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The management of ABC Corporation is considering the purchase of a new machine costing $430,000. The...
The management of Dakota Corporation is considering the purchase of a new machine costing $420,000. The...
The management of Dakota Corporation is considering the purchase of a new machine costing $420,000. The company's desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing information, use the following data in determining the acceptability of this investment: Year Income from Operations Net Cash Flow 1 $100,000 $180,000 2 40,000 120,000 3 20,000 100,000...
The management of Arkansas Corporation is considering the purchase of a new machine costing $490,000. The...
The management of Arkansas Corporation is considering the purchase of a new machine costing $490,000. The company's desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing information, use the following data in determining the acceptability of this investment: Year Income from Operations Net Cash Flow 1 $100,000 $180,000 2 40,000 120,000 3 40,000 100,000...
1) 2) 3) 4) 5) The primary advantages of the average rate of return method are...
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The primary advantages of the average rate of return method are its ease of computation and the fact that a. there is less possibility of loss from changes in economic conditions and obsolescence when the commitment is short-term Ob. it is especially useful to managers whose primary concern is liquidity Oc. it emphasizes the amount of income earned over the life of the proposal Od. rankings of proposals are necessary The management of Wyoming Corporation...
1) 2) 3) 4) 5) The management of River Corporation is considering the purchase of a...
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The management of River Corporation is considering the purchase of a new machine costing $380,000 The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment: ncome from Net Cash Year Flow $20,000 20,000 20,000 20,000 20,000 $95,000 95,000 95,000 95,000 95,000 4...
The management of Wyoming Corporation is considering thepurchase of a new machine costing $375,000. The...
The management of Wyoming Corporation is considering the purchase of a new machine costing $375,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability in this situation:YearIncome fromOperationsNet Cash Flow1$18,750$93,750218,75093,750318,75093,750418,75093,750518,75093,750The cash payback period for this investment is:A) 4 yearsB) 5 yearsC) 3 yearsD) 20 years2.The management of Wyoming Corporation is...
Quip Corporation wants to purchase a new machine for $300,000. Management predicts that the machine will...
Quip Corporation wants to purchase a new machine for $300,000. Management predicts that the machine will produce sales of $200,000 each year for the next 5 years. Expenses are expected to include direct materials, direct labor, and factory overhead (excluding depreciation) totaling $80,000 per year. The firm uses straight-line depreciation with an assumed residual (salvage) value of $50,000. Quip's combined income tax rate, t, is 40%. Management requires a minimum after-tax rate of return of 10% on all investments. What...
Quip Corporation wants to purchase a new machine for $300,000. Management predicts that the machi...
Quip Corporation wants to purchase a new machine for $300,000. Management predicts that the machine will produce sales of $200,000 each year for the next 5 years. Expenses are expected to include direct materials, direct labor, and factory overhead (excluding depreciation) totaling $80,000 per year. The firm uses straight-line depreciation with an assumed residual (salvage) value of $50,000. Quip's combined income tax rate, t, is 40%. Management requires a minimum after-tax rate of return of 10% on all investments. What...
Chapter 26 Question 1: (1 point) Calculate the average rate of return for an equipment that...
Chapter 26 Question 1: (1 point) Calculate the average rate of return for an equipment that has a cost of $320,000, an estimated residual value of $20,000, and is estimated to result in total income of $170,000 over 5 years. Chapter 26 Question 2: (1 point) Calculate the cash payback period for an equipment that has a cost of $200,000. The net cash flows for years 1 through 5 are, $90,000, $60,000, $40,000, $20,000, and $15,000 respectively. Chapter 26 Question...
Net Present Value Method The following data are accumulated by Geddes Company in evaluating the purchase...
Net Present Value Method The following data are accumulated by Geddes Company in evaluating the purchase of $105,000 of equipment, having a four-year useful life: Net Income Net Cash Flow Year 1 $31,000 $52,000 Year 2 19,000 40,000 Year 3 9,000 30,000 Year 4 (1,000) 20,000 Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683...
Net Present Value Method The following data are accumulated by Geddes Company in evaluating the purchase...
Net Present Value Method The following data are accumulated by Geddes Company in evaluating the purchase of $102,900 of equipment, having a four-year useful life: Net Income Net Cash Flow Year 1 $33,000 $56,000 Year 2 20,000 43,000 Year 3 10,000 32,000 Year 4 (1,000) 22,000 Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683...
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The primary advantages of the average rate of return method are its ease of computation and the fact that a. there is less possibility of loss from changes in economic conditions and obsolescence when the commitment is short-term Ob. it is especially useful to managers whose primary concern is liquidity Oc. it emphasizes the amount of income earned over the life of the proposal Od. rankings of proposals are necessary The management of Wyoming Corporation...
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The management of River Corporation is considering the purchase of a new machine costing $380,000 The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment: ncome from Net Cash Year Flow $20,000 20,000 20,000 20,000 20,000 $95,000 95,000 95,000 95,000 95,000 4...
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