Homework Answers
| Ans. | *Depreciation = (Cost of project - Salvage value) / Useful life in years | |||
| ($240,000 - $25,000) / 10 | ||||
| $215,000 / 10 | ||||
| $21,500 | ||||
| Net income | $5,400 | |||
| Add: Depreciation | $21,500 | |||
| Annual cash inflows | $26,900 | |||
| Payback period = Initial investment / Annual cash inflows | ||||
| $240,000 / $26,900 | ||||
| 8.92 | years | |||
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Required information [The following information applies to the questions displayed below.) Falcon Crest Aces (FCA), Inc.,...
Required information (The following information applies to the questions displayed below) Falcon Crest Aces (FCA), Inc.,...
Required information (The following information applies to the questions displayed below) Falcon Crest Aces (FCA), Inc., is considering the purchase of a small plane to use in its wing-walking demonstrations and aerial tour business. Various information about the proposed investment follows: Initial Investment Useful life Salvage value Annual net income generated FCA's cost of capital 5.400 Assume straight line depreciation method is used. Required: Help FCA evaluate this project by calculating each of the following: 1. Accounting rate of return....
Required information (The following information applies to the questions displayed below) Falcon Crest Aces (FCA), Inc.,...
Required information (The following information applies to the questions displayed below) Falcon Crest Aces (FCA), Inc., is considering the purchase of a small plane to use in its wing walking demonstrations and aerial tour business. Various information about the proposed investment follows: Initial investment Useful life Salvage value Annual net income generated FCA's cost of capital $ 240,000 10 years 25,000 Assume straight line depreciation method is used. 4. Help FCA evaluate this project by calculating each of the following:...
Required information [The following information applies to the questions displayed below) Falcon Crest Aces (FCA), Inc.,...
Required information [The following information applies to the questions displayed below) Falcon Crest Aces (FCA), Inc., is considering the purchase of a small plane to use in its wing walking demonstrations and aerial tour business. Various information about the proposed investment follows: $ 240,00 1 year Initial investment Useful life Salvage value Annual net income generated FCA's cost of capital $ 25,00 5,400 Assume straight line depreciation method is used. 3. Help FCA evaluate this project by calculating each of...
Required information (The following information applies to the questions displayed below.) Falcon Crest Aces (FCA), Inc.,...
Required information (The following information applies to the questions displayed below.) Falcon Crest Aces (FCA), Inc., is considering the purchase of a small plane to use in its wing-walking demonstrations and aerial tour business. Various information about the proposed investment follows: Initial investment Useful life Salvage value Annual net income generated FCA'S Cost of capital $ 220,000 $ 10 years 25,000 $ 5,000 7% Assume straight line depreciation method is used. 2. Help FCA evaluate this project by calculating each...
The following information applies to the questions displayed below.) Falcon Crest Aces (FCA), Inc., is considering...
The following information applies to the questions displayed below.) Falcon Crest Aces (FCA), Inc., is considering the purchase of a small plane to use in its wing-walking demonstrations and aerial tour business. Varlous Information about the proposed Investment follows: $ $ Initial investment Useful life Salvage value Annual net income generated FCA's cost of capital 190,000 10 years 20,000 4.400 $ Assume straight line depreciation method is used. Required: Help FCA evaluate this project by calculating each of the following:...
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4. Net Present Value assuming the cost of capital is 6
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4. Net Present Value assuming the cost of capital is 6
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