Homework Answers
1.
Simple rate of return = Net annual benefit/Net investment
= [93,000-52,000-(310,000/10)] / [310,000-31,000]
= 9,000/279,000
= 3.23%
Comment if you face any issues
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2.
Denny Corporation is considering replacing a technologically obsolete machine with a new state-of-the-art numerically controlled...
Denny Corporation is considering replacing a technologically obsolete machine with a new state-of-the-art numerically controlled machine....
Denny Corporation is considering replacing a technologically obsolete machine with a new state-of-the-art numerically controlled machine. The new machine would cost $110,000 and would have a sixteen-year useful life. Unfortunately, the new machine would have no salvage value. The new machine would cost $12,000 per year to operate and maintain, but would save $42,000 per year in labor and other costs. The old machine can be sold now for scrap for $11,000. The simple rate of return on the new...
Denny Corporation is considering replacing a technologically obsolete machine with a new state-of-the-art numerically controlled machine....
Denny Corporation is considering replacing a technologically obsolete machine with a new state-of-the-art numerically controlled machine. The new machine would cost $200,000 and would have a sixteen-year useful life. Unfortunately, the new machine would have no salvage value. The new machine would cost $30,000 per year to operate and maintain, but would save $62,000 per year in labor and other costs. The old machine can be sold now for scrap for $20,000. The simple rate of return on the new...
2. Perkins Corporation is considering several investment proposals, as shown below: Investment Proposal A $136,000 $170,000...
2.
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2.
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The management of Osborn Corporation is investigating an investment in equipment that would have a useful...
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. The management of Penfold Corporation is considering the purchase of a machine that would cost...
. The management of Penfold Corporation is considering the purchase of a machine that would cost $430,000, would last for 5 years, and would have no salvage value. The machine would reduce labor and other costs by $95,000 per year. The company requires a minimum pretax return of 13% on all investment projects. Click here to view Exhibit 13B-1 and Exhibit 13B-2 to determine the appropriate discount factor(s) using the tables provided. The net present value of the proposed project...
he management of Penfold Corporation is considering the purchase of a machine that would cost $400,000,...
he management of Penfold Corporation is considering the purchase of a machine that would cost $400,000, would last for 10 years, and would have no salvage value. The machine would reduce labor and other costs by $60,000 per year. The company requires a minimum pretax return of 13% on all investment projects. Click here to view Exhibit 13B-1 and Exhibit 13B-2 to determine the appropriate discount factor(s) using the tables provided. The net present value of the proposed project is...
Vandezande Inc. is considering the acquisition of a new machine that costs $361,000 and has a...
Vandezande Inc. is considering
the acquisition of a new machine that costs $361,000 and has a
useful life of 5 years with no salvage value. The incremental net
operating income and incremental net cash flows that would be
produced by the machine are (Ignore income taxes.):
Vandezande Inc. is considering the acquisition of a new machine that costs $361,000 and has a useful life of 5 years with no salvage value. The incremental net operating income and incremental net cash...
Almendarez Corporation is considering the purchase of a machine that would cost $150,000 and would last...
Almendarez Corporation is considering the purchase of a machine that would cost $150,000 and would last for 5 years. At the end of 5 years, the machine would have a salvage value of $18,000. By reducing labor and other operating costs, the machine would provide annual cost savings of $39,000. The company requires a minimum pretax return of 13% on all investment projects. (Ignore income taxes.) Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount...
Almendarez Corporation is considering the purchase of a machine that would cost $120,000 and would last...
Almendarez Corporation is considering the purchase of a machine that would cost $120,000 and would last for 4 years. At the end of 4 years, the machine would have a salvage value of $18,000. By reducing labor and other operating costs, the machine would provide annual cost savings of $32,000. The company requires a minimum pretax return of 10% on all investment projects. (Ignore income taxes.) Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount...
Denny Corporation is considering replacing a technologically obsolete machine with a new state-of-the-art numerically controlled machine. The new machine would cost $200,000 and would have a sixteen-year useful life. Unfortunately, the new machine would have no salvage value. The new machine would cost $30,000 per year to operate and maintain, but would save $62,000 per year in labor and other costs. The old machine can be sold now for scrap for $20,000. The simple rate of return on the new...
2.
Perkins Corporation is considering several investment proposals, as shown below: Investment Proposal A $136,000 $170,000 $102,000 $127,500 $ 163,200 $ 255,000 $142,800 $288,000 Investment required Present value of future net cash flows If the project profitability index is used, the ranking of the projects from most to least profitable would be: The management of Osborn Corporation is investigating an investment in equipment that would have a useful life of 5 years. The company uses a discount rate of 12%...
2.
Mattice Corporation is considering investing $640,000 in a project. The life of the project would be 6 years. The project would require additional working capital of $24,000, which would be released for use elsewhere at the end of the project. The annual net cash inflows would be $158,000. The salvage value of the assets used in the project would be $34,000. The company uses a discount rate of 18%. (lgnore income taxes.) Click here to view Exhibit 13B-1 and...
The management of Osborn Corporation is investigating an investment in equipment that would have a useful life of 8 years. The company uses a discount rate of 12% in its capital budgeting. The net present value of the investment, excluding the annual cash inflow, is -$407,414. How large would the annual cash inflow have to be to make the investment in the equipment financially attractive? (Ignore income taxes.) Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the...
Vandezande Inc. is considering
the acquisition of a new machine that costs $361,000 and has a
useful life of 5 years with no salvage value. The incremental net
operating income and incremental net cash flows that would be
produced by the machine are (Ignore income taxes.):
Vandezande Inc. is considering the acquisition of a new machine that costs $361,000 and has a useful life of 5 years with no salvage value. The incremental net operating income and incremental net cash...
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