rizona Company is considering an investment in new machinery. The annual incremental profits/(losses) relating to the investment are estimated to be:                                   $’000 Year 1                         (11) Year 2                         3 Year 3                         34 Year 4                         47 Year 5                         8   Investment at the start of the project would be $175,000. The investment sum, assuming nil disposal value after five years, would be written off using the straight-line method. The depreciation has been included in the profit estimates above, which should be assumed to arise at each year end.     Required:   A         Compute the net cash flow for each of the five years.                                      Calculate the net present value (NPV) of the investment at a discount rate of 10% per annum (the company’s required rate of return)

ces Finch Manufacturing Company has an opportunity to purchase some technologically advanced equipment that will reduce the company's cash outflow for operating expenses by $1,280,000 per year. The cost of the equipment is $6,820,160.00. Finch expects it to have a 9-year useful life and a zero salvage value. The company has established an investment opportunity hurdle rate of 11 percent and uses the straight-line method for depreciation. (PV of $1 and PVA of $1) Note: Use appropriate factor(s) from the tables provided. Required a. Calculate the internal rate of return of the investment opportunity. Note: Do not round intermediate calculations. b. Indicate whether the investment opportunity should be accepted. a. Internal rate of return b. Should the investment opportunity be accepted? % 4

A division is considering the acquisition of a new asset that will cost $2,960,000 and have a cash flow of $790,000 per year for each of the four years of its life. Depreciation is computed on a straight-line basis with no salvage value. Ignore taxes.   Required: a. & b. What is the ROI for each year of the asset's life if the division uses beginning-of-year asset balances and net book value for the computation? What is the residual income each year if the cost of capital is 8 percent? (Enter "ROI" answers as a percentage rounded to 1 decimal place (i.e., 32.1). Negative amounts should be indicated by a minus sign.)     Year Investment Base ROI Residual Income 1 $2,960,000   %   2     %   3     %   4     %

Most Company has an opportunity to invest in one of two new projects. Project Y requires a $325,000 investment for new machinery with a four-year life and no salvage value. Project Z requires a $325,000 investment for new machinery with a three-year life and no salvage value. The two projects yield the following predicted annual results. The company uses straight-line depreciation, and cash flows occur evenly throughout each year. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)    Project Y Project Z Sales   $ 370,000     $ 296,000   Expenses                 Direct materials     51,800       37,000   Direct labor     74,000       44,400   Overhead including depreciation     133,200       133,200   Selling and administrative expenses     26,000       26,000   Total expenses     285,000       240,600   Pretax income     85,000       55,400   Income taxes (38%)     32,300       21,052   Net income   $ 52,700     $…