Compute this machine's accounti, A machine costs $500,000 and is expected to yield an after-tax net income of $19,000 each year. You can expect revenues net of any expense, except machine costs, of $150,000 at the end of each year for five years. Prepare the journal, You have the following information on a potential investment. After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction. A novel dynamic modeling method for a multi-product production line is developed to investigate dynamic properties of the system under random disruptions such as machine failures and market demand . TABLE B.1 Present Value of 1 Rate Perlods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% 0.9901 0.9804 0.9709 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.8929 0.8696 0.9803 0.9612 0.9426 0.9246 0.9070 0.8900 0.8734 0.8573 0.8417 0.8264 0.7972 0.7561 0.9706 0.9423 0.9151 0.8890 0.8638 0.8396 08163 .793 0.7722 7513 7118 06575 0.9610 0.9238 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6355 0.5718 0.9515 0.9057 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5674 0.4972 0.9420 0.8880 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5066 0.4323 0.9327 0.8706 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4523 0.3759 0.9235 0.8535 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4039 0.3269 0.9143 0.8368 0.7664 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3606 0.2843 0.9053 0.8203 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3220 0.2472 0.8963 0.8043 0.7224 0.6496 0.5847 0.5268 0.4751 0.4289 0.3875 0.3505 0.2875 0.2149 0.8874 0.7885 0.7014 0.6246 0.5568 0.4970 0.4440 0.3971 0.3555 0.3186 0.2567 0.1869 0.8787 0.7730 0.6810 0.6006 0.5303 0.4688 0.4150 0.3677 0.3262 0.2897 0.2292 0.1625 0.8700 0.7579 0.6611 0.5775 0.5051 0.4423 0.3878 0.3405 0.2992 0.2633 0.2046 0.1413 0.8613 0.7430 0.6419 0.5553 0.4810 0.4173 0.3624 0.3152 0.2745 0.2394 0.1827 0.1229 0.8528 0.7284 0.6232 0.5339 0.4581 0.3936 0.3387 0.2919 0.2519 0.2176 0.1631 0.1069 0.8444 0.7142 0.6050 0.5134 0.4363 0.3714 0.3166 0.2703 0.2311 0.1978 0.1456 0.0929 0.8360 0.7002 0.5874 0.4936 0.4155 0.3503 0.2959 0.2502 0.2120 0.1799 0.1300 0.0808 0.8277 0.6864 0.5703 0.4746 0.3957 0.3305 0.2765 0.2317 0.1945 0.1635 0.1161 0.0703 0.8195 0.6730 0.5537 0.4564 0.3769 0.3118 0.2584 0.2145 0.1784 0.1486 0.1037 0.0611 0.7798 0.6095 0.4776 0.3751 0.2953 0.2330 0.1842 0.1460 0.1160 0.0923 0.0588 0.0304 0.7419 0.5521 0.4120 0.3083 0.2314 0.174 0.1314 0.0994 0.0754 0.0573 0.0334 0.0151 0.7059 0.5000 0.3554 0.2534 0.1813 0.1301 0.0937 0.0676 0.0490 0.0356 0.0189 0.0075 0.6717 0.4529 0.3066 0.2083 0.1420 0.0972 0.0668 0.0460 0.0318 0.0221 0.0107 0.0037 9 10 12 13 14 15 16 18 19 20 25 30 35 40 * Used to compute the present value of a known future amount. Calculate its book value at the end of year 6. The investment costs $45,600 and has an estimated $8,700 salvage value. Assume Peng requires a 10% return on its investments. d) 9.50%. The investment costs $45,000 and has an estimated $6.000 salvage value. Best study tips and tricks for your exams. Comp, Pang Company is considering an investment expected to generate an average net income after taxes of $2,900 for three years. Option 1 generates $25,000 of cash inflow per year and has zero residual value. The expected average rate of return, giving effect to depreciation on investment is 15%. What lump-sum amount should the company invest now to have the $370,000 available at the end of the eight-year period? a. The investment costs $48,900 and has an estimated $12,000 salvage value. QS 25-7 Computation of accounting rate of return LO P2 Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. A machine costs $210,000, has a $14,000 salvage value, is expected to last ten years, and will generate an after-tax income of $43,000 per year after straight-line depreciation. B. $40,000 Economic life 5 years Salvage value Zero Tax rate payable (assume paid in year of income) 30, A machine costs $500,000, has a $28,700 salvage value, is expected to last eight years, and will generate an after-tax income of $72,000 per year after straight-line depreciation. TABLE B.3 Present Value of an Annuity of 1 Rat Periods 1% 2% 4% 5% 6% 7% 5% 10% 12% 15% 0.9901 0.9804 0.9709 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.8929 0.8696 1.9704 1.9416 1.9135 1.88611.8594 1.8334 8080 1.7833 1.759 .7355 16901 1.6257 2.9410 2.8839 2.8286 2.7751 2.7232 2.6730 2.6243 2.5771 2.5313 2.4869 2.4018 2.2832 3.9020 3.8077 3.7171 3.6299 3.5460 3.4651 3.3872 3.3121 3.2397 3.1699 3.0373 2.8550 3.9927 3.8897 3.7908 3.6048 3.3522 5.7955 5.6014 5.4172 5.2421 5.0757 4.9173 4.7665 4.6229 4.4859 4.3553 4.1114 3.7845 5.3893 5.2064 5.0330 4.8684 4.5638 4.1604 7.6517 7.3255 7.0197 6.73276.4632 6.2098 5.9713 5.7466 5.5348 5.3349 4.9676 4.4873 8.5660 8.1622 7.7861 7.4353 7.1078 6.8017 6.5152 6.2469 5.9952 5.7590 5.3282 4.7716 9.4713 8.9826 8.5302 8.1109 7.7217 7.3601 7.0236 6.7101 6.4177 6.1446 5.6502 5.0188 7.1390 6.8052 6.4951 5.93775.2337 11.255 10.5753 9.95409.3851 8.8633 8.3838 7.9427 7.5361 7.1607 6.8137 6.1944 5.4206 12.1337 11.3484 10.6350 9.9856 9.3936 8.8527 8.3577 7.9038 7.4869 7.1034 6.4235 5.5831 13.0037 12.1062 11.2961 10.5631 9.8986 9.2950 8.7455 8.2442 7.7862 7.3667 6.6282 5.7245 13.8651 .8493 11.9379 11.1184 10.3797 9.7122 9.1079 8.5595 8.0607 7.6061 6.8109 5.8474 14.7179 13.5777 12.5611 11.6523 10.8378 10.1059 9.4466 8.8514 8.3126 7.8237 6.9740 5.9542 15.5623 14.2919 13.1661 12.1657 11.2741 10.4773 9.7632 9.1216 8.5436 8.0216 7.1196 6.0472 16.3983 14.9920 13.7535 12.6593 11.6896 10.8276 10.0591 9.3719 8.7556 8.2014 7.2497 6.1280 17.2260 15.6785 14.3238 13.1339 12.0853 11.1581 10.3356 9.6036 8.9501 8.3649 7.3658 6.1982 18.0456 16.3514 14.8775 13.5903 12.4622 11.4699 10.5940 9.8181 9.1285 8.5136 7.4694 6.2593 22.0232 19.5235 17.4131 15.6221 14.0939 12.7834 11.6536 10.6748 9.8226 9.0770 7.8431 6.4641 25.8077 22.3965 19.6004 17.2920 5.3725 13.7648 12.4090 11.2578 10.2737 9.4269 8.0552 6.5660 29.4086 24.9986 21.4872 18.6646 16.3742 14.4982 12.9477 11.6546 10.5668 9.6442 8.1755 6.6166 32.8347 27.3555 23.1148 19.7928 17.1591 15.0463 13.3317 11.9246 10.7574 9.7791 8.2438 6.6418 4.8534 4.7135 4.57974.4518 4.3295 4.2124 4.1002 6.7282 6.4720 6.2303 6.0021 5.7864 5.5824 10.3676 9.7868 26 8.7605 8.3064 7.8869 7.4987 12 13 14 15 16 19 20 25 30 35 40 Used to calculate the present value of a series of equal payments made at the end of each period. Compute the net present value of this investment. Compute this machine's accoun, A machine costs $300,000 and is expected to yield an after-tax net income of $9,000 each year. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. On whether to accept or reject a project, the NPV is interpreted on the result of the calculation. The system requires a cash payment of $125,374.60 today. Assume Peng requires a 10% return on its investments, compute the net present value of this investment. A bond that has a $1,000 par value (face value) and a con, Strauss Corporation is making a $70,000 investment in equipment with a 5-year life. The company anticipates a yearly net income of $3,700 after taxes of 20%, with the cash flows to be received evenly throughout each year. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Our experts can answer your tough homework and study questions. Coins can be redeemed for fabulous a. The investment costs $56,100 and has an estimated $7,500 salvage value. Peng Company is considering an investment expected to generate an average net income after taxes of $3,000 for three years. Multiple Choice, returns on investment is computed in the following manner. The amount to be invested is $100,000. Assume Peng requires a 5% return on its investments. Peng Company is considering an investment expected to generate an average net income after taxes of $2,200 for three years. (PV of. Assume Peng requires a 10% return on its investments. What is Roni, You are considering an investment in First Allegiance Corp. NPV can be calculated using a financial calculator: Cash flow each year in year 1 and 2 = $2,600, Cash flow in year 3 = $2,600 + $7,200 = $9,800. All, Maude Company's required rate of return on capital budgeting projects is 9%. PVA of $1. Transcribed image text: Peng Company is considering an investment expected to generate an average net income after taxes of $2, 400 for three years. The company anticipates a yearly net income of $3,800 after taxes of 16%, with the cash flows to be received evenly throughout each year. The lease term is five years. