Homework Answers
Intitial Invetment is $135000
Rate of return is 12%
Depreciation = $135000/10years =$13500
| Particulars | Yearly Cash Flows ($) |
| Cost Savings(A) | 30000 |
| Depreciation (B) | 13500 |
| Net Cost savings (C=A-B) | 16500 |
| Tax on Savings@34%(D) | 5610 |
| Net Cost savings after tax(F=C-D) | 10890 |
| Net Cash Inflow(G=F+B) | 24390 |
Annual Profit = 10890
Average Investment =(Opening Investment+Closing Investment)/2
=(135000+0)/2=67500
a)Net Present Value(NPV) = Present Value of Cash inflows/Cost Savings after tax-Initial investment
=24390*(Present Value@12%,10Years)- 135000
=24390*5.65022-135000=2808.86=$2808.86
b)Payback Period =Initial Investment / Net Cash Flow per Period
=135000/24390=5.53Years =5 years 6 months 10 days
c)Internal Rate of Return = rate of return at which NPV is equal to "0"
=12.506%
d)Accrual accounting rate of return based on actual investment =Average Annual Profit/Initial investment
= 10890/135000=0.0806 =8.066%
f)Accrual accounting rate of return based on actual investment =Average Annual Profit/Average Investment
= 10890/67500=0.1613 =16.13%
The above all answers are changed if machine has a terminal disposal value is $11,000
Then NPV is increased,Net Payback period decreased,IRR is increased Accrual account rate of return is based on average investment is decreased.
Add Answer to:
Seattle Hospital, a taxpaying entity, estimates that it can save $30,000 a year in cash operating...
Chicago Hospital, a taxpaying entity, estimates that it can save $28,000 a year in cash operating...
Chicago Hospital, a taxpaying entity, estimates that it can save $28,000 a year in cash operating costs for the next 10 years if it buys a special-purpose eye-testing machine at a cost of $110,000. No terminal disposal value is expected. Chicago Hospital's required rate of return is 10%. Assume all cash flows occur at year-end except for initial investment amounts. Chicago Hospital uses straight-line depreciation. The income tax rate is 30% for all transactions that affect income taxes. Present Value...
Chicago Hospital, a taxpaying entity, estimates that it can save $33,000 a year in cash operating...
Chicago Hospital, a taxpaying entity, estimates that it can save $33,000 a year in cash operating costs for the next 8 years if it buys a special-purpose eye-testing machine at a cost of $140,000. No terminal disposal value is expected. Chicago Hospital's required rate of return is 14%. Assume all cash flows occur at year-end except for initial investment amounts. Chicago Hospital uses straight-line depreciation. The income tax rate is 31% for all transactions that affect income taxes. Present Value...
Jefferson Labs, a taxpaying entity, estimates that it can save $29,000 a year in cash operating...
Jefferson Labs, a taxpaying entity, estimates that it can save $29,000 a year in cash operating costs for the next 8 years if it buys a special-purpose eye-testing machine at a cost of $115,000. No terminal disposal value is expected. 'Jefferson Labs' required rate of return is 12%. Assume all cash flows occur at year-end except for initial investment amounts. Jefferson Labs uses straight-line depreciation. The income tax rate is 38% for all transactions that affect income taxes. Requirement 1....
Question Help O Chicago Hospital, a nonprofit organization, estimates that it can save $25,000 a year...
Question Help O Chicago Hospital, a nonprofit organization, estimates that it can save $25,000 a year in cash operating costs for the next 9 years if it buys a special-purpose eye-testing machine at a cost of $100,000. No terminal disposal value is expected. Chicago Hospital's required rate of return is 14%. Assume all cash flows occur at year-end except for initial investment amounts. Chicago Hospital uses straight-line depreciation. Present Value of $1 table Present Value of Annuity of $1 table...
Jefferson Labs, a nonprofit organization, estimates that it can save $26,000 a year iN cash operating costs for the nex...
Jefferson Labs, a nonprofit organization, estimates that it can save $26,000 a year iN cash operating costs for the next 9 years if it buys a special-purpose eye-testing machine at a cost of $125,000. No terminal disposal value is expected. Jefferson Labs' required rate of return is 12%. Assume all cash flows occur at year-end except for initial investment amounts. Jefferson Labs uses straight-line depreciation. Present Value of $1 table Present Value of Annuity of $1 table Future Value of...
