Homework Answers
Annual cash inflow = cost saving = $9730
Present value of an annuity of 1 = Investment / annual cash inflow
= $40000 / 9730
= 4.111
Internal rate of return = 12%
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--/10 Question 9 View Policies Current Attempt in Progress Sheridan, Inc. is considering purchasing equipment costing...
Marigold, Inc. is considering purchasing equipment costing $34000 with a 6-year useful life. The equipment will...
Marigold, Inc. is considering purchasing equipment costing $34000 with a 6-year useful life. The equipment will provide annual cost savings of $8270 and will be depreciated straight-line over its useful life with no salvage value. Marigold requires a 10% rate of return. Period 6 8% 4.623 Present Value of an Annuity of 1 9% 10% 11% 12% 4.486 4.355 4.231 4.111 15% 3.784 What is the approximate internal rate of return for this investment? 11% 9% O 10% O 12%
Splish Brothers, Inc. is considering purchasing equipment costing $76000 with a 6-year useful life. The equipment...
Splish Brothers, Inc. is considering purchasing equipment costing $76000 with a 6-year useful life. The equipment will provide annual cost savings of $18487 and will be depreciated straight-line over its useful life with no salvage value. Splish Brothers requires a 10% rate of return. Present Value of an Annuity of 1 Period 8% 9% 10% 11% 12% 15% 6 4.623 4.486 4.355 4.231 4.111 3.784 What is the approximate internal rate of return for this investment? 9% 10% 11% 12%
Johnson Company is considering purchasing one of two new machines. The following estimates are available for...
Johnson Company is considering purchasing one of two new machines. The following estimates are available for each machine: Machine 1 Machine 2 Initial cost $152,000 $169,000 Annual cash inflows 50,000 60,000 Annual cash outflows 15,000 20,000 Estimated useful life 6 years 6 years The company's minimum required rate of return is 9%. Present Value of an Annuity of 1 Period 8% 9% 10% 11% 12% 15% 6 4.623 4.486 4.355 4.231 4.111 3.784 Requirement: Compute Payback, NPV, PI, and IRR...
Cullumber, Inc. is considering purchasing equipment costing $30000 with a 6-year useful life. The equipment will...
Cullumber, Inc. is considering purchasing equipment costing $30000 with a 6-year useful life. The equipment will provide annual cost savings of $7200 and will be depreciated straight-line over its useful life with no salvage value. Cullumber requires a 10% rate of return. Present Value of an Annuity of 1 What is the approximate internal rate of return for this investment? 12% 9% 10% 11%
--/10 Question 10 View Policies Current Attempt in Progress Marigold Company is considering buying equipment for...
--/10 Question 10 View Policies Current Attempt in Progress Marigold Company is considering buying equipment for $260000 with a useful life of 5 years and an estimated salvage value of $10000. If annual expected income is $28000, the denominator in computing the annual rate of return is $260000 $130000. $270000 $135000
Multiple Choice Question 114 CullumberCompany is considering two capital investment proposals. Estimates regarding each project are...
Multiple Choice Question 114
CullumberCompany is considering two capital investment
proposals. Estimates regarding each project are provided
below:
Project Soup
Project Nuts
Initial investment
$200000
$400000
Annual net income
16000
46000
Net annual cash inflow
60000
97000
Estimated useful life
5 years
6 years
Salvage value
0
0
The company requires a 10% rate of return on all new
investments.
Present Value of an
Annuity of 1
Periods
9%
10%
11%
12%
5
3.89
3.791
3.696
3.605
6
4.486
4.355...
View Policies Current Attempt in Progress Sheridan Company acquires equipment at a cost of $44.100 on...
View Policies Current Attempt in Progress Sheridan Company acquires equipment at a cost of $44.100 on January 3, 2021. Management estimates the equipment will have a residual value of $6,300 at the end of its 4-year useful life. Assume that the company uses the diminishing-balance method and that the diminishing-balance depreciation rate is double the straight-line rate. Calculate the depreciation expense for each year of the equipment's life. Do not leave any answer field blank. Enter o for amounts.) Depreciation...
