Homework Answers
Answer = 20%
Workings:
Computation of simple rate of return:
Simple rate of return = annual incremental net operating income / initial investment
= $10,000 / $50,000
= 20%
Add Answer to:
If we are looking at a machine with an incremental net operating income after all expenses...
A potential pitfall to the NPV method might be: O It doesn't take into account the...
A potential pitfall to the NPV method might be: O It doesn't take into account the salvage value of old equipment. It doesn't take into account the time value of money. If we are using wages as part of our outflows, a change in the labor market that creates a steep rise in wages may make what we thought was a positive cash flow a negative cash flow. Previous Next Activity Details Task: View this topic MacBook Air If we...
To use the IRR method, it is important to have the following information: O The initial...
To use the IRR method, it is important to have the following information: O The initial cost and annual savings (net cash flow). O The initial cost of the investment, the useful life and the annual cost savings (net cash flow) and the minimum required rate of return for the project The initial cost and useful life. Previous Next Activity Details Task: View this topic MacBook Air You have been tasked with reviewing adding on to your manufacturing facility to...
The longer it takes to recover the initial investment the: The lower the risk of loss...
The longer it takes to recover the initial investment the: The lower the risk of loss on the investment The safer the investment will be for the company. O Higher the risk of loss on the investment Previous Next Activity Details Task: View this topic Ends Jul 31, 2020 11:00 PM MacBook Air The longer it takes to recover the initial investment the: The lower the risk of loss on the investment The safer the investment will be for the...
What are the incremental revenues, expenses, and net income for each year for Model A and...
What are the incremental revenues, expenses, and net income for
each year for Model A and Model B? Te=15%. Time period is across 10
years...
please answer #4 and #5
Oxford Manufacturing company needs to invest in a new air compressor. They have narrowed the choice to two alternatives, A and B. the following financial data has been collected: Model A Model B Investment Cost $25,000 $35,000 Annual Incremental Revenues $18,700 $16,500 Annual O&M Costs $5,600 $3,500 Salvage Value $4,000...
Check my wo Average operating assets Total liabilities Sales Contribution margin Net operating income $280,000 $...
Check my wo Average operating assets Total liabilities Sales Contribution margin Net operating income $280,000 $ 33,600 $160,000 $ 89,600 $ 33,600 Return on Investment (ROI) is: Multiple Choice 210% O 0 56.0% O 32.0% O Prev | 1 of 20 Next > MacBook Air
The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $50,000....
The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $50,000. The machine would replace an old piece of equipment that costs $13,000 per year to operate. The new machine would cost $6,000 per year to operate. The old machine currently in use could be sold now for a salvage value of $20,000. The new machine would have a useful life of 10 years with no salvage value. Required: 1. What is the annual depreciation...
Part A Kelisen Ltd recently purchased a new dyeing machine for $100,000. Management expects the dyeing...
Part A Kelisen Ltd recently purchased a new dyeing machine for $100,000. Management expects the dyeing machine to generate the following additional revenues and expenses during its useful life. Average incremental revenue $50,000 per year Average incremental expenses (depreciation not included) $20,000 per year The dyeing machine has an expected life of 6 years and is depreciated using the straight line method You are required to: a) Prepare a schedule showing the incremental revenue, incremental operating expenses and incremental depreciation...
Revenues $300,000 Less operating expenses: Rent $169,000 Insurance 15,000 Depreciation 46,000 Maintenance 20,000 250,000 Net operating income $ 50,00...
Revenues $300,000 Less operating expenses: Rent $169,000 Insurance 15,000 Depreciation 46,000 Maintenance 20,000 250,000 Net operating income $ 50,000 1. A company has estimated the annual revenues and expenses for a project it is considering (listed above) that will cost a total of $500,000, have a ten-year useful life, and has a salvage value of $40,000. The company requires a payback period of 5 years or less. Using the information above, what is the expected annual cash flow for this...
Information on four investment proposals is given below: Investment required Present value of cash inflows Net...
