Tempura, Inc., is considering two projects. Project A requires an investment of $48,000. Estimated annual receipts for 20 years are$19.000; estimated annual costs are $12,500. An alternative project, B, requires an investment of $77,000, has annual receipts for 20years of $23,000, and has annual costs of $18,000. Assume both projects have a zero salvage value and that MARR is 11.0 %/year.Click here to access the TVM Factor Table CalculatorPart aWhat is the present worth of each project?Project A. $Project B: $

Net annual receipt from project A = $(19,000 - 12,500) = $6,500Net annual receipt from project B =…

Answered: Tempura, Inc., is considering two…

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter26: Capital Investment Analysis

Section: Chapter Questions

Problem 2CMA: Staten Corporation is considering two mutually exclusive projects. Both require an initial outlay of...

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Dauten is offered a replacement machine which has a cost of 8,000, an estimated useful life of 6 years, and an estimated salvage value of 800. The replacement machine is eligible for 100% bonus depreciation at the time of purchase- The replacement machine would permit an output expansion, so sales would rise by 1,000 per year; even so, the new machines much greater efficiency would cause operating expenses to decline by 1,500 per year The new machine would require that inventories be increased by 2,000, but accounts payable would simultaneously increase by 500. Dautens marginal federal-plus-state tax rate is 25%, and its WACC is 11%. Should it replace the old machine?
Roberts Company is considering an investment in equipment that is capable of producing more efficiently than the current technology. The outlay required is 2,293,200. The equipment is expected to last five years and will have no salvage value. The expected cash flows associated with the project are as follows: Required: 1. Compute the projects payback period. 2. Compute the projects accounting rate of return. 3. Compute the projects net present value, assuming a required rate of return of 10 percent. 4. Compute the projects internal rate of return.
Tempura, Inc., is considering two projects. Project A requires an investment of $58,000. Estimated annual receipts for 20 years are $20,000; estimated annual costs are $12,500. An alternative project, B, requires an investment of $77,000, has annual receipts for 20 years of $26,000, and has annual costs of $18,000. Assume both projects have a zero salvage value and that MARR is 16.0 %/year. What is the present worth of each project? Project A: $ Project B: $
Tempura, Inc., is considering two projects. Project A requires an investment of $50,000. Estimated annual receipts for 20 years are $20,000; estimated annual costs are $12,500. An alternative project, B, requires an investment of $75,000, has annual receipts for 20 years of $28,000, and has annual costs of $18,000. Assume both projects have a zero salvage value and that MARR is 12%/year.a. What is the present worth of each project? b. Which project should be recommended?
Tempura, Inc., is considering two projects. Project A requires an investment of $50,000. Estimated annual receipts for 20 years are $20,000; estimated annual costs are $12,500. An alternative project, B, requires an investment of $75,000, has annual receipts for 20 years of $28,000, and has annual costs of $18,000. Assume both projects have zero salvage value and that MARR is 12%/year.a. What is the annual worth of each project? b. Which project should be recommended?
Trailer Treasures Inc. is considering two projects and must do one of them. Project A requires an investment of $35,000. Estimated annual receipts for 5 years are $14,000; estimated annual costs are $4,500. Alternatively, Project B requires an investment of $70,000 has annual receipts for 5 years of $20,000, and has annual costs of $4,500. Assume both proejcts have $10,000 salvage value and that MARR IS 15%/year. 1. What is the annual worth of Project A? 2. What is the annual worth of Project B? 3. Which project should be recommended? Why? Please show work through excel
Delia Landscaping is considering a new 4-year project. The necessary fixed assets will cost $189,000 and be depreciated on a 3-year MACRS and have no salvage value. The MACRS percentages each year are 33.33 percent, 44.45 percent, 14.81 percent, and 7.41 percent, respectively. The project will have annual sales of $126,000, variable costs of $33,700, and fixed costs of $12,700. The project will also require net working capital of $3,300 that will be returned at the end of the project. The company has a tax rate of 21 percent and the project's required return is 9 percent. What is the net present value of this project? ASAP, PLEASE
Delia Landscaping is considering a new 4-year project. The necessary fixed assets will cost $201,000 and be depreciated on a 3-year MACRS and have no salvage value. The MACRS percentages each year are 33.33 percent, 44.45 percent, 14.81 percent, and 7.41 percent, respectively. The project will have annual sales of $138,000, variable costs of $37,300, and fixed costs of $13,000. The project will also require net working capital of $3,600 that will be returned at the end of the project. The company has a tax rate of 23 percent and the project's required return is 10 percent. What is the net present value of this project? Multiple Choice O O O $44,506 $51,532 $48,552 $50,391
Mountain Frost is considering a new project with an initial cost of $205,000. The equipment will be depreciated on a straight-line basis to a zero book value over the four-year life of the project. The projected net income for each year is $20,000, $20,900, $24,600, and $16,900, respectively. What is the average accounting return? Please make sure its correct
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Wendy and Wayne are evaluating a project that requires an initial investment of $795,000 in fixed assets. The project will last for eight years, and the assets have no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 143,000 units per year. Price per unit is $36, variable cost per unit is $28, and fixed costs are $798,975 per year. The tax rate is 30 percent, and the required annual return on this project is 21 percent. The projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/- 14 percent. Required: (a)Calculate the best-case NPV. (Do not round your intermediate calculations.) (Click to select) # (b)Calculate the worst-case NPV. (Do not round your intermediate calculations.) (Click to select) +
Wendy and Wayne are evaluating a project that requires an initial investment of $788,000 in fixed assets. The project will last for nine years, and the assets have no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 155,000 units per year. Price per unit is $45, variable cost per unit is $23, and fixed costs are $801,396 per year. The tax rate is 30 percent, and the required annual return on this project is 17 percent. The projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/- 15 percent. Required: (a)Calculate the best-case NPV. (Do not round your intermediate calculations.) (Click to select) ♥ (b)Calculate the worst-case NPV. (Do not round your intermediate calculations.) (Click to select)

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