A project produces annual net income of $10,000, $15,000, and $12,500 over its 3-year life and requires an initial investment in fixed assets of $200,000, and the fixed assets depreciated to zero by the end of the project. What is the average accounting rate of return?
Select one:
a. 12.50%
b. 13.71%
c. 14.62%
d. 13.98%
e. 14.32%
A project produces annual net income of $10,000, $15,000, and $12,500 over its 3-year life and...
Yutu LA DDAD Abc Aabeto 5 What is the IRR? 6. A project produces annual net income of 546,200, 551,800, and 562,900 over its 3-year life, respectively. The initial cost of the project is 5675.000. This cost is depreciated straight line to a zero book value over three years. What is the average accounting rate of return if the required discount rate is 145 percent? 1589 percent 16.67 percent 18.98 percent 20.25 percent 23.84 percent
Down Under Boomerang, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $2.37 million. The fixed asset will be depreciated straight-line to zero over its 3-year tax life, after which it will be worthless. The project is estimated to generate $1,780,000 in annual sales, with costs of $690,000. The tax rate is 24 percent and the required return is 11 percent. What is the project’s NPV?
A project requires an initial fixed asset investment of $600,000, which will be depreciated straight-line to zero over the six-year life of the project. The pre-tax salvage value of the fixed assets at the end of the project is estimated to be $50,001. Projected sales volume for each year of the project is shown below. The sale price is $50 per unit for the first three years, and $45 per unit for years 4 through 1. A $30,000 initial investment...
Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $2.43 million. The fixed asset will be depreciated straight-line to zero over its 3-year tax life, after which time it will have a market value (salvage value) of $189,000. The project requires an initial investment in networking capital of $270,000. The project is estimated to generate $2,160,000 in annual sales, with costs of $864,000. The tax rate is 34 percent and the...
Q3. (25 marks) A project requires an initial fixed asset investment of $600,000, which will be depreciated straight-line to zero over the six-year life of the project. The pre-tax salvage value of the fixed assets at the end of the project is estimated to be $50,001. Projected sales volume for each year of the project is shown below. The sale price is $50 per unit for the first three years, and $45 per unit for years 4 through 1. A...
A project with a life of 5 has an initial fixed asset investment of $24,360, an initial NWC investment of $2,320, and an annual OCF of –$37,120. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required return is 8 percent, what is the project's equivalent annual cost, or EAC? A project with a life of 5 has an initial fixed asset investment of $24,360, an initial NWC investment...
P10-11 Calculating Project Cash Flow from Assets [LO Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $5.724 million. The fixed asset will be depreciated straight-line to zero over its 3-year tax life, after which time it will have a market value (salvage value) of $445,200. The project requires an initial investment in net working capital of $636,000. The project is estimated to generate $5,088,000 in annual sales, with costs of...
A business corporation is considering a new three year project that requires an initial fixed asset investment of $5.6 million. The fixed asset will be depreciated straight-line to zero over a 4 year life. The project is estimated to generate $3 million in annual sales with variable costs of $700,000 and fixed costs of $300,000. If the tax rate is 25%. Suppose the project requires an initial investment in net working capital of $500,000 and the fixed assets will be...
Jansen Company, Inc. is contemplating a new 4 – year expansion project that requires an initial fixed asset investment of $3.6 million and initial working capital investment of $300,000. The fixed asset will be depreciated straight-line to zero over its 4-year tax life, after which time it is expected to be sold for $200,000 cash. The project is estimated to generate $3,050,000 in annual sales, with costs of $1,992,000. If the tax rate is 35%, what is the Operating Cash...
H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2,470,000. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $3,190,000 in annual sales, with costs of $2,210,000. Assume the tax rate is 21 percent and the required return on the project is 9 percent. What is the project’s NPV? (A negative answer should be indicated by...