Your business partner has just presented to you a summary of projected costs and annual receipts for a new product line. He asks you to calculate the before-tax IRR & ERR for the investment opportunity. The company’s MARR = 15% quarterly. Is this investment  justified?

A business is planningto purchase a piece of equipment that will produce a continuous stream of income for 6 years with rate of flow f(t) = 12348. Assume the continuous income stream earns 6.85%, compounded continuously. A. Find the future value of f(t) after 6 years and interpret the result. First, write an expression for the definite integral you must evaluate to answer this question. and b b )da, where a = The future value of the investment after years is $ (Round your final answer to 4 significant figures. For example, an answer like $1,244, 252.02 would become $1,244,000.00.) B. Find the present value of the continuous income stream. That is, what single deposit into an account earning the same interest rate will produce the same future value as the continous income stream? To answer this question you must solve the equation (Use P to represent the principal amount invested.) In order to match the S that will be earned by the continous income stream over years, you would need a…

Two different copying machines are being considered in your company. The Mortar copier would be purchased while the Xrocks copier would be leased. The company will replace any copier selected at this time after three years (i.e., the planning horizon for this evaluation is three years). The MACRS depreciation recovery period for office equipment is seven years. Assume an income tax rate of 40% and an after-tax MARR of 18% per year. Using the data in the table below, which machine would you recommend?

Greater Findlay Development Consortium is preparing to open a new retail strip mall and have multiple businesses that would like lease space in it.  Each business will pay a fixed amount of rent plus a percentage of the gross sales generated each year.  The cash flows from each of the businesses has approximately the same amount of risk.  The business names, annual expected cash flows, and initial capital outflow for each of the businesses that would like to lease space in the strip mall are provided below. Greater Findlay Development Consortium uses a 12% hurdle rate which is its cost of capital. All business will be evaluated based on 4-year term because the contract will expire in four years.    Video Now Apple Garden Croger Mart Horizon Wireless Initial Capital Outlay ($200,000) ($298,000) ($248,000) ($272,000)           Annual Net Cash Flows         Year 1                           65,000                        100,000                           80,000…

What would the effect of the failure in the ratio measurement?

Your storage firm has been offered $99,500 in one year to store some goods for one year. Assume your costs are $96,800, payable immediately, and the cost of capital is 8.9%. Should you take the contract? The NPV will be $ (Round to the nearest cent.)

You are an employee of University Consultants, Limited, and have been given the following assignment. You are to present an investment analysis of a small retail income-producing property for sale to a potential investor. The asking price for the property is $1,430,000; rents are estimated at $183,040 during the first year and are expected to grow at 2.5 percent per year thereafter. Vacancies and collection losses are expected to be 10 percent of rents. Operating expenses will be 35 percent of effective gross income. A fully amortizing 70 percent loan can be obtained at 8 percent interest for 30 years (total annual payments will be monthly payments × 12). The property is expected to appreciate in value at 4 percent per year and is expected to be owned for five years and then sold. Required: a. What is the first-year debt coverage ratio? b. What is the terminal capitalization rate? c. What is the investor's expected before-tax internal rate of return on equity invested (BTIRR)? d. What…

Suppose that annual income from a rental property is expected to start at $1,250 per year and decrease at a uniform amount of $40 each year after the first year for the 13-year expected life of the property. The investment cost is $7,000, and i is 7% per year. Is this a good investment? Assume that the investment occurs at time zero (now) and that the annual income is first received at EOY one. Click the icon to view the interest and annuity table for discrete compounding when i= 7% per year. The present equivalent of the rental income equals S (Round to the nearest dollar.)

The owner of a bicycle repair shop forecasts revenues of $160,000 a year. Variable costs will be $50,000, and rental costs for the shop are $30,000 a year. Depreciation on the repair tools will be $10,000.   a. Prepare an income statement for the shop based on these estimates. The tax rate is 20%.           b. Calculate the operating cash flow for the repair shop using the three methods given below:   Dollars in minus dollars out. Adjusted accounting profits. Add back depreciation tax shield.

An individual wishes to invest $5000 over the next year in two types of investment: Investment A yields 5% and investment B yields 8%. Market research recommends an allocation of at least 25% in A and at most 50% in B. Moreover, investment in A should be at least half the investment in B.