Almendarez Corporation is considering the purchase of a machine that would cost $220,000 and would last for 6 years. At the end of 6 years, the machine would have a salvage value of $21,500. By reducing labor and other operating costs, the machine would provide annual cost savings of $46,000. The company requires a minimum pretax return of 10% on all investment projects. (Ignore income taxes.)
Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using the tables provided.
The net present value of the proposed project is closest to: (Round your intermediate calculations and final answer to the nearest whole dollar amount.)
Multiple Choice
$16,464
$(7,544)
$(56,000)
$(22,891)
Present value of annuity at 10% for 6 years is 4.355
Present value factor at 10% for 6th year is 0.564
Present value of cash inflows = ($46,000 X 4.355) + ($21,500 X 0.564) = $212,456
Net present value = $212,456 - $220,000 = ($7,544)
Net present value is negative. ($7,544)
2nd option
Almendarez Corporation is considering the purchase of a machine that would cost $220,000 and would last...
Almendarez Corporation is considering the purchase of a machine
that would cost $200,000 and would last for 5 years. At the end of
5 years, the machine would have a salvage value of $20,000. By
reducing labor and other operating costs, the machine would provide
annual cost savings of $44,000. The company requires a minimum
pretax return of 8% on all investment projects. (Ignore income
taxes.)
Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine
the appropriate discount...
Joanette, Inc., is considering the purchase of a machine that
would cost $470,000 and would last for 5 years, at the end of
which, the machine would have a salvage value of $57,000. The
machine would reduce labor and other costs by $117,000 per year.
Additional working capital of $3,000 would be needed immediately,
all of which would be recovered at the end of 5 years. The company
requires a minimum pretax return of 15% on all investment projects.
(Ignore...
Joanette, Inc., is considering the purchase of a machine that
would cost $660,000 and would last for 9 years, at the end of
which, the machine would have a salvage value of $56,000. The
machine would reduce labor and other costs by $116,000 per year.
Additional working capital of $2,000 would be needed immediately,
all of which would be recovered at the end of 9 years. The company
requires a minimum pretax return of 12% on all investment projects.
(Ignore...
The following data pertain to an investment proposal (Ignore
income taxes.):
Cost of the investment
$
68,000
Annual cost savings
$
20,000
Estimated salvage value
$
6,000
Life of the project
5
years
Discount rate
13
%
Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine
the appropriate discount factor(s) using the tables provided.
The net present value of the proposed investment is closest
to:
Multiple Choice
$3,258
$5,598
$2,340
$42,000
EXHIBIT 128-2 Present Value of an Annuity...
Wendell’s Donut Shoppe is investigating the purchase of a new
$34,600 donut-making machine. The new machine would permit the
company to reduce the amount of part-time help needed, at a cost
savings of $6,200 per year. In addition, the new machine would
allow the company to produce one new style of donut, resulting in
the sale of 2,200 dozen more donuts each year. The company realizes
a contribution margin of $2.00 per dozen donuts sold. The new
machine would have...
Moates Corporation has provided the following data concerning an
investment project that it is considering:
Initial investment
$
390,000
Annual cash flow
$
127,000
per year
Expected life of the project
4
years
Discount rate
8
%
Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine
the appropriate discount factor(s) using the tables provided.
The net present value of the project is closest to:
Multiple Choice
$30,624
$(30,624)
$390,000
$(263,000)
EXHIBIT 12B-2 Present Value of an Annuity of...
Find the area of the shaded region. The graph depicts the standard normal distribution with mean 0 and standard deviation 1 Click to view.page 1 of the table. Click to view.page 2 of the table The area of the shaded region is (Round to four decimal places as needed) Standard Normal Distribution Area 0 Z N .01 3.4 - 3.3 -3.2 3.1 3.0 2.9 2.8 - 2.7 .09 .0002 .0003 .0005 .0007 .0010 .0014 .0019 .0026 .08 ,0003 .0004 .0005...
A standardized exam's scores are normally distributed In a recent year, the mean test score was 1495 and the standard deviation was 315. The test scores of four students selected at random are 1900, 1240, 2230, and 1400 Find the z-scores that correspond to each value and determine whether any of the values are unusual The z-score for 1900 is (Round to two decimal places as needed) The Z-score for 1240 is (Round to two decimal places as needed.) The...
Windhoek Mines, Ltd., of Namibia, is contemplating the purchase of equipment to exploit a mineral deposit on land to which the company has mineral rights. An engineering and cost analysis has been made, and it is expected that the following cash flows would be associated with opening and operating a mine in the area: Cost of new equipment and timbers Working capital required Annual net cash receipts Cost to construct new roads in year three Salvage value of equipment in...
Oakmont Company has an opportunity to manufacture and sell a new product for a four-year period. The company's discount rate is 18%. After careful study, Oakmont estimated the following costs and revenues for the new product: Cost of equipment needed Working capital needed Overhaul of the equipment in year two Salvage value of the equipment in four years $ 230,000 $ 84,000 $ 9,000 $ 12,000 Annual revenues and costs: Sales revenues Variable expenses Fixed out-of-pocket operating costs $ 400,000...