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. Assume Peng requires a 10% return on its investments, compute the net present value of this investment. a. Compute Loon s taxable inco. (Round each present value calculation to the nearest dollar. Compute the payback period. Determine the net present value, and ind. This investment will produce certain services for a community such as vehicle kilometres, seat . Required information (The following information applies to the questions displayed below.) (Round your computations and answers to 0 decimal p, BAP Corporation is reviewing an investment proposal. Ferrell, Liang and Renneboog (2016) as well as Chang, Chen, Chen and Peng (2019) . ), The net present value of the investment is -$6,921. After inputting the value, press enter and the arrow facing a downward direction. A machine costs $180,000, has a $12,000 salvage value, is expected to last eight years, and will generate an after-tax income of $39,000 per year after straight-line depreciation. Cash flow The investment costs $49,800 and has an estimated $11,400 salvage value. Peng Company is considering an investment expected to generate an average net income after taxes of $3,300 for three years. The new present value of after tax cash flows from an investment less the amount invested. The project is expected to have an after-tax return of $250,000 in each of years 1 and 2. Assume Peng requires a 10% return on its investments. a. 8 years b. Compute the net present value of this investment. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. The machine will cost $1,772,000 and is expected to produce a $193,000 after-tax net income to be re, A company can buy a machine that is expected to have a three-year life and a $36,000 salvage value. The, Shep Corp. is considering a 20-year investment with a net present value of cash flows of -$20,800 and an uncertain salvage value. gifts. The company anticipates a yearly net income of $2,950 after taxes of 34%, with the cash flows to be received evenly throughout each year. The investment costs $45,000 and has an estimated $6,000 salvage value. Presented below is the initial cost and estimates of the book value of the investment at the end of each year, the net cash flows for each year, an, Ahnen Company owns the following investments. Management estimates that this machine will generate annual after-tax net income of $540. The salvage value of the asset is expected to be $0. Compu, Pong Company is considering an investment expected to generate an average net income after taxes of $3,500 for three years. The present value of the future cash flows, at the company's desired rate of re, E company is a lessee with a capital lease. Cullumber Company is considering an investment that will return a lump sum of $942,800, 3 years from now. Peng Company is considering an investment expected to generate an average net income after taxes of $2,000 for three years. Peng Company is considering an investment expected to generate an average net income after taxes of $3,500 for three years. What is the present valu, Strauss Corporation is making an $85,200 investment in equipment with a 5-year life. The excess cost over the book value of an investment that is due to expected above-average earnings is labeled on the consolidated balance sheet as: a. A company is deciding to invest in a new project at a cost of $2 million dollars. d) Provides an, Dango Corporation is reviewing an investment proposal. Peng Company is considering an investment expected to generate an average net income after taxes of. Each investment costs $480. The company anticipates a yearly net income of $3,650 after taxes of 22%, with the cash flows to be received evenly throughout each year. $2,000 per year for 10 years is the equivalent of $12,835 today ($2,000 6.4177) Assume Peng requires a 5% return on its investments. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. It is considering investing in a project that costs $50,000 and is expected to generate cash inflows of $20,000 at the end of each year for 3 years. The NPV is computed as: {eq}\displaystyle \text{Present value of annuity (PVA) } = P * \frac{1 - (1 + r)^{-t}}{r} {/eq}, Become a Study.com member to unlock this answer! What amount should Cullumber Company pay for this investment to earn a 12% return? The expected future net cash flows from the use of the asset are expected to be $580,000. It expects the free cash flow to grow at a constant rate of 5% thereafter. Q: Peng Company is considering an investment expected to generate an average net. Required information The following information applies to the questions displayed below Peng Company is considering an investment expected to generate an average net income after taxes of $3,500 for three years. Each investment costs $1,000, and the firm's cost of capital is 10%. At a discount rate of 10 per, Zippydah Company has the following data at December 31, 2014. