TB Problem 16-142 (Algo) Tanner Corporation is considering the acquisition of... Tanner Corporation is considering the acquisition of a new machine that is expected to produce annual savings in cash operating costs of $77,000 before income taxes. The machine costs $230,000, has a useful life of five years, and no salvage value. Tanner uses straight-line depreciation on all assets, is subject to a 40% income tax rate, and has an after-tax hurdle rate of 10%. Year 1 2 3 4 FV of $1 at FV of an ordinary annuity PV of $1 at PV of an ordinary annuity at 10% at 10% 10% 1.100 1.210 1.331 1.464 1.611 1.772 1.000 2.100 3.310 4.641 6.105 7.716 A. Rate of return B. Net present value 10% 0.909 0.826 0.751 0.683 0.621 8.564 Required: A. Compute the machine's accounting rate of return on the initial investment. B. Compute the machine's net present value. Note: For all requirements, do not round intermediate calculations. Round final answers to whole number. Answer is complete but not entirely correct. 14,899 0.989 1.736 2.487 3.170 3.791 4.355

TB Problem 16-142 (Algo) Tanner Corporation is considering the acquisition of... Tanner Corporation is considering the acquisition of a new machine that is expected to produce annual savings in cash operating costs of $77,000 before income taxes. The machine costs $230,000, has a useful life of five years, and no salvage value. Tanner uses straight-line depreciation on all assets, is subject to a 40% income tax rate, and has an after-tax hurdle rate of 10%. Year 1 2 3 4 FV of $1 at FV of an ordinary annuity PV of $1 at PV of an ordinary annuity at 10% at 10% 10% 1.100 1.210 1.331 1.464 1.611 1.772 1.000 2.100 3.310 4.641 6.105 7.716 A. Rate of return B. Net present value 10% 0.909 0.826 0.751 0.683 0.621 8.564 Required: A. Compute the machine's accounting rate of return on the initial investment. B. Compute the machine's net present value. Note: For all requirements, do not round intermediate calculations. Round final answers to whole number. Answer is complete but not entirely correct. 14,899 0.989 1.736 2.487 3.170 3.791 4.355

Fundamentals Of Financial Management, Concise Edition (mindtap Course List)

10th Edition

ISBN:9781337902571

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter12: Cash Flow Estimation And Risk Analysis

Section: Chapter Questions

Problem 11P: REPLACEMENT ANALYSIS St. Johns River Shipyards is considering the replacement of an 8-year-old...

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3 Problem 16-142 (Algo) Tanner Corporation is considering the acquisition of... nner Corporation is considering the acquisition of a new machine that is expected to produce annual savings in cash operating costs $55,000 before income taxes. The machine costs $150,000, has a useful life of five years, and no salvage value. Tanner uses raight-line depreciation on all assets, is subject to a 10% Income tax rate, and has an after-tax hurdle rate of 10%. Year 123456 FV of $1 at FV of an ordinary annuity PV of $1 at PV of an ordinary annuity at 10% at 10% 10% 1.100 1.210 1.331 1.464 1.611 1.772 1.000 2.100 3.310 4.641 6.105 7.716 A. Rate of return B. Net present value 10% 0.909 0.826 0.751 0.683 0.621 0.564 equired: Compute the machine's accounting rate of return on the initial investment. . Compute the machine's net present value. Note: For all requirements, do not round Intermediate calculations. Round final answers to whole number. % 0.909 1.736 2.487 3.170 3.791 4.355 www
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A company has purchased a machine (CCA rate 24%) at $300,000 and has a tax rate of 33.00%. By how much will the NPV change if the company is able to obtain a $13,000 salvage value for its machine at the end of the project's life in Year 4? Assume a discount rate of 11.20% and that all else remains the same. Question 10Answer a. $8,502 b. $10,415 c. -$1,913 d. $6,589 e. $10,075
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#17 Daily Enterprises is purchasing a $10.51 million machine. It will cost $50,155.00 to transport and install the machine. The machine has a depreciable life of five years using the straight-line depreciation and will have no salvage value. The machine will generate incremental revenues of $4.48 million per year along with incremental costs of $1.46 million per year. Daily's marginal tax rate is 34.00%. The cost of capital for the firm is 15.00%. (answer in dollars..so convert millions to dollars) What is the year 0 cash flow for the project? Submit Answer format: Currency: Round to: 2 decimal places.
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Payback; ARRPortsmouth Port Services creates and maintains shipping channels at various ports around the world. The company is considering the purchase of a $72,000,000 ocean-going dredge that has a five-year life and no salvage value. The company depreciates assets on a straight-line basis. This equipment’s expected annual cash flow on a before-tax basis is $18,600,000. Ports-mouth requires that an investment be recouped in less than five years and have a pre-tax accounting rate of return of at least 18 percent.a. Compute the payback period for this equipment.Note: Round your answer to one decimal place (i.e. round 4.3555 to 4.4).Payback period Answer yearsb. Compute the accounting rate of return for this equipment.Note: Round percentage to one decimal point (i.e. round 4.555% to 4.6%).Accounting rate of return Answer%c. Is the equipment an acceptable investment for Portsmouth? Answer
ew-Project Analysis Madison Manufacturing is considering a new machine that costs $350,000 and would reduce pre-tax manufacturing costs by $110,000 annually. Madison would use the 3-year MACRS method to depreciate the machine, and management thinks the machine would have a value of $33,000 at the end of its 5-year operating life. The applicable depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%. Working capital would increase by $35,000 initially, but it would be recovered at the end of the project's 5-year life. Madison's marginal tax rate is 40%, and a 9% cost of capital is appropriate for the project. Assume management is unsure about the $110,000 cost savings - this figure could deviate by as much as plus or minus 20%. Calculate the NPV if cost savings value deviate by plus 20%. Round your answer to the nearest dollar.$ Calculate the NPV if cost savings value deviate by minus 20%. Round your answer to the nearest dollar.$
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
TB Problem 8-139 (Ignore income taxes in this problem.) Alesi Corporation... (Ignore income taxes in this problem.) Alesi Corporation is considering purchasing a machine that would cost $320,430 and have a useful life of 5 years. The machine would reduce cash operating costs by $97,100 per year. The machine would have a salvage value of $107,260 at the end of the project. (Assume the company uses straight-line depreciation.) Required: a. Compute the payback period for the machine. (Round your answer to 2 decimal places.) b. Compute the simple rate of return for the machine. (Round your intermediate answers to nearest whole dollar and your final answer to 2 decimal places.)
1.Gillespie Gold Products, Inc., is considering the purchase of new smelting equipment. The new equipment is expected to increase production and decrease costs, with a resulting increase in profits. First Cost is at $40,000; Savings per year is $10,000; Actual useful life is 5 years; Salvage value is $4000. a.Determine the ATCF using a tax rate of 42% and straight-line method of depreciation. b. If the average yearly inflation rate for the 5-year study period is 3.5%, what is the real-dollar ATCF that is equivalent to the actual-dollar ATCF? The base time period is year zero (b=0). 2.Machine A was purchased last year for $20,000 and had an estimated market value of $2000 at the end of its 6-year useful life. Annual operating costs are $2000. The machine will perform satisfactorily over the next 5 years. A salesperson for another company is offering a replacement, Machine B, for $14,000, with a market value of $1,400 after 5 years. Annual operating costs for Machine B will only be…