Styles Q3) (Capital budgeting methods) (25 Marks) City Hospital, a nonprofit organization, estimates that it can...
Styles Q3) (Capital budgeting methods) (25 Marks) City Hospital, a nonprofit organization, estimates that it can save $28,000 a year in cash operating costs for the next 10 years if it buys a special purpose eye testing machine at a cost of $110,000. No terminal disposal value is expected. City Hospital's required rate of return is 14%. Assume all cash flows occur at year-end except for initial investment amounts. City Hospital uses straight-line depreciation. Required: 1. Calculate the following for...
i need help City Hosptal, a tapaying enty, eetimales that it can save $28,000 a year...
i need help
City Hosptal, a tapaying enty, eetimales that it can save $28,000 a year in cash operating costs for the next 10 years if it buys a special-purpose aye-lesting machine at a cost of $110,000. No terminal disposal value is expecled City Hosplal's required rate of return is 14%. Assume al cash fows occur at year-end except for inilial imvestment ameunts Cty Hosptal uses straighe-ine deprecietion. The income tax rale is 30% for al transacions hat affect income...
* Data Table Year Amount $ 11,000 9,000 7,000 4,000 $ 31,000 Print Done Chicago Cola...
* Data Table Year Amount $ 11,000 9,000 7,000 4,000 $ 31,000 Print Done Chicago Cola is considering the purchase of a special-purpose bottling machine for $24,000. It is expected to have a useful life of 4 years with no terminal disposal value. The plant manager estimates the following savings in cash operating costs: (Click the icon to view the savings in cash operating costs.) Chicago Cola uses a required rate of return of 18% in its capital budgeting decisions....
E21-25 (similar to) Question Help Western Cola is considering the purchase of a special-purpose bottling machine...
E21-25 (similar to) Question Help Western Cola is considering the purchase of a special-purpose bottling machine for $45,000. It is expected to have a useful life of 4 years with no terminal disposal value. The plant manager estimates the following savings in cash operating costs: E(Click the icon to view the savings in cash operating costs.) Western Cola uses a required rate of return of 16% in its capital budgeting decisions. Ignore income taxes in your analysis. Assume all cash...
Lethbridge Company runs hardwa Omekaxes«dge's management estimates that if it invests $160,000 in a new computer...
Lethbridge Company runs hardwa Omekaxes«dge's management estimates that if it invests $160,000 in a new computer system, it can save $60,000 in annual cash operating costs. The system has an expected useful life of five years and no terminal disposal value. The required rate of return is 12%. Ignore income tax issues in your answers. Assume all cash flows occur at year-end except for initial investment amounts Required 1. Calculate the following for the new computer system: a. Net present...
Chicago Hospital, a taxpaying entity, estimates that it can save $28,000 a year in cash operating costs for the next 10 years if it buys a special-purpose eye-testing machine at a cost of $110,000. No terminal disposal value is expected. Chicago Hospital's required rate of return is 10%. Assume all cash flows occur at year-end except for initial investment amounts. Chicago Hospital uses straight-line depreciation. The income tax rate is 30% for all transactions that affect income taxes. Present Value...
Chicago Hospital, a taxpaying entity, estimates that it can save $33,000 a year in cash operating costs for the next 8 years if it buys a special-purpose eye-testing machine at a cost of $140,000. No terminal disposal value is expected. Chicago Hospital's required rate of return is 14%. Assume all cash flows occur at year-end except for initial investment amounts. Chicago Hospital uses straight-line depreciation. The income tax rate is 31% for all transactions that affect income taxes. Present Value...
Question Help O Chicago Hospital, a nonprofit organization, estimates that it can save $25,000 a year in cash operating costs for the next 9 years if it buys a special-purpose eye-testing machine at a cost of $100,000. No terminal disposal value is expected. Chicago Hospital's required rate of return is 14%. Assume all cash flows occur at year-end except for initial investment amounts. Chicago Hospital uses straight-line depreciation. Present Value of $1 table Present Value of Annuity of $1 table...