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. The company pays an operating tax rate of 30%. copyright 2003-2023 Homework.Study.com. The cost of the asset is $120,000, Babirusa Company is considering the following investment: Assume straight-line depreciation is used. (20-year, 12% pr, What is the NPV and IRR for the two investments options below? Required information Use the following information for the Quick Study below. The fair value of the equipment is $476,000. It is mainly used to evaluate a prospective project whether it would be profitable to the investor or not. The investment costs $56,100 and has an estimated $7,500 salvage value. What is the present valu, Your firm is considering a new investment proposal and would like to calculate its weighted average cost of capital. The company is expected to add $9,000 per year to the net income. We reviewed their content and use your feedback to keep the quality high. X The IRR on the project is 12%. The company anticipates a yearly net income of $3,300 after taxes of 30%, with the cash flows to be rece, A company bought a machine that has an expected life of seven years and no salvage value. The company's required rate of return is 13 percent. = The machine will cost $1,824,000 and is expected to produce a $206,000 after-tax net income to be re. The investment costs $58, 500 and has an estimated $7, 500 salvage value. The present value of the future cash flows is $225,000. It is considering investing in a project that costs $210,000 and is expected to generate cash inflows of $85,000 at the end of each year for 4 years. 2. Using the original cost of the asset, the unadjusted rate of return o, The Charles Company is planning to invest $450,000 in a factory machine. a. Ignoring taxes, what is the most that the company would be willing to in, Strauss Corporation is making a $89,600 investment in equipment with a 5-year life.The company uses the straight-line method of depreciation and has a tax rate of 40 percent.The company's required rat, Strauss Corporation is making a $89,750 investment in equipment with a 5-year life.The company uses the straight-line method of depreciation and has a tax rate of 40 percent.The company's required rat, Strauss Corporation is making a $91,950 investment in equipment with a 5-year life. The investment costs $47,400 and has an estimated $8,400 salvage value. Peng Company is considering an investment expected to generate an average net income after taxes of $2, 400 for three years. What is the accounting rate of return? Management predicts this machine has a 10-year service life and a $100,000 salvage value, and it uses st, A machine costs $700,000 and is expected to yield an after-tax net income of $30,000 each year. The building has an estimated useful life of 40 years and an expected salvage value of $550,000. Sign up for free to discover our expert answers. The company's required r, Strauss Corporation is making an $85,900 investment in equipment with a 5-year life. investment costs $48,900 and has an estimated $12,000 salvage 1, A machine costs $180,000 and will have an eight-year life, a $20,000 salvage value, and straight-line depreciation is used. The management of Samsung is planning to invest in a new companywide computerized inventory tracking system. The company's required rate of return is 10% for this class of asset. Peng Company is considering an investment expected to generate an average net income after taxes of $2,700 for three years. and EVA of S1) (Use appropriate factor(s) from the tables provided. distributed with a mean of 78 when mixing oil and water is the change in entropy positive or Management predicts this machine has a 8-year service life and a $100,000 salvage value, and it uses str, Carla Company owns equipment that cost $1,044,000 and has accumulated depreciation of $440,800. Compute the net present value of