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A company is considering the purchase of a new piece of equipment for $90,000. Predicted annual...
1) A company is considering the purchase of new equipment for $90,000. The projected annual net cash flows are $35,500. The machine has a useful life of 3 years and no salvage value. Management of the company requires a 8% return on investment. The present value of an annuity of $1 for various periods follows: Period Present value of an annuity of $1 at 8% 1 0.9259 2 1.7833 3 2.5771 What is the net present value of...
QUESTION 24 Basso Company is considering the purchase of a new equipment for $320,000. The equipment has no residual value and net cash inflows for four years are: Year 1 Year 2 Year 3 Year 4 $100,000 150,000 140,000 200,000 What is the cash payback period for the investment? a. 2.5 years. b.2.75 years. O c. 2 years. d. 3 years.
A company is considering purchase of a piece of equipment that costs £23,000. Projected net annual cash flows over the project's life are: Year Net Cash Flows 4,000 7,000 15,000 10,000 (a) Calculate the payback period for the project. (3 marks) (b) Calculate the net present value for the project, assuming a cost of capital of 11%. (4 marks) (c) Determine the internal rate of return for the project. (3 marks)
Nelson Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in cash flow of $112.000. The equipment will have an initial cost of $224,000 and have a 3 year life. If the salvage value of the equipment is estimated to be $87,000, what is the payback period? Ignore income taxes Multiple Choice 0 122 years O 200 years O 278 years O 500 years O
Belmont Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net income after tax of $200,000. The equipment will have an initial cost of $1,000,000 and have an 8-year life. If there is no salvage value of the equipment, what is the payback period? 8 years 5 years 1.6 years 3.08 years
Company A is considering the purchase of a new piece of equipment which would cost $10,000 with a 5 year useful life and have a salvage of $500 at the end of the 5 year period. Marginal tax rate is 30%, avg tax rate 20%. Assume straight line depreciation, the net effect of annual depreciation on the free cash flow is$___ in each of the 5 years.
Wright Corp. is considering the purchase of a new piece of equipment, which would have an initial cost of $1,000,000 and a 5-year life. There is no salvage value for the equipment. The increase in cash flow each year of the equipment's life would be as follows: Year 1 $ 375,000 Year 2 $ 350,000 Year 3 $ 285,000 Year 4 $ 230,000 Year 5 $ 185,000 What is the payback period? 3.00 years 2.96 years 2.39 years 3.51 years
Big Cat Company is considering the purchase of a new piece of equipment. Relevant information concerning the equipment follows: Purchase cost: $180,000 Annual cost savings that will be provided by the equipment: $37,500 Life of the equipment: 12 years (Ignore income taxes.) Compute the payback period for the equipment. If the company rejects all proposals with a payback period of more than four years, would the equipment be purchased? Compute the simple rate of return on the equipment. Use straight-line...
Grayson Corp. is considering the purchase of a piece of equipment that costs $29,233. Projected net annual cash flows over the project's life are:YearNet Annual Cash Flow1 $5,181216,784319,816419,675The cash payback period is _______ . Round your answer by two decimals
Company A is considering investing in a piece of equipment with a cost of $150,000. Annual cash flows over the 7-year useful life are projected to be $27,000. The payback period is?