Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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- The expected average rate of return for a proposed investment of $446,000 in a fixed asset with a useful life of 4 years, straight-line depreciation, no residual value, and an expected total income of $379,840 for the 4 years is (round to two decimal places) a.0.85% b.1.70% c.21.29% d.42.58%arrow_forwardThe expected average rate of return for a proposed investment of $5,090,000 in a fixed asset, using straight-line depreciation, a useful life of 20 years, no residual value, and an expected total income of $10,180,000 over the 20 years, is (round to two decimal places) a.20.00% b.1.00% c.10.00% d.40.00%arrow_forwardZLX is evaluating an investment and has generated the following: Initial investment at time t=0 is $2,000,000 Life of project is 8 years Initial investment depreciated to $0 via straight-line over entire life NWC investment required = $0.00 Expected market salvage value of investment assets = $0.00 Starting 1-year from today, and remaining constant over project life: Incremental sales as a result of investment = $1,600,000 / year Incremental expenses as a result of investment = $1,100,000 / year firm' tax rate = 28% What is the IRR of this investment? Enter rate in decimal form, rounded to fourth digit, as in "0.1234"arrow_forward
- Please read instructions and answer each question show work.arrow_forwardConsider two air-conditioning systems with the cash flow estimates as given below. Use AW analysis to determine the sensitivity of the economic decision to MARR values of 4%, 6%, and 8% per year. Air-Conditioning System 1 System First cost, $ AOC, $ per year Salvage value, $ New compressor and motor cost at midlife, $ Life, years -10,000 -500 -100 -1,850 8 The annual worth of air-conditioning system 1 when the MARR is 4% is $ The annual worth of air-conditioning system 2 when the MARR is 4% is $ The annual worth of air-conditioning system 1 when the MARR is 6% is $ The annual worth of air-conditioning system 2 when the MARR is 6% is $ The annual worth of air-conditioning system 1 when the MARR is 8% is $ The annual worth of air-conditioning system 2 when the MARR is 8% is $ Air-Conditioning System 2 -14,000 -85 -300 -2,540 12arrow_forwardThe information below relates to the purchase of equipment: investment in the project: $10,000 Net annual cash inflows: 2,400 Working capital required: 5,000 Salvage value of the equipment: 1,000 Life of the project: 8 years At the completion of the project, the working capital will be released for use elsewhere. Compute the net present value of the project, using a discount rate of 10% $606 $8,271 ($1,729) $1,729arrow_forward
- please detail solution and explnationarrow_forwardThe expected average rate of return for a proposed investment of $652,000 in a fixed asset, with a useful life of 4 years, straight-line depreciation, no residual value, and an expected total net income of $241,000 for the 4 years, is: a. 13.90% b. 9.24% c. 36.96% d. 18.48%arrow_forwardHelp please The following details relate to a particular asset Future Cash flows (per annum) 90,000 Expected period of cash flows 3 years Discount Rate 10% Open market price of asset 210,000 Cost of asset 630,000 Accumulated depreciation 450,000 Calculate both : a)determine the recoverable amount for this asset b)Determine whether the asset is impairedarrow_forward
- The expected average rate of return for a proposed investment of $786,000 in a fixed asset, with a useful life of 4 years, straight-line depreciation, no residual value, and an expected total net income of $282,000 for the 4 years, is (round to two decimal points). a.35.88% b.8.97% c.13.90% d.17.94%arrow_forwardI will rate. Solve correctly and show all works.arrow_forwardExplorer Company is considering the following investment proposal: Initial investment: Depreciable assets (straight-line) $28,800 Working capital 3,200 Operations (per year for 4 years): Cash receipts $20,000 Cash expenditures 8,800 Disinvestment: Salvage value of equipment $2,400 Recovery of working capital 3,200 Discount rate: 10 percent Additional information for interest rate of 10 percent and four time periods: Present value of $1 0.68301 Present value of an annuity of $1 3.16987 What is the net present value for the investment? Select one: a. $14,658 b. $35,503 c. $3,825 d. $7,327arrow_forward
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