Q4. Evaluate to total present worth of all the cash-flow of machine XYZ for an interest rate of 10% per year. Relevant costs are as follows Machine XYZ Investment cost $18,000 Useful life 20 years Market value $5,000 Annual operating expenses $250 Overhead cost-end of 7th year $500 Overhead cost-end of 14th year $800

Q4. Evaluate to total present worth of all the cash-flow of machine XYZ for an interest rate of 10% per year. Relevant costs are as follows Machine XYZ Investment cost $18,000 Useful life 20 years Market value $5,000 Annual operating expenses $250 Overhead cost-end of 7th year $500 Overhead cost-end of 14th year $800

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Use Annual Cash Flow Analysis to choose which Alternative should the company choose, if the interest rate 12%. Data Alt. A Alt. B Alt. C Useful Life, Years 13 11 First Cost $2,300,000 $2,780,000 $2,540,000 Salvage Value $82,000 $118,000 $97,000 Annual Benefit $580,000 $670,000 $650,000 M&O $65,000 $78,000 $71,000 M&O Gradient $11,000 $15,000 $12,500
Book Show Me How E Print Item Internal Rate of Return A project is estimated to cost $507,840 and provide annual net cash flows of $69,000 for 10 years. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 4.212 3.791 3.605 3.353 2.991 4.917 4.355 4.111 3.785 3.326 7 5.582 4.868 4.564 4.160 3.605 6.210 5.335 4.968 4.487 3.837 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 of return for this proj using the Present Value of an Annuity of $1 at Compound Interest table shown above. Determine the internal Previous Check My Work 3 more Check My Work uses remaining. Email Instructor Save and Exit Submit Assignmen All work saved. DD F11 F10 80 888 F9 F8 F6 F4 & # $ %3D 4 5 6 7 8 9 3 P E R Y U G H JK
Project Y requires a $350,000 investment for new machinery with a four-year life and no salvage value. The project yields the following annual results. Cash flows occur evenly within each year. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery Selling, general, and administrative expenses Income Revelant Time Value of Money factors: PV $1 (8%, 4 years): PVA $1 (8%, 4 years): PVAD $1 (8%, 4 years): FV $1 (8%, 4 years): FVA $1 (8%, 4 years): FVAD $1 (8%, 4 years): 0.7350 3.3121 3.5771 1.3605 4.5061 4.8666 Project Y $350,000 157,500 87,500 49,000 $56,000
Q5) For the cash flows shown, determine which service alternative should be selected? Assume that the interest rate = 10% per year A B Initial cost, $ 300,000 600,000 Annual cost, $/year 30,000 Annual cost started at 22,000 year 4, $/year Extra cost every 6 40,000 years, S Cost started at year 4 10,000 to 8 Salvage value, $ 30,000 110,000 Life, Years 8 8 1- Capitalized cost (CC) of Alternative A: A) -493,766 B)-473,766 C)-482,010 D) -461,421 E)-453,730 2- Capitalizes cost (CC) of alternative B: A)-851,844 B)-920,056 C) -875,631 D) -951,844 E)-984,008 3- Which alternative will be selected on the basis of their capitalized cost analyses? Justify your answer.
1. For the following cash flow compute: Investment $65,000 42,000 60,000 Annual operating Cost Annual Revenues Operating cost will increase by Arithmetic Gradient of G=$500 annually from the second year thru the 6 year Salvage Value at the end of 6 year Investment life n=6 years MARR= 10% 3,000 Hint for IRR use 20% a. Draw the cash-flow Diagram and compute PVW AW.FW b. IRR C. ERR
Given information: Initial Investment = $20,000 Yearly Cash Flows = $5000 Time = 5 years Discount rate = 6% Can you please use excell formulas to show at what discount rate is the net present value "0"...I am not sure which function to use. Thank you!
Stellan Manufacturing is considering the following two investment proposals: Proposal X Proposal Y $510,000 4 years Investment Useful life Estimated annual net cash inflows received at the end of each year Residual value Depreciation method Annual discount rate 1 2455 N. Compute the present value of the future cash inflows from Proposal Y. Present value of an ordinary annuity of $1: 8% 9% 10% 2 3 6 0.926 1.783 2.577 3.312 3.993 4.623 OA. $255,000 OB. $295,800 OC. $317,520 OD. $272,085 0.917 1.759 2.531 3.240 3.809 4.486 $732,000 5 years 0.909 1.736 2.487 3.170 3.791 4.355 $164,000 $68,000 Straight-line Straight-line 10% $98,000 $0 ... 9%
Calculate the Equivalent X(4) for a project with the following cash flows: First Cost (F.C) = JD 13000, Annual Income for the last 6 years= JD 2400 Operating Cost (O.C.) = JD 30 Income, at the end of the 4th year = JD 5000, Salvage Value (S.V.) = 1800. If n= 9 years and i=7% per year. ( show the CFD and calculations)
8. Calculate Internal Rate of Return from the following information: Initial investment = Rs 6,00,000 Life of the asset = 4 years Estimated net annual cash inflows: 1st year ended = Rs 1,50,000 2nd year ended = Rs 2,00,000 %3D 3rd year ended = Rs 3,00,000 4th year ended = 2,00,000.
Tiberius Manufacturing is considering two alternative investment proposals with the following data: Proposal X Investment $10,800,000 Useful life. Estimated annual net cash inflows for 5 years 5 years $2,160,000 Residual value $60,000 Depreciation method Straight-line Required rate of return 14% Calculate the accounting rate of return for Proposal Y. (Round any intermediate calculations and your final answer to two decimal places.) OA. 13.90% OB. 11.56% OC. 17.83% OD. 7.58% Proposal Y $440,000 5 years $99,000 $35,000 Straight-line 13%
Compute the annual-equivalence amount for the following cash flow series at i = 12% $1.600 S1.600 $800 SH00 S800 $500 $500 $1.000 You invest in a piece of equipment costing $50,000. The equipment will be used for two years, and it will be worth $20,000 at the end of three years. The machine will be used for 4,000 hours during the first year, 6,000 hours during the second year, and 5,000 hours during the third year. The expected savings associated with the use of the piece of equipment will be $28,000 during the first year, $40,000 during the second year, and $35,000 during the third year. Your interest rate is 12%. (a) What is the capital recovery cost? (b) What is the annual equivalent worth? (c) What is net savings generated per machine-hour?
The cash flows for two alternatives are shown. The correct equation for computing the AW of Alternative B at 10% per year interest is: A B First Cost, $ |-25,000 |-17000 Annual cost, $ per year -3000 |-3200 Salvage Value, $ |1100 2100 Life, years 3 5 O AW(B)=-17,000(A/P, 10%, 5) -3200 (A/P, 10%, 5)+2100(A/F, 10%, 5) AW(B)=-17,000 (A/P, 10%, 5)-3200-2100(A/F, 10%, 5) AW(B)=-17,000 (A/P, 10%, 15)-3200+2100(A/F, 10%, 15) O AW(B)=-17,000 (A/P, 10%, 5)-3200+2100(A/F, 10%, 5)