ZuoTi.Pro
Question

Chugington, Inc. is doing some financial planning. The company currently has $38,695 in its account, and...

Chugington, Inc. is doing some financial planning. The company currently has $38,695 in its account, and it knows it will need to make a withdrawal of $35,832 in 12 years to pay for an equipment upgrade. The company anticipates depositing $9,696 at the end of year 6 from a project. The company will also need to make another large withdrawal of $5,159 at the end of year 3 to pay off a loan. How much could Chugington spend on a remodel of the factory floor today and still meet all of its future financial obligations? Assume an interest rate of 1% compounded annually.

business   economics   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Present value = 38695 - 35832 * (P/F, 1%,12) + 9696 * (P/F, 1%,6) - 5159 * (P/F, 1%,3)

= 38695 - 35832 * 0.887449 + 9696 * 0.942045 - 5159 * 0.970590

= 11022.72 ~ 11023 (Nearest Dollar)

0 0
Add a comment
Know the answer?
Add Answer to:
Chugington, Inc. is doing some financial planning. The company currently has $38,695 in its account, and...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • This is an extra credit review problem. It is optional. Chugington, Inc. is doing some financial...

    This is an extra credit review problem. It is optional. Chugington, Inc. is doing some financial planning. The company currently has $34,137 in its account, and it knows it will need to make a withdrawal of $32.706 in 8 years to pay for an equipment upgrade. The company anticipates depositing $9,317 at the end of year 6 from a project. The company will also need to make another large withdrawal of $2,891 at the end of year 2 to pay...

  • I NEED ABSOLUTELY CORRECT ANSWERS FOR THESE. 0.6 pts Question The city of Suburbia received a...

    I NEED ABSOLUTELY CORRECT ANSWERS FOR THESE. 0.6 pts Question The city of Suburbia received a proposal for plant watering from Water Can Gardening Company. The company would water all city plants for $634 each quarter, increasing the amount charged by $17 each subsequent quarter. Water Can Gardening Company requires a 8-year commitment. The mayor has asked you to calculate the equivalent uniform quarterly cost for the plant water service to help with budgeting. Use a nominal annual interest rate...

  • Robin is planning for her retirement. She is currently 37 years old and plans to retire...

    Robin is planning for her retirement. She is currently 37 years old and plans to retire at age 62 and live until age 97. Robin currently earns $120,000 per year and anticipates needing 80% of her income during retirement. She anticipates Social Security will provide her with $15,000 per year at age 62, leaving her with required savings to provide $81,000 ($120,000 x 0.80 - $15,000) annually during retirement. She is willing to take some investment risk. Her pre-retirement portfolio...

  • Capital Budgeting (1) MSM Company is planning an upgrade to its warehouse. The upgrade involves computerizing...

    Capital Budgeting (1) MSM Company is planning an upgrade to its warehouse. The upgrade involves computerizing many of the material handling activities. The cost of the upgrade is expected to be $3,500,000. The equipment falls into the 7 year IRS depreciation range (use straight line full year every year) and is expected to provide annual cash cost savings and other annual cash benefits totaling $900,000. At the end of year 3 a one-time fully tax deductible software upgrade of $45,000...

  • After taking Business classes you realize the importance of financial planning, and determine to deposit some...

    After taking Business classes you realize the importance of financial planning, and determine to deposit some money each year into your bank account for future investments. Since you were from New England area originally, you would like to accumulate $100,000 as your down payment for a house in suburban Boston so that you could enjoy the fun of snow plowing in winter. If you deposit $2,000 per year into an account that earns 10% interest per year compounded annually, how...

  • MEO Foods has made cat food for over 20 years. The company currently has a debt-equity...

    MEO Foods has made cat food for over 20 years. The company currently has a debt-equity ratio of 25%, borrows at 10% interest rate, and is in the 40% tax bracket. Its shareholders require an 18% return. MEO is planning to expand cat food production capacity. The equipment to be purchased would last three years and generate the following unlevered cash flows(UCF): Year 0: -$15 million. Year 1: $5 million. Year 2: $8 million. Year 3: $10 million Year 4:...

  • The A2X company has made it a financial goal to buy its own building in 7...

    The A2X company has made it a financial goal to buy its own building in 7 years. A2X estimates it will need $79967 for a down payment. The local bank pays 4%, compounded annually. How much should the company invest in the bank today to have its down payment in 7 years? Enter your answer as follows: 1234 Round your answer. Do not use a dollar sign ("S"), any commas ("") or a decimal point ( .

  • MVP, Inc., has produced rodeo supplies for over 20 years. The company currently has a debt-equity...

    MVP, Inc., has produced rodeo supplies for over 20 years. The company currently has a debt-equity ratio of 65 percent and the tax rate is 22 percent. The required return on the firm’s levered equity is 12 percent. The company is planning to expand its production capacity. The equipment to be purchased is expected to generate the following unlevered cash flows: Year Cash Flow 0 −$19,800,000 1 5,880,000 2 9,680,000 3 8,980,000 The company has arranged a debt issue of...

  • The XYZ Company loaned some money to one of its vendors so the vendor could upgrade...

    The XYZ Company loaned some money to one of its vendors so the vendor could upgrade its supply chain. In return, the vendor has agreed to pay XYZ $59,726 a year, with the first payment occurring at the end of year 6.The vendor will make a total of 12 payments to XYZ (one per year). What is the annual worth of this loan? Use a MARR of 3% to make the calculation. Hint: Count the years carefully. Calculate the annual...

  • The XYZ Company loaned some money to one of its vendors so the vendor could upgrade...

    The XYZ Company loaned some money to one of its vendors so the vendor could upgrade its supply chain. In return, the vendor has agreed to pay XYZ $59107 a year, with the first payment occurring at the end of year 6.The vendor will make a total of 13 payments to XYZ (one per year). What is the annual worth of this loan? Use a MARR of 4% to make the calculation. Hint: Count the years carefully. Calculate the annual...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT