Estimate Longlife's cost of retained earnings. Management predicts this machine has a 9-year service life and a $140,000 salvage value, and it uses str, A machine costs $500,000 and is expected to yield an after-tax net income of $19,000 each year. Securities Cost Fair Value Trading 120,000 124,000 Non-trading 100,000 94,000 The non-trading securities are held as long-term investments. The company is expected to add $9,000 per year to the net income. What is the average amount invested in a machine during its predicted five-year life if it costs $200,000 and has a $20,000 salvage value? Peng Company is considering an Investment expected to generate an average net income after taxes of $3,000 for three years. Average invested assets are $500,000, and Avocado Company has an 8% cost of capital. At a discount rate of 10 per, Zippydah Company has the following data at December 31, 2014. The machine will cost $1,796,000 and is expected to produce a $199,000 after-tax net income to be received at the end of each year. It expects the free cash flow to grow at a constant rate of 5% thereafter. Assume the company uses straight-line depreciation. The amount, to be invested, is $100,000. Com, Peng Company is considering an investment expected to generate an average net income after taxes of $2,200 for three years. Everything you need for your studies in one place. The investment costs $57.600 and has an estimated $8,400 salvage value. Yearly net cash inflows (before taxes) from the machine are estimated at $140,000. The company anticipates a yearly net income of $3,300 after taxes of 30%, with the cash flows to be rece, A company bought a machine that has an expected life of seven years and no salvage value. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Q: Peng Company is considering an investment expected to generate an average net. What amount should Cullumber Company pay for this investment to earn a 12% return? copyright 2003-2023 Homework.Study.com. The present value of the future cash flows is $225,000. 17 US public . Get access to this video and our entire Q&A library, How to Calculate Net Present Value: Definition, Formula & Analysis. The investment costs $54,900 and has an estimated $8,100 salvage value. and EVA of S1) (Use appropriate factor(s) from the tables provided. What is the accountin, A company buys a machine for $62,000 that has an expected life of 7 years and no salvage value. Investment required $60,000,000, Salvage value after 10 years $0, Gross income $2, A company forecasts free cash flow of $40 million in three years. Compute the net present value of this investment. Required information [The following information applies to the questions displayed below.] What are the investment's net present value and inte. Using a sample of Chinese-listed firms with key soil pollution regulation from 2013 to 2020, this study utilized the Difference-in-Differences method . What amount should Elmdale Company pay for this investment to earn a 12% return? After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction. The Controller asks you to use a depreciation method that would produce the highest charge against income after three years. Option 1 generates $25,000 of cash inflow per year and has zero residual value. Using the original cost of the asset, the unadjusted rate of return on, A machine costs $600,000 and is expected to yield an after-tax net income of $23,000 each year. Required information [The following information applies to the questions displayed below.) Assume the company uses straight-line depreciation. The investment costs $45,000 and has an estimated $6,000 salvage value. Compute the net present value of this investment. Anglemenesis Company is planning to spend $84,000 for a new machine that is to be depreciated on a straight-line basis over 10 years with no salvage value. The firm has a beta of 1.62. Compute this machine's accoun, If an asset costs $210,000 and is expected to have a $30,000 salvage value at the end of its ten-year life, and generates annual net cash inflows of $30,000 each year, the cash payback period is: A) 8 years B) 7 years C) 6 years D) 5 years, The anticipated purchase of a fixed asset for $400,000 with a useful life of 5 years and no residual value is expected to yield a total income of $150,000. Assume Peng requires a 5% return on its investments. Peng Company is considering an investment expected to generate an average net income after taxes of $3,400 for three years. Peng Company is considering an investment expected to generate an average net income after taxes Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. If a table of present v, A company can buy a machine that is expected to have a three-year life and a $29,000 salvage value. Using the orig, A building has a cost of $500,000 and accumulated depreciation of $40,000. The investment costs $56,100 and has an estimated $7,500 salvage value. 