Managerial Accounting
5th Edition
ISBN: 9781259176494
Author: John J Wild, Ken Shaw Accounting Professor
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 11, Problem 1BTN
To determine
Concept introduction:
Requirement 1:
To have an internal rate of return(IRR) 10% how much annually cash flow should A inc earn from the project.
To determine
Concept introduction:
Cash flow-it generally defines the advantages and the cost of a future project. As cost is represented through cash outflows and benefits as cash inflow. The present value of a cash flow refers to the discounted value of the present month of prospect sum of money.
Internal rate of return (IRR)- is used in order to measure the profitability of the possible investment. It is a rate of discount that makes the net present value of all cash flow equal to zero.
Requirement 2:
To explain:
(a) Computing the amount apple invested in a capital asset in recent years.
(b) Amount of cash flow that Apple must earn on this project, assuming 10-year life and 10% internal rate of return(IRR).
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Assume Apple invested $2.12 billion to expand its manufacturing capacity. Assume that these assets have a 10-year life and that Apple requires a 10% internal rate of return on these assets. Required 1. What is the amount of annual cash flows that Apple must earn from these projects to have a 10% internal rate of return? Hint: Identify the 10-period, 10% factor from the present value of an annuity table, and then divide $2.12 billion by this factor to get the annual cash flows necessary 2. Access Apple’s financial statements for the fiscal year ended September 30, 2017, from Appendix A. a. Determine the amount that Apple invested in capital assets for 2017. Hint: Refer to the statement of cash flows. b. Did Apple invest more in capital assets or in marketable securities for 2017?
Which is the correct answer?
Use the following table for this question
Present value of an Annuity of $1
Periods 8% 9% 10%
1 .926 .917 .909
2 1.783 1.759 1.736
3 2.577 2.531 2.487
A company has a minimum required rate of return of 9% and is considering investing in a project which costs $25,000 and is expected to generate cash inflows of $10,000 at the end of each year for three years. The net presentvalue of this project is:
a. $25,310
b. $15,000
c. $9,170
d. $5,310
The value of an investment comes from its cash flows. Let’s say you are intent on receiving $45,000 per year, starting at the end of year one and continuing over 10 years. A lump sum of $380,000 invested now (year 0) will allow you to receive your desired annual amount. What interest rate is required to make this happen?
Chapter 11 Solutions
Managerial Accounting
Ch. 11 - Prob. 1MCQCh. 11 - Prob. 2MCQCh. 11 - Prob. 3MCQCh. 11 - Prob. 4MCQCh. 11 - Prob. 5MCQCh. 11 - Prob. 1DQCh. 11 - What is capital budgeting?Ch. 11 - Identify four reasons that capital budgeting...Ch. 11 - Prob. 4DQCh. 11 - Prob. 5DQ
Ch. 11 - Prob. 6DQCh. 11 - Prob. 7DQCh. 11 - Prob. 8DQCh. 11 - Prob. 9DQCh. 11 - Prob. 10DQCh. 11 - Prob. 11DQCh. 11 - Prob. 12DQCh. 11 - Prob. 13DQCh. 11 - Prob. 1QSCh. 11 - Prob. 2QSCh. 11 - Prob. 3QSCh. 11 - Prob. 4QSCh. 11 - Prob. 5QSCh. 11 - Prob. 6QSCh. 11 - Prob. 7QSCh. 11 - Prob. 8QSCh. 11 - Prob. 9QSCh. 11 - Prob. 10QSCh. 11 - Prob. 11QSCh. 11 - Prob. 12QSCh. 11 - Prob. 13QSCh. 11 - Prob. 14QSCh. 11 - Prob. 15QSCh. 11 - Prob. 16QSCh. 11 - Prob. 1ECh. 11 - Exercise 24-2 Net present value P3 Refer to the...Ch. 11 - Prob. 3ECh. 11 - Prob. 4ECh. 11 - Prob. 5ECh. 11 - Prob. 6ECh. 11 - Prob. 7ECh. 11 - Prob. 8ECh. 11 - Prob. 9ECh. 11 - Prob. 10ECh. 11 - Prob. 11ECh. 11 - Prob. 12ECh. 11 - Prob. 13ECh. 11 - Prob. 14ECh. 11 - Prob. 15ECh. 11 - Prob. 16ECh. 11 - Prob. 1PSACh. 11 - Most Company has as opportunity to invest in one...Ch. 11 - Prob. 3PSACh. 11 - Prob. 4PSACh. 11 - Prob. 5PSACh. 11 - Prob. 6PSACh. 11 - Prob. 1PSBCh. 11 - Prob. 2PSBCh. 11 - Prob. 3PSBCh. 11 - Prob. 4PSBCh. 11 - Prob. 5PSBCh. 11 - Prob. 6PSBCh. 11 - Prob. 11SPCh. 11 - Prob. 1BTNCh. 11 - Prob. 2BTNCh. 11 - Prob. 3BTNCh. 11 - Prob. 4BTNCh. 11 - Prob. 5BTNCh. 11 - Break into teams and identify four reasons that an...Ch. 11 - Read the chapter opener about Limor Fried and her...Ch. 11 - Prob. 8BTNCh. 11 - Prob. 9BTN
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