Walen Co. has intends to purchase a new forklift for $88,000.00 cash. It expects annual net operating cash flows of $13,700 peryear for 8 years, and a salvage value at the end of 8 years of $9,200. Walen uses a 6% discount rate. What is the net present valueof the investment? (For calculation purposes, use five decimal places as displayed in the factor table provided. Round your answer to twodecimal places (e.g., 52.75).)Click here to view the factor table.

Step 1: Given,Initial cost of the forklift = $88,000.00Annual net operating cash flows = $13,700 per…

Answered: Walen Co. has intends to purchase a new…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 5PB: Mason, Inc., is considering the purchase of a patent that has a cost of $85000 and an estimated...

See similar textbooks

Similar questions

Mason, Inc., is considering the purchase of a patent that has a cost of $85000 and an estimated revenue producing lite of 4 years. Mason has a required rate of return that is 12% and a cost of capital of 11%. The patent is expected to generate the following amounts of annual income and cash flows: A. What is the NPV of the investment? B. What happens if the required rate of return increases?
Walen Co. has intends to purchase a new forklift for $90,000.00 cash. It expects annual net operating cash flows of $15,100 per year for 8 years, and a salvage value at the end of 8 years of $10,000. Walen uses a 8% discount rate. What is the net present value of the investment? (For calculation purposes, use five decimal places as displayed in the factor table provided. Round your answer to two decimal places (e.g., 52.75).) Click here to view the factor table. Net present value of investment A
Whispering Winds Company is considering an investment which will return a lump sum of $2,590,000 six years from now. What amount should Whispering Winds Company pay for this investment to earn an 11% return? (For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round answer to O decimal places, e.g. 5,275.) Click here to view the factor table. Amount pay for investment $
Olive Company is considering a project that is estimated to cost $275,500 and provide annual net cash flows of $65,523 for the next five years. Required: What is the internal rate of return for this project? Note: Round your answer to 2 decimal places. Intermat Rate of Returi
IronZee Industries is adding a new product line that will require an investment of $1,268,000. It is estimated this investment will have a 10-year life and will generate net cash inflows of $296,000 the first year, $266,000 during the second year, and $235,000 each year thereafter for 8 years. The project will have $0.00 residual value. Compute the ARR for the investment. (Round your answers to two decimal places when needed and use rounded answers for all future calculations). IronZee Industries Total net cash inflows during operation life of expansion Less: Total depreciation during operating life of expansion Total operating income during operating life Divide by: expansions operating life in years Average annual operating income from expansion (Amount Invested + Residual Value) / 2 / 2 = = / Average amount Invested Average annual operating income / Average amount invested = = ARR (%)
Riordan Manufacturing is considering an investment in new equipment that will produce equal annual cash flows of $52,000 for 8 years and has a net present value of $94,182. The initial investment is $247,000, the useful life is 8 years, and the equipment's salvage value after 8 years is $26,000. What is the equipment's profitability index? Round your answer to two decimal places. 6.56 1.38 4.75 1.81
Strange Manufacturing Company is purchasing a production facility at a cost of $12 million. The company expects the project to generate annual cash flows of $6.4 million over the next 5 years. Its cost of capital is 6.7 per cent. What is the net present value of this project? Round your answer to 2 decimal places. E.g. if the final value is $12345.8342, please type 12345.83 in the answer box (do not type the dollar sign).
1. The initial investment is $52,133 and the salvage value is $10,000. The project is expected to generate $25,087 net cash inflows and the annual net income is $5,072. State the annual rate of return in decimal form to two decimal places. (For example, if you calculate 16%, then state your answer as .16)
Consolidated Aluminum is considering the purchase of a new machine that will cost $308,000 and provide the following cash flows over the next five years: $88,000, 92,000, $91,000, $72,000, and $71,000. What is the internal rate of return (IRR) for this piece of equipment? Use the Present Value tables in Time Value of Money Appendix e of the book or use Excel to calculate the answer. Round to 2 decimal places. O Cannot be determined from the information provided. O 11.30% O 11.28% O 11.00%
Ivanhoe Company is evaluating the purchase of a rebuilt spot-welding machine to be used in the manufacture of a new product. The machine will cost $175,000, has an estimated useful life of 7 years and a salvage value of zero, and will increase net annual cash flows by $38,346. Click here to view the factor table. What is its approximate internal rate of return? (For calculation purposes, use 5 decimal places as displayed in the factor table provided, eg. 1.25124 and final answers to O decimal places, e.g. 16%) Internal rate of return %
Knowledge Check Walen Co. has intends to purchase a new forklift for $93,000.00 cash. It expects annual net operating cash flows of $14,400 year for 8 years, and a salvage value at the end of 8 years of $9,800. Walen uses a 6% discount rate. What is the net present of the investment? (For calculation purposes, use five decimal places as displayed in the factor table provided. Round your answer to decimal places (e.g., 52.75).) Click here to view the factor table. Net present value of investment $
Ubu Manufacturing Company is purchasing a production facility at a cost of $40 million. The company expects the project to generate annual net cash flows of $8 million over the next 6 years. Its cost of capital is 10.8 per cent. What is the net present value of this project? Round your answer to 2 decimal places. E.g. if the final value is $12345.8342, please type 12345.83 in the answer box (do not type the dollar sign).

SEE MORE QUESTIONS

Recommended textbooks for you

Principles of Accounting Volume 2

Accounting

ISBN:

9781947172609

Author:

OpenStax

Publisher:

OpenStax College

Principles of Accounting Volume 2

Accounting

ISBN:

9781947172609

Author:

OpenStax

Publisher:

OpenStax College

SEE MORE TEXTBOOKS