answer quickly Question 44.1. The head of a department wishes to create a sinking fund to replace oldequipment used by his/her department. He/she has estimated that it will cost R3679 253,60 to replace the equipment in three years' time. Given:• The estimated return for the next three years is 6 %.• Compounding is done monthly.• The estimated salvage value of old equipment in three years' time is R80000.What amount must be set aside monthly to make the purchase of the equipmentpossible

In this we will calculate the future value factor and than find out the monthly payment required.

Answered: The head of a department wishes to…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

See similar textbooks

Similar questions

Flounder’s Custom Construction Company is considering three new projects, each requiring an equipment investment of $23,320. Each project will last for 3 years and produce the following net annual cash flows. Year AA BB CC 1 $7,420 $10,600 $13,780 2 9,540 10,600 12,720 3 12,720 10,600 11,660 Total $29,680 $31,800 $38,160 The equipment’s salvage value is zero, and Flounder uses straight-line depreciation. Flounder will not accept any project with a cash payback period over 2 years. Flounder’s required rate of return is 12%.Click here to view PV table.(a)Compute each project’s payback period. (Round answers to 2 decimal places, e.g. 15.25.) AA years BB years CC years Which is the most desirable project? The most desirable project based on payback period is Project AAProject BBProject CC Which is the least desirable project? The least desirable project based on payback period is…
Crane’s Custom Construction Company is considering three new projects, each requiring an equipment investment of $22,220. Each project will last for 3 years and produce the following net annual cash flows. Year AA BB CC 1 $7,070 $10,100 $13,130 2 9,090 10,100 12,120 3 12,120 10,100 11,110 Total $28,280 $30,300 $36,360 The equipment’s salvage value is zero, and Crane uses straight-line depreciation. Crane will not accept any project with a cash payback period over 2 years. Crane’s required rate of return is 12%. (a)Compute each project’s payback period. (Round answers to 2 decimal places, e.g. 15.25.) AA years BB years CC years (b)Compute the net present value of each project. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round final answers to the nearest whole dollar, e.g. 5,275. For calculation purposes, use 5 decimal places as…
1. A company is planning to acquire vehicles for its engineer by buying brand new car and then replacing them every 4 years up to a period of 20 years. The old cars have trade-in value of P300,000.00 at the end of 4 years with a replacement cost of P500,000.00. Annual operating costs including depreciation are estimated P50,000.00. The fund is to invested at 8% compounded annually and should have an excess balance of P150,000.00 at the end of 20 years for emergency fund. Determine the amount needed to push through with the project.
22. A machine, initially costing Php 155000, is set to depreciate Php 20000 every year using sinking fund method. How much must be invested every year to replace the asset with a better but more expensive machine costing Php 250000 after 5 years at an annual rate of 5%. a. Php 41346.88 b. Php 36547.78 c. Php 44487.37 d. Php 37,192.61 е. None of the above
A machine has a first cost of P800,000 and a salvage value of P50,000 at the end of its life after 10 years. The annual saving for the use of the machine amount s to P124,900.97. If the annual maintenance of the machine is P4000 and the sinking fund to recover depreciation earns 6%, compute for the rate of return of investment. Answer: 8%
Crane's Custom Construction Company is considering three new projects, each requiring an equipment investment of $27,280. Each project will last for 3 years and produce the following net annual cash flows. Year AA BB CC 1 $8,680 $12,400 $16,120 2 11,160 12,400 14,880 3 14,880 12,400 13,640 Total $34,720 $37,200 $44,640 The equipment's salvage value is zero, and Crane uses straight-line depreciation. Crane will not accept any project with a cash payback period over 2 years. Crane's required rate of return is 12%. Click here to view PV table. (a) Compute each project's payback period. (Round answers to 2 decimal places, e.g. 15.25.) AA BB BB years years CC years
I need the solution in handwriting The following are the cost of a system and the useful life is five years. The salvage value for depreciation purpose is equal to 25% of the hardware cost Item Cost Hardware $170,000 Training Installation $18,000 $18,000 a) What is the book value of the system at the end of year three if Straight line method is used? b) Suppose that after depreciation of the system for two years with straight line, the company decides to switch to the decline method for the reminder of the system life (depreciation rate 30%). What is the system Book Value at the end of four years? (
A cooling water pumping station at a manufacturing plant in iligan city cost 30,000,000 to construct and it is projected to have 25 year life with an estimated salvage value of 10% of construction cost. Calculate the annual depreciation charge for year 10(d10)using:a.straight line method b.declining balance method c.double declining balance method d.sinking fund at 10% e.sum-of-the-year digit method B.)if the cooling water pumping atation will be book-depreciated to zero over a recovery period of 30 years using the double blance method
a. A new operating system for an existing machine is expected to cost $520,000 and have a useful life of six years. The system yields an incremental after-tax income of $150,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $10,000.b. A machine costs $380,000, has a $20,000 salvage value, is expected to last eight years, and will generate an after-tax income of $60,000 per year after straight-line depreciation. Assume the company requires a 10% rate of return on its investments. Compute the net present value of each potential investment. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)
Wildhorse's Custom Construction Company is considering three new projects, each requiring an equipment investment of $26,840. Each project will last for 3 years and produce the following net annual cash flows. Year AA BB CC 1 $8,540 $12,200 $15,860 2 10,980 12,200 14,640 3 14,640 12,200 13,420 Total $34,160 $36,600 $43,920 The equipment's salvage value is zero, and Wildhorse uses straight-line depreciation. Wildhorse will not accept any project with a cash payback period over 2 years. Wildhorse's required rate of return is 12%. Click here to view PV table. (a) Compute each project's payback period. (Round answers to 2 decimal places, e.g. 15.25.) AA BB years years CC years
a. A new operating system for an existing machine is expected to cost $710,000 and have a useful life of six years. The system yields an incremental after-tax income of $255,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $21,000. b. A machine costs $520,000, has a $20,300 salvage value, is expected to last eight years, and will generate an after-tax income of $78,000 per year after straight-line depreciation. Assume the company requires a 12% rate of return on its investments. Compute the net present value of each potential investment. (PV of $1. FV of $1. PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Complete this question by entering your answers in the tabs below. Required A Required B A new operating system for an existing machine is expected to cost $710,0000 and have a useful life of six years. The system yields an incremental after-tax income of $255,000 each year after deducting its…
a. A new operating system for an existing machine is expected to cost $630,000 and have a useful life of six years. The system yields an incremental after-tax income of $195,000 each year after deducting its straight line depreciation. The predicted salvage value of the system is $26,200 b. A machine costs $540,000, has a $35,000 salvage value, is expected to last eight years, and will generate an after tax income of $82,000 per year after streight-line depreciation Assume the company requires a 12% rate of return on its investments. Compute the net present value of each potential investment (PV of 5), EV of S1, PVA of 31 and EVA of 50 (Use appropriate factor(s) from the tables provided) Complete this question by entering your answers in the tabs below. Required A Required A new operating system for an existing machine is expected to cost $630,000 and have a useful life of six years. The system vieles an incremental after-tax income of $195,000 each year after deducting its…

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS