Jefferson Labs, a taxpaying entity, estimates that it can save $29,000 a year in cash operating costs for the next
8 years if it buys a special-purpose eye-testing machine at a cost of $115,000. No terminal disposal value is expected. 'Jefferson Labs' required rate of return is 12%.
Assume all cash flows occur at year-end except for initial investment amounts. Jefferson Labs uses straight-line depreciation. The income tax rate is 38%
for all transactions that affect income taxes.
Requirement 1. Calculate the following for the special-purpose eye-testing machine:
a. Net present value (NPR) (Round interim calculations and your final answers to the nearest whole dollar. Use a minus sign or parentheses for a negative net present value.)
The net present value is $ |
. |
b. Payback period (Round your answer to two decimal places.)
The payback period is |
years. |
c. Internal rate of return (Round the rate to two decimal places, X.XX%.)
The internal rate of return (IRR) is |
%. |
d. Accrual accounting rate of return based on net initial investment (Round interim calculations to the nearest whole dollar. Round the rate to two decimal places, X.XX%.)
The accrual accounting rate of return (AARR) is |
% based on net initial investment. |
e. Accrual accounting rate of return based on average investment (Round interim calculations to the nearest whole dollar. Round the rate to two decimal places, X.XX%.)
The accrual accounting rate of return (AARR) is |
% based on average investment. |
Requirement 2. How would your computations in requirement 1 be affected if the special-purpose machine had a
$12,000
terminal disposal value at the end of
8
years? Assume depreciation deductions are based on the
$115,000
purchase cost and zero terminal disposal value using the straight-line method. Answer briefly in words without further calculations.
NPV would |
because the disposal value |
Payback would |
because the disposal value |
IRR would |
because the disposal value |
AARR would |
because the disposal value |
||
under either method. |
Jefferson Labs, a taxpaying entity, estimates that it can save $29,000 a year in cash operating...
Jefferson Labs, a nonprofit organization, estimates that it can save $26,000 a year iN cash operating costs for the next 9 years if it buys a special-purpose eye-testing machine at a cost of $125,000. No terminal disposal value is expected. Jefferson Labs' required rate of return is 12%. Assume all cash flows occur at year-end except for initial investment amounts. Jefferson Labs uses straight-line depreciation. Present Value of $1 table Present Value of Annuity of $1 table Future Value of...
Chicago Hospital, a taxpaying entity, estimates that it can save $33,000 a year in cash operating costs for the next 8 years if it buys a special-purpose eye-testing machine at a cost of $140,000. No terminal disposal value is expected. Chicago Hospital's required rate of return is 14%. Assume all cash flows occur at year-end except for initial investment amounts. Chicago Hospital uses straight-line depreciation. The income tax rate is 31% for all transactions that affect income taxes. Present Value...
Seattle Hospital, a taxpaying entity, estimates that it can save $30,000 a year in cash operating costs for the next 10 years if it buys a special-purpose eye-testing machine at a cost of $135,000. No terminal disposal value is expected. Seattle Hospital's required rate of return is 12%. Assume all cash flows occur at year-end except for initial investment amounts. Seattle Hospital uses straight-line depreciation. The income tax rate is 34% for all transactions that affect income taxes. Calculate the...
Chicago Hospital, a taxpaying entity, estimates that it can save $28,000 a year in cash operating costs for the next 10 years if it buys a special-purpose eye-testing machine at a cost of $110,000. No terminal disposal value is expected. Chicago Hospital's required rate of return is 10%. Assume all cash flows occur at year-end except for initial investment amounts. Chicago Hospital uses straight-line depreciation. The income tax rate is 30% for all transactions that affect income taxes. Present Value...
Question Help O Chicago Hospital, a nonprofit organization, estimates that it can save $25,000 a year in cash operating costs for the next 9 years if it buys a special-purpose eye-testing machine at a cost of $100,000. No terminal disposal value is expected. Chicago Hospital's required rate of return is 14%. Assume all cash flows occur at year-end except for initial investment amounts. Chicago Hospital uses straight-line depreciation. Present Value of $1 table Present Value of Annuity of $1 table...
i need help
City Hosptal, a tapaying enty, eetimales that it can save $28,000 a year in cash operating costs for the next 10 years if it buys a special-purpose aye-lesting machine at a cost of $110,000. No terminal disposal value is expecled City Hosplal's required rate of return is 14%. Assume al cash fows occur at year-end except for inilial imvestment ameunts Cty Hosptal uses straighe-ine deprecietion. The income tax rale is 30% for al transacions hat affect income...
* Data Table Year Amount $ 11,000 9,000 7,000 4,000 $ 31,000 Print Done Chicago Cola is considering the purchase of a special-purpose bottling machine for $24,000. It is expected to have a useful life of 4 years with no terminal disposal value. The plant manager estimates the following savings in cash operating costs: (Click the icon to view the savings in cash operating costs.) Chicago Cola uses a required rate of return of 18% in its capital budgeting decisions....
Chicago Cola is considering the purchase of a special-purpose bottling machine for $24,000. It is expected to have a useful life of 4 years with no terminal disposal value. The plant manager estimates the following savings in cash operating costs: PE (Click the icon to view the savings in cash operating costs.) Chicago Cola uses a required rate of return of 18% in its capital budgeting decisions. Ignore income taxes in your analysis. Assume all cash flows occur at year-end...
Chicago Cola is considering the purchase of a special-purpose bottling machine for $24,000. It is expected to have a useful life of 4 years with no terminal disposal value. The plant manager estimates the following savings in cash operating costs: E: (Click the icon to view the savings in cash operating costs.) Chicago Cola uses a required rate of return of 18% in its capital budgeting decisions. Ignore income taxes in your analysis. Assume all cash flows occur at year-end...
b. Payback period (Round your answer to two decimal places.) The payback period is years. c. Discounted payback period (Round intarim calculations to the nearest whole dollar, Round the rate to two decimal places, XXX % .) The discounted payback period is years d. Intemal rate of return (Round the rate to two decimal places, XXX %) The internal rate of return (RR) is e. Accrual accounting rate of return based on net initial investment (Round interim calculations to the...