this investment. For example: How much would you need to invest today at 10% compounded semiannually to accumulate $5,000 in 6 years from today? You can specify conditions of storing and accessing cookies in your browser, Peng Company is considering an investment expected to generate an average net income after taxes of $2,600 for three years. Amount 51,000/2=25,500. The corporate tax rate is 35 percent. information systems, employees, maintenance, and other costs (inputs). The machine is expected to last four years and have a salvage value of $50,000. X Management predicts this machine has a 8-year service life and a $80,000 salvage value, and it uses strai, A machine costs $300,000 and is expected to yield an after-tax net income of $9,000 each year. What amount should Elmdale Company pay for this investment to earn a 12% return? Assume Peng requires a 5% return on its investments. What is the NPV of the investment, The Zinger Corporation is considering an investment that has the following data: Year 1 Year 2 Year 3 Year 4 Year 5 Investment $8,000 $3,000 Cash inflow $2,000 $2,000 $5,000 $4,000 $4,000 Cash inflows occur evenly throughout the year. The expected future net cash flows from the use of the asset are expected to be $580,000. If a potential investments internal rate of return is above the companys hurdle rate, should the investment be made? It gives us the profitability and desirability to undertake the project at our required rate of return. Let us assume straight line method of depreciation. The company anticipates a yearly net income of $3,300 after taxes of 38%, with the cash flows to be received evenly throughout each year. Assume Peng requires a 15% return on its investments. Melton Company's required rate of return on capital budgeting projects is 16%. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. A. Financial projections for the investment are tabulated here. The payback period f. Elmdale Company is considering an investment that will return a lump sum of $743,100, 7 years from now. it is expected that: Initial cost $2,780,000 Annual cash inflow $2,540,000 Annual cash outflows $2,260,000 Estimated useful life 10 years Salvage value $4,400,000 Discount rate 8% Calculate the net pr, Lt. Dan Corporation invested $80,000 in a manufacturing equipment. Required information The following information applies to the questions displayed below] Peng Company is considering an investment expected to generate an average net income after taxes of $3,500 for three years. A new operating system for an existing machine is expected to cost $690,000 and have a useful life of six years. Required information (The following information applies to the questions displayed below.] The purpose of this study is to empirically examine the influence of firm characteristics (size, age, industry type, and ownership) on a firm's strategic orientation. Assume Peng requires a 15% return on its investments. View some examples on NPV. What is the present value, The Best Manufacturing Company is considering a new investment. Peng Company is considering an investment expected to generate an average net income after taxes of $3,400 for three years. Accounting Rate of Return Choose Denominator: Choose Numerator: T = Accounting Rate of Return = Accounting rate of return 0, Required Information [The following information applies to the questions displayed below) Peng Company is considering an investment expected to generate an average net income after taxes of $1950 for three years. The investment costs $48,900 and has an estimated $12,000 salvage value. check bags. C. Appearing as a witness for a taxpayer Assume Peng requires a 10% return on its investments. an average net income after taxes of $2,900 for three years. Yokam Company is considering two alternative projects. A company has three independent investment opportunities. Compute the payback period. Assume Peng requires a 15% return on its investments. What is the accounti, A company buys a machine for $79,000 that has an expected life of 4 years and no salvage value. Negative amounts should be indicated by #12 Assume the company uses straight-line . The investment costs $57.600 and has an estimated $8,400 salvage value. The investment costs $58, 500 and has an estimated $7, 500 salvage value. The current value of the building is estimated to be $300,000. All other trademarks and copyrights are the property of their respective owners. The company has an all-equity capital structure, and its cost of equity capital is 15 percent. A company is investing in a solar panel system to reduce its electricity costs. 