The garden supply company is also considering taking out a loan and buying a small truck to save costs on deliveries. The truck costs $60,000 and is expected to earn end of year after tax net cash inflows of $10000, $15000, $20000 and $20000 for the next four years before it wears out sufficiently to be unreliable and must be sold for an estimated $10000 (after tax).                                                                                                                                                                                           Required e. What additional advice would you give management if the required payback period was three years? Please show all workings

Q: g out a loan and buying a small truck to save costs on deliveries. The truck costs $60000 and is…

A: NPV stands for net present value which implies the concept of evaluating the value of future…

Q: Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost…

A: Given that, Cost of grill = $35000 Depreciation = Straight line basis over 3 years Sale value after…

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A: Present value of annuity is the current value of the future payments that are calculated using the…

Q: Johnny's lunches are considering purchasing a new energy-efficient grill. The grill will cost $49000…

A: NPV  Its usage is done for project’s profitability analysis in investment planning and in capital…

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A: Here, Initial Investment is $595,000 Salvage Value of is $81,000 Savings before taxes every year is…

Q: Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost…

A: The capital budgeting is a technique that helps to analyze the profitability of the project.

Q: templating the purchase of a new $545,000 computer-based order entry system. The system will be…

A: IRR is a rate where present value of cashinfows is equal to present value of cashoutflows.

Q: Lou Lewis, the president of Lewisville Company has asked you to give him an analysis of the best use…

A: Net Present Value - An investment proposal's net present value can be calculated by adding up all of…

Q: The garden supply company is also considering taking out a loan and buying a small truck to save…

A: Cost of Truck is $60,000 Estimated after tax selling price of truck is $18,000 Project life is 4…

Q: Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost…

A: Formulas:

Q: , calculate the net investment for the new line.

A: Information Provided: Existing line cost = $600,000 Existing line book value = $200,000 Salvage…

Q: What are the operating cash flows in each year? b. What are the total cash flows in each year? c.…

A: Operating Cash Flows: It computes whether operations of the company can be sustained and grow…

Q: Ignore income taxes in this problem.) Your Company has a truck that needs a new engine that would…

A: We have to find out present value of both trucks and from that we can get net present value.

Q: Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost…

A: Operating cash flow :- Operating cash flow (OCF) is a proportion of the measure of money produced by…

Q: (Ignore income taxes in this problem.) Your Company has a truck that needs a new engine that would…

A: Given Discount rate = 6% New engine = 35000 Life = 5 years Annual operating expenses = 8500 Salvage…

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A: Internal Rate of Return is the rate of interest at which the net present value of a project becomes…

Q: 3. The garden supply company is also considering taking out a loan and buying a small truck to save…

A:

Q: NATO Co.’s business is booming, and it needs to raise more capital.  The company purchases supplies…

A: Here, Discount Rate is 1% Days of Discount is 10 days Days of Payment without adverse effect is 30…

Q: Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost…

A: Data given: Cost = $47,000 Savings on account of purchase = $23,500 Tax rate = 30%   Working:…

Q: A developer is deciding whether to purchase some heavy-duty landscaping equipment. The alternative…

A: Computation:

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A: Net present value commonly known as NPV refers to the amount left after subtracting the present…

Q: Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost…

A: Formulas:

Q: Your firm spends $500,000 per year (end of the year payment) in regular maintenance of its…

A: Future value of uniform annual recurring cost is given below formula:F=R1+in-1iWhere,F=Future…

Q: Suppose you are a financial manager at a car rental company. The company recently purchased a batch…

A: The break even point rental would be -   Break even point rental  ( after tax )=Cost of asset - PV…

Q: seful life of the truck by 5 years. As an alternative, Your Company could buy a brand new truck for…

A: We have to find out present value of both trucks and from that we can get net present value.   Given…

Q: Johnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will cost…

A: The operating cash flows is calculated as net Income plus depreciation, total cash flows would be…

Q: Firm Z has invested $4 million in marketing campaign to assess the demand for the product Minish.…

A: Cash Flow - The net inflow or outflow of money during a given period is known as cash flow. It is…

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A: Net present value is differences between present value of cash flow and initial investment.

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A: Since you have posted a question with multiple sub-parts, we will solve first three subparts for…

Q: The garden supply company is also considering taking out a loan and buying a small truck to save…

A: The question is based on the concept of NPV. As per Bartleby guidelines we are allowed to answer…

Q: Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost…

A: Operating cash flow refers to the cash generated by the company from its normal business operations.…

Q: of the following five years, with no salvage value for the equipment and no recovery of operating…

A:

Q: A sales engineer has the following alternatives to consider in touring his sales territory. A. Buy a…

A: Les Assume X to be the number of days car used per year. After-tax cash flows of automobiles in…

Q: A cooperative that makes value-added products like jams and jellies has voted to purchase a new…

A: In the given question we are provided with the data of a cooperative which is involved in the…

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A: A lease agreement laying out the terms under which one gathering consents to lease property…

Q: Your firm is contemplating the purchase of a new $575,000 computer-based order entry system. The…

A: Savings before tax = $ 176,000 Purchase Price = $ 575,000 Tax Rate = 23% Salvage Value = $60,000…

Q: Your firm is contemplating the purchase of a new $605,000 computer-based order entry system. The…

A: Internal Rate of Return : It show the how much on investment amount project will return and it also…

Q: Your firm spends $600,000 per year (end of the year payment) in regular maintenance of its…

A: Internal Rate of Return (IRR) is defined as the discount rate which produces a zero NPV. Decision…

Q: our firm spends $474,000 per year in regular maintenance of its equipment. Due to the economic​…

A: The question is based on the concept of capital budgeting of long term investment decision. Internal…

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A: Discounting is a technique through which PV of future amount is computed by consider appropriate…

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A: Given information: Cost of equipment is $32,000 Depreciated over 3 years Scrap value after year 5 is…

Q: Firm Z has invested $4 million in marketing campaign to assess the demand for the product Minish.…

A: NPV  is defined as the sum of the present values of all future cash inflows  less the sum of the…

Q: A drug store is looking into the possibility of installing a “24/7” automated prescription refill…

A: Given:   Projected increase in revenues 20000 Expected annual costs 5000 Depreciation Method…

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A: To grow, firm starts various new projects. Firm can do the business at least situation of not loss…

Q: Johnson Hardware wants to construct a new building at a second location. If construction could begin…

A: Inflation rate = 3% Cost of New Building = $500,000 Down Payment required = 20% Monthly Investment =…

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A: Calculating the of the depreciation expenses for the equipment. We have,Depreciation expenses =…

Q: Your firm spends $800,000 per year (end of the year payment) in regular maintenance of its…

A: Using Excel IRR function

Q: Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost…

A: Computation of the operating cash flows in each year are shown as below: Formula sheet is annexed…

Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.