Review Question El Dorado Limited This company convened a meeting of its managers and informed them of an opportunity for investment in Lala land . The management accounting department was asked to study and recommend whether this investment is going to be profitable or not . They provide them with the following details: TABLE 1 Capital  Expenditure involved $70000 Maturity period iof the project 4 yrs Revenue $18000 Salary expense $5000 Lease expense annually $3500 Supplies expense $1500 Maintenance expense $900 Utilities $1200 Cost of capital  10% Salvage value 34000 Tax rate 25%     The company will need to spend $6200 on net working capital but this sum will be returned at the end of the period. The estimated sale of the capital asset at the end of the project will be $20000. The company can sublet part of the facilities for $2000 yearly during the project . The capital expenditure is depreciated using  straight line method . REQUIRED Calculate the initial investment Calculate each year cash flow after tax Calculate the terminal value of the project including the ATCF

nitial investment—Basic calculation   Cushing Corporation is considering the purchase of a new grading machine to replace the existing one. The existing machine was purchased 2 years ago at an installed cost of $19,800​; it was being depreciated under MACRS using a​ 5-year recovery period.​ (See table LOADING... for the applicable depreciation​ percentages.) The existing machine is expected to have a usable life of at least 5 more years. The new machine costs $35,900 and requires $4,500 in installation​ costs; it will be depreciated using a​ 5-year recovery period under MACRS. The existing machine can currently be sold for $25,700 without incurring any removal or cleanup costs. The firm is subject to a 40% tax rate. Calculate the initial investment associated with the proposed purchase of a new grading machine. Data table ​(Click on the icon located on the​ top-right corner of the data table below in order to copy its contents into a​ spreadsheet.)   Rounded Depreciation…

Ra Subject - Accounting

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Required information [The following information applies to the questions displayed below.] Montego Production Company is considering an investment in new machinery for its factory. Various information about the proposed investment follows: Initial investment Useful life Salvage value Annual net income generated Montego's cost of capital Assume straight line depreciation method is used. Help Montego evaluate this project by calculating each of the following: $ 860,000 6 years Net Present Value $ 20,000 $ 66,000 11% Required: 4. Recalculate Montego's NPV assuming its cost of capital is 12 percent. (Future Value of $1, Present Value of $1. Future Value Annuity of $1, Present Value Annuity of $1.) Note: Use appropriate factor(s) from the tables provided. Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places.

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Subject: accounting

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