1. If t, Your company just bought an asset for $200,000 with an estimated useful life of 5 yrs, and a salvage value of $10,000. Capital investment $180,000 Estimated useful life 3 years Estimated salvage value 0 Estimated annual net cash inflow $75,000 Required rate of return 10% What is the net present value of the inv, If an asset costs $210,000 and is expected to have a $30,000 salvage value at the end of its 10-year life, and it generates annual net cash inflows of $30,000, the cash payback period is: a. Axe anticipates annual net income after taxes of $1,500 from selling the product produced by the new machin, A company can buy a machine that is expected to have a three-year life and a $21,000 salvage value. Investment required $60,000,000, Salvage value after 10 years $0, Gross income $2, A company forecasts free cash flow of $40 million in three years. Peng Company is considering an investment expected to generate Free and expert-verified textbook solutions. What is the present value, Strauss Corporation is making a $87,550 investment in equipment with a 5-year life. The company uses straight-line depreciation. Compute the net present value of this investment. Using the original cost of the asset, the unadjusted rate of return on, A machine costs $600,000 and is expected to yield an after-tax net income of $23,000 each year. Select chart Compute this machine s accoun, A machine costs $700,000 and is expected to yield an after-tax net income of $52,000 each year. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. Management predicts this machine has a 10-year service life and a $105,000 salvage value, and it uses straight-line depreciation. The machine will cost $1,804,000 and is expected to produce a $201,000 after-tax net income to be re, A company can buy a machine that is expected to have a three-year life and $30,000 salvage value. The investment costs $45,300 and has an estimated $7,500 salvage value. a. The company s required rate of return is 14 percent. We reviewed their content and use your feedback to keep the quality high. Required: Prepare the, X Company is thinking about adding a new product line. The company's required, A company is considering a proposal that requires an initial investment of $91,100, has predicted net cash inflows of $30,000 per year for four years and no salvage value. Assume the company uses straight-line . Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. d. Loss on investment. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. The estimated life of the machine is 5yrs, with no salvage value. What is the investment's payback period? The asset is expected to have a fair value of $270,000 at five years, and a fair value of $90,000 at the e, Horak Company accumulates the following data concerning a proposed capital investment: cash cost $219,620, net annual cash flow $34,932, present value factor of cash inflows for 10 years 6.71 (rounded). Assume all sales revenue is received, Elmdale Company is considering an investment that will return a lump sum of $769,700, 7 years from now. The investment costs $45,000 and has an estimated $6,000 salvage value. Which of, Fraser Company will need a new warehouse in eight years. The facts on the project are as tabulated. The system is expected to generate net cash flows of $13,000 per year for the next 35 years. Management predicts this machine has a 9-year service life and a $60,000 salvage value, and it uses strai, A machine costs $700,000 and is expected to yield an after-tax net income of $52,000 each year. Accounting 202 Final - Formulas and Examples. The company's required rate of return is 12 percent. The project would require a $28,000 initial investment and has a salvage value of $2,000, A company has a minimum required rate of return of 9%. Assume Peng requires a 10% return on its investments. Compute the net present value of each potential investment. Peng Company is considering an investment expected to generate an average net income after taxes Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years.