Information on four investment proposals is given below: Investment required Present value of cash inflows Net present value Life of the project Investment Proposal B С D $(430,000) $(50,000) $(50,000) $(1,820,000) 631,600 70,500 76,800 2,429, 200 $ 201,600 $ 20,500 $ 26,800 $ 609,200 5 years 7 years 6 years 6 years Required: 1. Compute the project profitability index for each investment proposal. (Round your answers to 2 decimal places.) 2. Rank the proposals in terms of preference. Investment Proposal...
Exercise 24-6 Net present value LO P3 a. A new operating system for an existing machine...
Exercise 24-6 Net present value LO P3 a. A new operating system for an existing machine is expected to cost $565,000 and have a useful life of six years. The system yields an incremental after tax income of $165,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $25.000 b. A machine costs $410,000, has a $26,000 salvage value, is expected to last eight years, and will generate an after-tax income of $75,000 per...
A potential pitfall to the NPV method might be: O It doesn't take into account the salvage value of old equipment. It doesn't take into account the time value of money. If we are using wages as part of our outflows, a change in the labor market that creates a steep rise in wages may make what we thought was a positive cash flow a negative cash flow. Previous Next Activity Details Task: View this topic MacBook Air If we...
To use the IRR method, it is important to have the following information: O The initial cost and annual savings (net cash flow). O The initial cost of the investment, the useful life and the annual cost savings (net cash flow) and the minimum required rate of return for the project The initial cost and useful life. Previous Next Activity Details Task: View this topic MacBook Air You have been tasked with reviewing adding on to your manufacturing facility to...
The longer it takes to recover the initial investment the: The lower the risk of loss on the investment The safer the investment will be for the company. O Higher the risk of loss on the investment Previous Next Activity Details Task: View this topic Ends Jul 31, 2020 11:00 PM MacBook Air The longer it takes to recover the initial investment the: The lower the risk of loss on the investment The safer the investment will be for the...
What are the incremental revenues, expenses, and net income for
each year for Model A and Model B? Te=15%. Time period is across 10
years...
please answer #4 and #5
Oxford Manufacturing company needs to invest in a new air compressor. They have narrowed the choice to two alternatives, A and B. the following financial data has been collected: Model A Model B Investment Cost $25,000 $35,000 Annual Incremental Revenues $18,700 $16,500 Annual O&M Costs $5,600 $3,500 Salvage Value $4,000...
Check my wo Average operating assets Total liabilities Sales Contribution margin Net operating income $280,000 $ 33,600 $160,000 $ 89,600 $ 33,600 Return on Investment (ROI) is: Multiple Choice 210% O 0 56.0% O 32.0% O Prev | 1 of 20 Next > MacBook Air
The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $50,000. The machine would replace an old piece of equipment that costs $13,000 per year to operate. The new machine would cost $6,000 per year to operate. The old machine currently in use could be sold now for a salvage value of $20,000. The new machine would have a useful life of 10 years with no salvage value. Required: 1. What is the annual depreciation...
Part A Kelisen Ltd recently purchased a new dyeing machine for $100,000. Management expects the dyeing machine to generate the following additional revenues and expenses during its useful life. Average incremental revenue $50,000 per year Average incremental expenses (depreciation not included) $20,000 per year The dyeing machine has an expected life of 6 years and is depreciated using the straight line method You are required to: a) Prepare a schedule showing the incremental revenue, incremental operating expenses and incremental depreciation...
Information on four investment proposals is given below: Investment required Present value of cash inflows Net present value Life of the project Investment Proposal B С D $(430,000) $(50,000) $(50,000) $(1,820,000) 631,600 70,500 76,800 2,429, 200 $ 201,600 $ 20,500 $ 26,800 $ 609,200 5 years 7 years 6 years 6 years Required: 1. Compute the project profitability index for each investment proposal. (Round your answers to 2 decimal places.) 2. Rank the proposals in terms of preference. Investment Proposal...
Exercise 24-6 Net present value LO P3 a. A new operating system for an existing machine is expected to cost $565,000 and have a useful life of six years. The system yields an incremental after tax income of $165,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $25.000 b. A machine costs $410,000, has a $26,000 salvage value, is expected to last eight years, and will generate an after-tax income of $75,000 per...
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