1,950/25,500=7.65. All rights reserved. a. The amount to be invested is $210,000. The investment costs $45,000 and has an estimated $6,000 salvage value. c) Only applies to a business organized as corporations. Melton Company's required rate of return on capital budgeting projects is 16%. The machine will cost $1,812,000 and is expected to produce a $203,000 after-tax net income to be re, A company can buy a machine that is expected to have a three-year life and a $23,000 salvage value. A machine costs $700,000 and is expected to yield an after-tax net income of $52,000 each year. (Round answer to 2 decimal places. Assume the company uses straight-line . Compute this machine's accou, A machine costs $300,000 and is expected to yield an after-tax net income of $9,000 each year. The payback period for this investment is: a) 3.9 years b) 3 years, Hung Company accumulates the following data concerning a proposed capital investment: cash cost of $216, 236, net annual cash flows of $43,800, and present value factor of cash inflows for 10 years 5.22 (rounded). Flower Company is considering an investment which will return a lump sum of $2,500,000 six years from now. Compute the net present value of this investment. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. Axe Corporation is considering investing in a machine that has a cost of $25,000. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. This investment will produce certain services for a community such as vehicle kilometres, seat . Calculate the payback period for the proposed e, You have the following information on a potential investment. Management predicts this machine has an 11-year service life and a $140,000 salvage value, and it uses s, A machine costs $400,000 and is expected to yield an after-tax net income of $9,000 each year. the accounting rate of return for this investment; assume the company uses straight-line depreciation. Common stock. Assu, Peng Company is considering an investment expected to generate an average net income after taxes of $3,000 for three years. The profitability index for this project is: a. The machine will cost $1,800,000 and is expected to produce a $200,000 after-tax net income to be rece, A company can buy a machine that is expected to have a three-year life and a $25,000 salvage value. A novel dynamic modeling method for a multi-product production line is developed to investigate dynamic properties of the system under random disruptions such as machine failures and market demand . The company anticipates a yearly net income of $3,650 after taxes of 22%, with the cash flows to be received evenly throughout each year. criteria in order to generate long-term competitive financial returns and . The company uses the straight-line method of depreciation and has a tax rate of 40 percent. The company has projected the following annual for the investment. Zhang et al. The investment costs $47,400 and has an estimated $8,400 salvage value. It is considering investing in a project which costs $350,000 and is expected to generate cash inflows of $140,000 at the end of each year for three years. Peng Company is considering an investment expected to generate an average net income after taxes of $3,200 for three years. We reviewed their content and use your feedback to keep the quality high. Compute this machine's accounti, On 1/1, a company buys equipment with a cost of $8,100, an estimated salvage value of $1,100, and an estimated useful life of 7 years. Negative amounts should be indicated by a minus sign. Assume Peng requires a 15% return on its investments. a. Assume Peng requires a 15% return on its investments. The payback period, You are considering investing in a start up company. A machine costs $190,000, has a $10,000 salvage value, is expected to last nine years, and will generate an after-tax income of $30,000 per year after straight-line depreciation. Compute the net present value of this investment. = Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. The NPV is computed as: {eq}\displaystyle \text{Present value of annuity (PVA) } = P * \frac{1 - (1 + r)^{-t}}{r} {/eq}, Become a Study.com member to unlock this answer! The project would require a $28,000 initial investment and has a salvage value of $2,000, A company has a minimum required rate of return of 9%. TABLE B.4 f= [(1 + i)"-1Vi Future Value of an Annuity of 1 Rate Periods 1% 2% 3% 6% 7% 8% 9% 10% 12% 15% 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 0000 .0000 1.0000 10000 2.0100 2.0200 2.0300 2.0400 2.0500 2.0600 2.0700 2.0800 2.0900 2.1000 2.1200 3.0301 3.0604 3.0909 3.1216 3.1525 3.1836 3.2149 3.2464 3.2781 3.3100 3.3744 4.0604 4.1216 4.1836 4.2465 4.3101 4.3746 4.4399 5.1010 5.2040 5.3091 5.4163 5.5256 5.6371 5.7507 5.8666 5.9847 6.1051 6.3528 6.1520 6.3081 6.4684 6.6330 6.8019 6.9753 7.1533 7.3359 7.5233 7.7156 8.1152 7.2135 7.4343 7.6625 7.8983 8.1420 8.3938 8.6540 8.9228 9.2004 9.4872 10.0890 8.2857 8.5830 8.8923 9.2142 9.5491 9.8975 10.2598 10.6366 11.0285 11.4359 12.2997 9.3685 9.7546 10.1591 10.5828 11.0266 11.4913 11.9780 12.4876 13.0210 13.5795 14.7757 1.0000 2.1500 3.4725 4.9934 6.7424 8.7537 11.0668 4.5061 4.5731 4.6410 4.7793 16.7858 10 10.4622 10.9497 11.4639 12.0061 12.5779 13.1808 13.8164 14.4866 15.1929 15.9374 17.5487 20.3037 11.5668 12.1687 12.8078 13.4864 14.2068 14.9716 15.7836 16.6455 7.5603 18.5312 20.6546 24.3493 12.6825 13.4121 14.1920 15.0258 15.9171 16.8699 17.8885 18.9771 20.1407 21.3843 24.1331 12 13 13.8093 14.6803 15.6178 16.6268 17.7130 18.8821 20.1406 21.4953 22.9534 24.5227 28.0291 14 14.9474 15.9739 17.0863 18.2919 19.5986 21.0151 22.5505 24.2149 26.0192 27.9750 32.3926 40.5047 15 16 17.2579 18.6393 20.1569 21.8245 23.6575 25.6725 27.8881 30.3243 33.0034 35.9497 42.7533 55.7175 17 18.4304 20.0121 21.7616 23.6975 25.8404 28.2129 30.8402 33.7502 36.9737 40.5447 48.8837 65.0751 18 19 20.8109 22.8406 25.1169 27.6712 30.5390 33.7600 37.3790 41.4463 46.0185 51.1591 63.4397 88.2118 20 22.0190 24.2974 26.8704 29.7781 33.0660 36.7856 40.9955 45.7620 51.1601 57.2750 72.0524 102.4436 25 30 35 41.6603 49.9945 60.4621 73.6522 90.3203 111.4348 138.2369 172.3168 215.7108 271.0244 431.6635 40 48.8864 60.4020 75.4013 95.0255 120.7998 154.7620 199.6351 259.0565 337.8824 442.5926 767.0914 1,779.0903 29.0017 34.3519 16.0969 7.2934 18.5989 20.0236 21.5786 23.2760 25.1290 27.1521 29.3609 31.7725 37.2797 47.5804 19.6147 21.4123 23.4144 25.6454 28.1324 30.9057 33.9990 37.4502 41.3013 45.5992 55.7497 75.8364 28.2432 32.0303 36.4593 41.6459 47.7271 54.8645 63.2490 73.1059 84.7009 98.3471 133.3339 212.7930 34.7849 40.5681 47.5754 56.0849 66.4388 79.0582 94.4608 113.2832 136.3075 164.4940 241.3327 434.7451 881.1702 Used to calculate the future value of a series of equal payments made at the end of each period. The salvage value is defined as the estimated book value of any asset after deducting all the depreciation on the asset. The investment costs $51,900 and has an estimated $10,800 salvage value. For example: What is the future value of $4,000 per ye ar for 6 years assuming an annual interest rate of 8%. d) 9.50%. S4 000 per year for 6 years accumulates to $29,343.60 ($4,000 7.3359). Stop procrastinating with our smart planner features. The investment costs $45,000 and has an estimated $6,000 salvage value. Management predicts this machine has a 10-year service life and a $120,000 salvage value, and it uses straight-line depreciation. The investment costs $45,000 and has an estimated $6,000 salvage value. The investment costs $45,000 and has an estimated $6,000 salvage value. The company is expected to add $9,000 per year to the net income. FV of $1. Required information [The following information applies to the questions displayed below.) 2003-2023 Chegg Inc. All rights reserved. The investment costs $48,900 and has an estimated $12,000 salvage value. Which of the following functional groups will ionize in The present value of an annuity due for five years is 6.109. Furthermore, the implication of strategic orientation for . To make this happen, the firm, Wilcox Company is considering an investment that will generate cash revenues of $120,000 per year for 8 years, and have cash expenses of $60,000 per year for 8 years. Currently, U.S. Treasury bills are yielding 6.75% and the expected return for the S & P 500 is 18.2%. Compute the net present value of this investment. These assets contribute $28,000 to annual net income when depreciation is computed on a straight-line basis. distributed with a mean of 78 when mixing oil and water is the change in entropy positive or If a potential investments internal rate of return is above the companys hurdle rate, should the investment be made? Capital investment - $15,000 Estimated useful life - 3 years Estimated salvage value - zero Estimated net cash inflow: -Year 1 - $7,00, Compute the net present value of each potential investment. The new present value of after tax cash flows from an investment less the amount invested. (20-year, 12% pr, What is the NPV and IRR for the two investments options below? The company's required, A company is considering a proposal that requires an initial investment of $91,100, has predicted net cash inflows of $30,000 per year for four years and no salvage value. 2003-2023 Chegg Inc. All rights reserved. What is Ronis' Return on Investment for 2015? Compute the net present value of this investment. What is the NPV of the investment, The Zinger Corporation is considering an investment that has the following data: Year 1 Year 2 Year 3 Year 4 Year 5 Investment $8,000 $3,000 Cash inflow $2,000 $2,000 $5,000 $4,000 $4,000 Cash inflows occur evenly throughout the year. The building is expected to generate net cash inflows of $15,000 per year for the next 30 years. investment costs $48,900 and has an estimated $12,000 salvage Management estimates that this machine will generate annual after-tax net income of $540. The investment costs $45,000 and has an estimated $6,000 salvage value. Required information (The following information applies to the questions displayed below.] For ex ample: What is the present value of $2,000 per year for 10 years assuming an annual interest rate of 9%. 