Sommers Company is evaluating a project requiring a capital expenditure of $300,000. The project has an estimated life of 5 years and no salvage value. The estimated net income and net cash flow from the project are as follows: Year Net Income Net Cash Flow 1 $60,000   $120,000   2 50,000   110,000   3 45,000   105,000   4 30,000   90,000   5 20,000   80,000     $205,000   $505,000   The company's minimum desired rate of return for net present value analysis is 12%. The present value of $1 at compound interest of 12% is shown in the table below: Year Present Value of $1 at 12% 1 0.893 2 0.797 3 0.712 4 0.636 5 0.567 a.  Determine the average rate of return on investment, giving effect to depreciation on the investment. Round your answer to two decimal places. fill in the blank 1 % b.  Determine the net present value. $ fill in the blank 2

CJN Corporation is evaluating a project requiring a capital expenditure of $806,250. The project has an estimated life of four years with no residual value at the end of the four years. The estimated net income and net cash flow from the project are as follows:   Year Net Income Net Cash Flow 1 $  75,000 $285,000 2 102,000 290,000 3 109,500 190,000 4     36,000   125,000   $322,500 $890,000   The company's minimum desired rate of return is 12%. The present value of $1 at compound interest of 12% for 1, 2, 3, and 4 years is:  .893,  .797,  .712, and  .636, respectively.   Determine: (a) the average rate of return on investment, and (b) the net present value.   (a)               (b)

Vandezande Incorporated is considering the acquisition of a new machine that costs $470,000 and has a useful life of 5 years with no salvage value. The incremental net operating income and incremental net cash flows that would be produced by the machine are (ignore Income taxes.): Year 1 Year 2 Year 3 Year 4 Year 5 Incremental Net Operating Income $ 78,000 $ 84,000 $ 95,000 $ 58,000 $ 100,000 Assume cash flows occur uniformly throughout a year except for the initial investment. The payback period of this investment is closest to: (Round your answer to 1 decimal place.) Multiple Choice 4.1 years 5.0 years 2.9 years Incremental Net Cash Flows $ 156,000 $ 163,000 $ 175,000 $ 160,000 $ 162,000 21 years

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     $…

A proposed cost-saving device has an installed cost of $795,000. The device will be used in a five-year project but is classified as three-year MACRS property for tax purposes (MACRS schedule). The required initial net working capital investment is $79,000, the tax rate is 22 percent, and the project discount rate is 11 percent. The device has an estimated Year 5 salvage value of $121,000. What level of pretax cost savings do we require for this project to be profitable? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Answer is complete but not entirely correct. Pretax cost savings $ 194.191.50 X

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Windsor Company is considering two capital expenditures. Relevant data for the projects are as follows: Project Initial investment Annual cash inflow Life of project Salvage value A $202,003 $41,080 6 years $0 B $306,910 $49,130 9 years $0 Windsor Company uses the straight-line method to depreciate its assets. Calculate the internal rate of return for each project. (For calculation purposes, use 5 decimal places as displayed in the facto provided, e.g. 1.25125. Round answers to O decimal places, e.g. 15%.)

Iggy Company is considering three capital expenditure projects. Relevant data for the projects are as follows. Project Investment AnnualIncome Life ofProject 22A $243,600 $17,130 6 years 23A 271,500 20,700 9 years 24A 280,600 15,700 7 years Annual income is constant over the life of the project. Each project is expected to have zero salvage value at the end of the project. Iggy Company uses the straight-line method of depreciation.(a) Determine the internal rate of return for each project. (Round answers 0 decimal places, e.g. 13%. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Project Internal Rate ofReturn 22A  % 23A  % 24A  % If Iggy Company’s required rate of return is 11%, which projects are acceptable?