The management of Cooper Corporation is considering the purchase of a new machine costing $420,000. The company's desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to this information, use the following data in determining the acceptability of the proposed purchase: Year Operating Income Net Cash Flow 1 $100,000 $180,000 2 40,000 120,000 3 20,000 100,000 4 10,000 90,000 5 10,000 90,000 What is the present value index for this investment?

Domestic

Calculate the present worth of all costs for a newly acquired machine with an initial cost of $24,000, no trade-in value, a life of 11 years, and an annual operating cost of $14,000 for the first 6 years, increasing by 10% per year thereafter. Use an interest rate of 10% per year.   The present worth of all costs for a newly acquired machine is determined to be $

Assume that a company purchased a new machine for $19,000 that has a salvage value of $3,000 at the end of its useful life of five years. The machine is expected to save the company $6,000 a year in cash operating costs for five years. The company’s discount rate is 15%. The profitability index of this investment opportunity is closest to:

Zenith Investment Company is considering the purchase of an office property. It has done an extensive market analysis and has estimated that based on current market supply or demand relationships, rents, and its estimate of operating expenses, annual NOI will be as follows:  Year NOI 1 $ 1,030,000 2 1,030,000 3 1,030,000 4 1,210,000 5 1,260,000 6 1,310,000 7 1,349,000 8 1,389,170 A market that is currently oversupplied is expected to result in cash flows remaining flat for the next three years at $1,030,000. During years 4, 5, and 6, market rents are expected to be higher. It is further expected that beginning in year 7 and every year thereafter, NOI will tend to reflect a stable, balanced market and should grow at 3 percent per year indefinitely. Zenith believes that investors should earn a 12 percent return (r) on an investment of this kind.Required: a. Assuming that the investment is expected to produce NOI in years 1 to 8 and is expected to be owned for…

You are an investor buying an existing office building. You determine that year 1 NOI will be $44,000 and that you the going in CAP rate is 4.1%. Using the Direct Capitalization approach, what is the estimated value of the building? You also determine that the Effective Gross Income will be $80,000 and the Effective Gross Income Multiplier is 13. What is the value using the EGIM muliplier approach? You also determine that the Annual Debt Service is 35,000. What is the Debt Service Coverage Ratio?

You must evaluate a proposal to buy a new milling machine. The purchase price of the milling machine, including shipping and installation costs, is $104,000, and the equipment will be fully depreciated at the time of purchase. The machine would be sold after 3 years for $43,000. The machine would require a $5,500 increase in net operating working capital (increased inventory less increased accounts payable). There would be no effect on revenues, but pretax labor costs would decline by $56,000 per year. The marginal tax rate is 25%, and the WACC is 8%. Also, the firm spent $4,500 last year investigating the feasibility of using the machine. a. How should the $4,500 spent last year be handled? I. Last year's expenditure is considered a sunk cost and does not represent an incremental cash flow. Hence, it should not be included in the analysis. II. The cost of research is an incremental cash flow and should be included in the analysis. III. Only the tax effect of the research expenses…

Godo

Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $495,000 cost with an expected four-year life and a $10,000 salvage value. Additional annual information for this new product line follows. (PV of $1, FV of $1, PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Required: 1. Determine income and net cash flow for each year of this machine's life. $ 1,960,000 1,502,000 121,250 167,000 2. Compute this machine's payback period, assuming that cash flows occur evenly throughout each year. 3. Compute net present value for this machine using a discount rate of 8%. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Determine income and net cash flow for each year of this machine's…

FNV Industries is considering the purchase of a new processing machine. The initial cost of the machine will be $246,410. The expected increase in net cash inflow as a result of the purchase is: $90,666 for the first year, $73,107 for the second year The machine will have a salvage value of $0 at the end of the second year. Assume that all cash inflows are received at the end of the year. At a discount rate of 6%, what is the net present value of the machine? Round your answer to the nearest whole dollar.