200,000. A company has three independent investment opportunities. The asset is expected to have a fair value of $270,000 at five years, and a fair value of $90,000 at the e, Horak Company accumulates the following data concerning a proposed capital investment: cash cost $219,620, net annual cash flow $34,932, present value factor of cash inflows for 10 years 6.71 (rounded). 45,000+6000=51,000. The investment costs $48,000 and has an estimated $10,200 salvage value. The company s required rate of return is 13 percent. For l6, = 8%), the FV factor is 7.3359. The current value of the building is estimated to be $300,000. A bond that has a $1,000 par value (face value) and a con, Strauss Corporation is making a $70,000 investment in equipment with a 5-year life. Peng Company is considering an investment expected to generate an average net income after taxes of $2, 400 for three years. PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Assume Peng requires a 15% return on its investments. The company is currently considering an investment that is expected to generate annual cash inflows of $10,000 for 6 years. The investment costs $45,600 and has an estimated $8,700 salvage value. The fair value. (The following information applies to the questions displayed below) Part 1 of 2 Peng Company is considering an investment expected to generate an average net income after taxes of $2,100 for three years. Peng Company is considering an investment expected to generate an average net income after taxes Peng Company is considering an investment expected to generate an average net income after taxes of $3,300 for three years. Assume Peng requires a 5% return on its investments. The security exceptions clause in the WTO legal framework has several sources. All other trademarks and copyrights are the property of their respective owners. The company's required, Crispen Corporation can invest in a project that costs $400,000. The company requires an 8% return on its investments. A company buys a machine for $76,000 that has an expected life of 6 years and no salvage value. Get access to this video and our entire Q&A library, How to Calculate Net Present Value: Definition, Formula & Analysis. Enter the email address you signed up with and we'll email you a reset link. The system is expected to generate net cash flows of $13,000 per year for the next 35 years. What is the accounti, The Truncale Company is planning a $210,000 equipment investment that has an estimated five-year life with no estimated salvage value. Assume Peng requires a 5% return on its investments. Specifically, by bringing remanufacturing into consideration, this paper examines a manufacturer that has four alternative carbon abatement strategies: (1) do nothing, (2) invest in carbon . The company currently has no debt, and its cost of equity is 15 percent. Assume Peng requires a 5% return on its investments. (PV of $1. Assume Peng requires a 10% return on its investments. b. 1. If the accounting rate of return is 12%, what was the purchase price of the mac. The investment costs $59,500 and has an estimated $9,300 salvage value. Management estimates that this machine will generate annual after-tax net income of $540. What lump-sum amount should the company invest now to have the $370,000 available at the end of the eight-year period? The investment costs $45,000 and has an estimated $10,800 salvage value. The product line is estimated to generate cash inflows of $300,000 the first year, $250,000 the second year, and $200,000 each year thereafter for ten more years. The company is considering an investment that would yield an after-tax cash flow of $30,000 in four years. The initial cost and estimates of the book value of the investment at the end of each year, the net cash flows for each year, and the net income, Elmdale Company is considering an investment that will return a lump sum of $725,500, 6 years from now. Assume Peng requires a 10% return on its investments, compute the net present value of this investment. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. Yokam Company is considering two alternative projects. The company's required rate of return is 10% for this class of asset. The company's required rate of return is 12 percent. What is the most that the company would be willing to invest in this, A company has a minimum required rate of return of 9%. The company anticipates a yearly net income of $2,950 after taxes of 34%, with the cash flows to be received evenly throughout each year.