Skysong Company is considering two capital investment proposals. Estimates regarding each project are provided below: &nbs
Skysong Company is considering two capital investment proposals. Estimates regarding each project are provided below: Project Soup Project Nuts Initial investment $400,000 $600,000 Annual net income $18,000 34,000 Net annual cash inflow $96,000 119,000 Estimated useful life 5 years 6 years Salvage 0 0 The company requires a 10% rate of return on all new investments Present Value of an Annuity of 1 Periods 9% 10% 11% 12% 5 3.89 3.791 3.696 3.605 6 4.486 4.355 ...
--/10 Question 7 View Policies Current Attempt in Progress Marigold Co. purchased some equipment 3 years...
--/10 Question 7 View Policies Current Attempt in Progress Marigold Co. purchased some equipment 3 years ago. The company's required rate of return is 12%, and the net present value of the project was $(900). Annual cost savings were: $7000 for year 1:5000 for year 2; and $3000 for year 3. The amount of the initial investment was Year Present Value of 1 at 12% 0.893 0.797 0.712 PV of an Annuity of 1 at 12% 0.893 1.690 2.402 $11472...
MarigoldCompany is considering two capital investment proposals. Estimates regarding each project are provided below: Project Soup...
MarigoldCompany is considering two capital investment proposals. Estimates regarding each project are provided below: Project Soup Project Nuts Initial investment $305000 $504000 Annual net income 30000 46000 Net annual cash inflow 110000 146000 Estimated useful life 5 years 6 years Salvage value 0 0 The company requires a 10% rate of return on all new investments. Present Value of an Annuity of 1 Periods 9% 10% 11% 12% 5 3.89 3.791 3.696 3.605 6 4.486 4.355 4.231 4.111 The cash...
Marigold, Inc. is considering purchasing equipment costing $34000 with a 6-year useful life. The equipment will provide annual cost savings of $8270 and will be depreciated straight-line over its useful life with no salvage value. Marigold requires a 10% rate of return. Period 6 8% 4.623 Present Value of an Annuity of 1 9% 10% 11% 12% 4.486 4.355 4.231 4.111 15% 3.784 What is the approximate internal rate of return for this investment? 11% 9% O 10% O 12%
--/10 Question 10 View Policies Current Attempt in Progress Marigold Company is considering buying equipment for $260000 with a useful life of 5 years and an estimated salvage value of $10000. If annual expected income is $28000, the denominator in computing the annual rate of return is $260000 $130000. $270000 $135000
Multiple Choice Question 114
CullumberCompany is considering two capital investment
proposals. Estimates regarding each project are provided
below:
Project Soup
Project Nuts
Initial investment
$200000
$400000
Annual net income
16000
46000
Net annual cash inflow
60000
97000
Estimated useful life
5 years
6 years
Salvage value
0
0
The company requires a 10% rate of return on all new
investments.
Present Value of an
Annuity of 1
Periods
9%
10%
11%
12%
5
3.89
3.791
3.696
3.605
6
4.486
4.355...
View Policies Current Attempt in Progress Sheridan Company acquires equipment at a cost of $44.100 on January 3, 2021. Management estimates the equipment will have a residual value of $6,300 at the end of its 4-year useful life. Assume that the company uses the diminishing-balance method and that the diminishing-balance depreciation rate is double the straight-line rate. Calculate the depreciation expense for each year of the equipment's life. Do not leave any answer field blank. Enter o for amounts.) Depreciation...
--/10 Question 7 View Policies Current Attempt in Progress Marigold Co. purchased some equipment 3 years ago. The company's required rate of return is 12%, and the net present value of the project was $(900). Annual cost savings were: $7000 for year 1:5000 for year 2; and $3000 for year 3. The amount of the initial investment was Year Present Value of 1 at 12% 0.893 0.797 0.712 PV of an Annuity of 1 at 12% 0.893 1.690 2.402 $11472...
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