The following information concerning a proposed capital budgeting project has been provided by Jochum Corporation: Click...
The following information concerning a proposed capital budgeting project has been provided by Jochum Corporation:
Click here to view Exhibit 13B-1 to determine the appropriate discount factor(s) using tables.
| Investment required in equipment | $ | 184,000 | ||||
| Salvage value of equipment | $ | 0 | ||||
| Working capital requirement | $ | 32,000 | ||||
| Annual sales | $ | 650,000 | ||||
| Annual cash operating expenses | $ | 470,000 | ||||
| One-time renovation expense in year 3 | $ | 70,000 | ||||
The expected life of the project is 4 years. The income tax rate is 30%. The after-tax discount rate is 10%. The company uses straight-line depreciation on all equipment and the annual depreciation expense would be $46,000. Assume cash flows occur at the end of the year except for the initial investments. The company takes income taxes into account in its capital budgeting.
The net present value of the project is closest to: (Round intermediate calculations and final answer to the nearest dollar amount.)
Garrison 16e updates 05-17-2018, 06-15-2018
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$171,624
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$326,200
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$212,083
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$291,700
Homework Answers
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The following information concerning a proposed capital
budgeting project has been provided by Jochum Corporation:
Click...
The following information concerning a proposed capital budgeting project has been provided by Jochum Corporation: Click...
The following information concerning a proposed capital budgeting project has been provided by Jochum Corporation: Click here to view Exhibit 13B-1 to determine the appropriate discount factor(s) using tables. Investment required in equipment $ 164,000 Salvage value of equipment $ 0 Working capital requirement $ 22,000 Annual sales $ 630,000 Annual cash operating expenses $ 487,000 One-time renovation expense in year 3 $ 50,000 The expected life of the project is 4 years. The income tax rate is 30%. The...
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Lander Company has an opportunity to pursue a capital budgeting project with a five-year time hor...
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Lander Company has an opportunity to pursue a capital budgeting project with a five-year time horizon. After careful study, Lander estimated the following costs and revenues for the project: $310,000 $ 68,000 $ 22.000 Cost of equipment needed Working capital needed Repair the equipment in two years Annual revenues and costs Sales revenues Variable expenses Fixed out-of-pocket operating costs $430,000 $220,000 $ 96,000 The piece of equipment mentioned above has a useful life of five years and zero salvage value....
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Lander Company has an opportunity to pursue a capital budgeting project with a five-year time horizon. After careful study, Lander estimated the following costs and revenues for the project: $260,000 $ 63,000 $ 19,500 Cost of equipment needed Working capital needed Repair the equipment in two years Annual revenues and costs: Sales revenues Variable expenses Fixed out-of-pocket operating costs $380,000 $195,000 $ 86,999 The piece of equipment mentioned above has a useful life of five years and zero salvage value....
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Joetz Corporation has gathered the following data on a proposed investment project (lgnore income taxes.) $37,000 $8,800 Investment required in equipment Annual cash inflows Salvage value of equipment 0 15 years Life of the investment Required rate of return 10% The company uses straight-line depreciation on all equipment. Assume cash flows occur uniformly throughout a year except for the initial investment Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using the tables provided...
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