Homework Answers
| Annual income | 5000 | ||||||||||||||
| Annual cost | 3000 | ||||||||||||||
| Net cash flow | 2000 | ||||||||||||||
| The sum of present value of future cash flows is 15210. | |||||||||||||||
| Present Value = Future value/ ((1+r)^t) | |||||||||||||||
| where r is the interest rate that is 10% and t is the time period in years. | |||||||||||||||
| Year | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 |
| future cash flow | 2000 | 2000 | 2000 | 2000 | 2000 | 2000 | 2000 | 2000 | 2000 | 2000 | 2000 | 2000 | 2000 | 2000 | 2000 |
| present value | 1818.18 | 1652.89 | 1502.63 | 1366.03 | 1241.84 | 1128.95 | 1026.32 | 933.01 | 848.20 | 771.09 | 700.99 | 637.26 | 579.33 | 526.66 | 478.78 |
| Sum of present values | 15212.16 | ||||||||||||||
| The cash flows extending to 15 years has a present value of 15212.16, therefore the project has lasted 15 years. | |||||||||||||||
| The project has lasted 15 years. | |||||||||||||||
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Use Exhibit 12B 1 and Exhibit 12B 2 to locate the present value of an annuity...
Use Exhibit 12B 1 and Exhibit 12B 2 to locate the present value of an annuity of S1, which is the amount to be multiplied tines the future annual cash flow amount. Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows. a, Campbell Manufacturing is considering the purchase of a new welding system. The cash benefits will be $480,000 per year. The system costs $2,450,000 and will last 10 years. b. Evee Cardenas...
Exercise A3-17 Present Values Use Present Value Tables or your calculator to complete the requirements below....
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5. Assume the company requires a 12% rate of return on its investments. Compute the net present value of each potential investment. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate fact...
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Exercise 24-6 Net present value LO P3 a. A new operating system for an existing machine...
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Exercise A3-11 Practice with Tables Use Future Value Tables and Present Value Tables, or your calculator,...
Exercise A3-11 Practice with Tables Use Future Value Tables and Present Value Tables, or your calculator, to complete the requirements below. Required: Round your answers to the nearest cent. a. Determine the future value of a single cash flow of $5,000 that earns 7% interest compounded annually for 10 years. $ b. Determine the future value of an annual annuity of 10 cash flows of $500 each that earns 7% compounded annually. $ c. Determine the present value of $5,000...
Exercise 24-6 Net present value LO P3 a. A new operating system for an existing machine...
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please help and answer each part!! ill give feedback! Present value Mixed streams Consider the mixed...
please help and answer each part!! ill give feedback!
Present value Mixed streams Consider the mixed streams of cash flows shown in the folowing table a. Find te present value of each stream using a 7% discount rate. b. Compare the caloulated present values and discuss them in light of S the undnoounted cash fows totaling $50,000 in each case, Is thore some discount rate at which the present values of the two streams would be The present value of...
Net Present Value Method Rapid Delivery, Inc., is considering the purchase of an additional delivery vehicle...
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A new operating system for an existing machine is expected to cost $760,000 and have a...
A new operating system for an existing machine is expected to
cost $760,000 and have a useful life of six years. The system
yields an incremental after-tax income of $270,000 each year after
deducting its straight-line depreciation. The predicted salvage
value of the system is $24,400.
A machine costs $460,000, has a $30,800 salvage value, is
expected to last eight years, and will generate an after-tax income
of $60,000 per year after straight-line depreciation.
Assume the company requires a 12%...
Use Exhibit 12B 1 and Exhibit 12B 2 to locate the present value of an annuity of S1, which is the amount to be multiplied tines the future annual cash flow amount. Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows. a, Campbell Manufacturing is considering the purchase of a new welding system. The cash benefits will be $480,000 per year. The system costs $2,450,000 and will last 10 years. b. Evee Cardenas...
Exercise A3-17 Present Values Use Present Value Tables or your calculator to complete the requirements below. Required: a. Determine the present value of a single $14,000 cash flow in 7 years if the interest (discount) rate is 8% per year. Round your answer to the nearest cent. $ 8,169 X b. Determine the number of periods for which $5,820 must be invested at an annual interest (discount) rate of 7% to produce an investment balance of $10,000. Round you answer...
Exercise 24-6 Net present value LO P3 a. A new operating system for an existing machine is expected to cost $550,000 and have a useful life of six years. The system yields an incremental after-tax income of $210,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $23,800. b. A machine costs $570,000, has a $37,100 salvage value, is expected to last eight years, and will generate an after-tax income of $72,000 per year...
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...
Exercise 24-6 Net present value LO P3 a. A new operating system for an existing machine is expected to cost $670,000 and have a useful life of six years. The system yields an incremental after-tax income of $295,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $22,200. b. A machine costs $570,000, has a $33,800 salvage value, is expected to last eight years, and will generate an after-tax income of $70,000 per year...
please help and answer each part!! ill give feedback!
Present value Mixed streams Consider the mixed streams of cash flows shown in the folowing table a. Find te present value of each stream using a 7% discount rate. b. Compare the caloulated present values and discuss them in light of S the undnoounted cash fows totaling $50,000 in each case, Is thore some discount rate at which the present values of the two streams would be The present value of...
Net Present Value Method Rapid Delivery, Inc., is considering the purchase of an additional delivery vehicle for $30,000 on January 1, 2016. The truck is expected to have a five-year life with an expected residual value of $5,000 at the end of five years. The expected additional revenues from the added delivery capacity are anticipated to be $58,000 per year for each of the next five years. A driver will cost $42,000 in 2016, with an expected annual salary increase...
A new operating system for an existing machine is expected to
cost $760,000 and have a useful life of six years. The system
yields an incremental after-tax income of $270,000 each year after
deducting its straight-line depreciation. The predicted salvage
value of the system is $24,400.
A machine costs $460,000, has a $30,800 salvage value, is
expected to last eight years, and will generate an after-tax income
of $60,000 per year after straight-line depreciation.
Assume the company requires a 12%...
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