investment in machinery with the following information. The company's required rate of return 14%. (PV of $1, FV of $1, PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Initial investment Useful life Salvage value Expected sales per year $ 258,000 Required A Required B 9 years $ 25,800 12,000 units Years 1-9 Year 9 salvage Totals Complete this question by entering your answers in the tabs below. a. Compute the investment's net present value. b. Using the answer from part a, is the investment's internal rate of return higher or lower than 14%? Hint: It is not necessary to compute the IRR to answer this question. Materials, labor, and overhead (except depreciation) Depreciation Machinery Compute the investment's net present value. Note: Negative net present values should be indicated with a minus sign. Round your present value factor to 4 decimals. Round your answers to the…
Exercise 26-19 (Algo) Net present value; internal rate of return; equal cash flows LO P3, P4 Quary Company is considering an investment in machinery with the following information. The company's required rate of return is 14%. (PV of $1, FV of $1. PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Initial investment Useful life Salvage value Expected sales per year $ 304,000 9 years $ 30,400 12,000 units Years 1-9 Year 9 salvage Totals Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Selling price per unit a. Compute the investment's net present value. b. Using the answer from part a, is the investment's internal rate of return higher or lower than 14% ? Hint: It is not necessary to compute the IRR to answer this question. Complete this question by entering your answers in the tabs below. Net Cash Flows Required A Required 8 Compute the investment's net present value. Note:…
A firm has projected the following financials for a possible project: YEAR Sales Cost of Goods S&A Depreciation Investment in NWC Investment in Gross PPE 0 1,130.00 105,468.00 1 132,716.00 Submit 549.00 2 62,780.00 62,780.00 30,000.00 30,000.00 30,000.00 21,093.60 21,093.60 21,093.60 Answer format: Currency: Round to: 2 decimal places. 3 132,716.00 132,716.00 132,716.00 549.00 What is the NPV of the project? (Hint: Be careful about rounding the WACC here!) 4 62,780,00 62,780.00 62,780.00 30,000.00 549.00 21,093.60 549.00 5 132,716.00 The firm has a capital structure of 37.00% debt and 63.00% equity. The cost of debt is 9.00%, while the cost of equity is estimated at 15.00%. The tax rate facing the firm is 38.00%. (Assume that you can't recover the final NWC position in year 5. i.e. only consider the change in NWC for each year) 30,000.00 21,093.60 549.00
Cost of plant R3 600 000Import duty R 900 000Installation cost R 300 000Net cash flows Year 1-10 R1 400 000 per annum (excluding residual value)Residual/scrap value R1 200 000The company uses straight-line depreciation. The cost of capital for projects of similar risk is 18%. 2.1 Calculate the investment’s Accounting Rate of Return (ARR). Briefly explain if the ARR is acceptable or not based on a target rate of return of 40%. Assume a payback period of 4 years. Determine the payback period and state if the investment isacceptable or not. Calculate and comment on the viability of the proposed investment based on the net present value(NPV) method. Discuss whether the advantages of using the NPV method outweigh the disadvantages
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?
METHODS THAT CONSIDER TIME VALUE OF MONEY Two investment proposals have been made and the following data thereon are given: Project ALPHA Project BETA Investment P123,417 P155,934 Depreciable assets included in the investment figure 60,000 72,000 Economic life 8 years 12 years Annual sales revenue P65,000 P78,000 Annual out-of-pocket operating cost 36,000 42,500 Income tax rate 35% Cost of capital 10% Determine which proposal is the better one based on: a. Internal rate of return b. Net present value c. Profitability index d. Discounted payback period
Quary Company is considering an investment in machinery with the following information. Initial investment Useful life Salvage value Expected sales per year (a) Compute the investment's annual income and annual net cash flow. (b) Compute the investment's payback period. Required A Required B Complete this question by entering your answers in the tabs below. $ 335,000 9 years $ 20,000 16,750 units Annual Amounts Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Selling price per unit Compute the investment's annual income and annual net cash flow. Expenses Income Net cash flow $ 75,375 35,000 8,375 $ 10