Jefferson Labs, a nonprofit organization, estimates that it can save $26,000 a year iN cash operating costs for the next 9 years if it buys a special-purpose eye-testing machine at a cost of $125,000. No terminal disposal value is expected. Jefferson Labs' required rate of return is 12%. Assume all cash flows occur at year-end except for initial investment amounts. Jefferson Labs uses straight-line depreciation. Present Value of $1 table Present Value of Annuity of $1 table Future Value of...
Styles Q3) (Capital budgeting methods) (25 Marks) City Hospital, a nonprofit organization, estimates that it can save $28,000 a year in cash operating costs for the next 10 years if it buys a special purpose eye testing machine at a cost of $110,000. No terminal disposal value is expected. City Hospital's required rate of return is 14%. Assume all cash flows occur at year-end except for initial investment amounts. City Hospital uses straight-line depreciation. Required: 1. Calculate the following for...
i need help
City Hosptal, a tapaying enty, eetimales that it can save $28,000 a year in cash operating costs for the next 10 years if it buys a special-purpose aye-lesting machine at a cost of $110,000. No terminal disposal value is expecled City Hosplal's required rate of return is 14%. Assume al cash fows occur at year-end except for inilial imvestment ameunts Cty Hosptal uses straighe-ine deprecietion. The income tax rale is 30% for al transacions hat affect income...
* Data Table Year Amount $ 11,000 9,000 7,000 4,000 $ 31,000 Print Done Chicago Cola is considering the purchase of a special-purpose bottling machine for $24,000. It is expected to have a useful life of 4 years with no terminal disposal value. The plant manager estimates the following savings in cash operating costs: (Click the icon to view the savings in cash operating costs.) Chicago Cola uses a required rate of return of 18% in its capital budgeting decisions....
E21-25 (similar to) Question Help Western Cola is considering the purchase of a special-purpose bottling machine for $45,000. It is expected to have a useful life of 4 years with no terminal disposal value. The plant manager estimates the following savings in cash operating costs: E(Click the icon to view the savings in cash operating costs.) Western Cola uses a required rate of return of 16% in its capital budgeting decisions. Ignore income taxes in your analysis. Assume all cash...
Lethbridge Company runs hardwa Omekaxes«dge's management estimates that if it invests $160,000 in a new computer system, it can save $60,000 in annual cash operating costs. The system has an expected useful life of five years and no terminal disposal value. The required rate of return is 12%. Ignore income tax issues in your answers. Assume all cash flows occur at year-end except for initial investment amounts Required 1. Calculate the following for the new computer system: a. Net present...
Most questions answered within 3 hours.
-
Industry: Telecommunications in India
Here, you need to discuss the sources of the growth pattern
and...
asked 33 minutes ago -
Hydrobromic acid
dissolves solid iron according to the followiaung reaction:
Fe(s)+2HBr(aq)→
FeBr2(aq)+ H2(g)
Part A. What...
asked 2 hours ago -
Verify the following vector identity in SPHERICAL
COORDINATES.
div(curl(A)) = 0
asked 3 hours ago -
The work function (Φ) for a metal is 7.50×10-19 J.
What is the longest wavelength (nm)...
asked 4 hours ago -
1. Would the following procedural changes cause the
calculated mass percent Ni2+ ion in Ni(NH3)nCl2 to...
asked 6 hours ago -
1. Why does the voltage of the capacitor vary with frequency?
where does this missing voltage...
asked 7 hours ago -
p p please write each step out clearly
3. A manager of a company is considering...
asked 6 hours ago -
On October 1, Ebony Ernst organized Ernst Consulting; on October
3, the owner contributed $83,540 in...
asked 7 hours ago -
A.)As an electron moves through a region of space, its speed
decreases from 9.60 × 106...
asked 7 hours ago -
In java with the netbeans program do:
Through object programming
Create a class "ContadorP", which is...
asked 7 hours ago -
Pattern Corporation acquired all of Science
Company's outstanding stock on January 1, 2016 for $600,000 cash....
asked 7 hours ago -
Here are all accounts Tyler Co. maintains.
Tax expenses $4,750
Common stocks $48,840
SG&A expenses $2,500...
asked 8 hours ago