A company is considering a project that would require purchasing an asset at a cost of $240,000. The project is expected to create cost savings if it is accepted. Assume the present value of salvage value is $12,000, present value of cost savings after-tax is $220,000, and PVCCATS is $60,000. What is the project's net present value?
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A company is considering a project that would require purchasing an asset at a cost of $240,000. The project is expected to create cost savings if it is accepted. Assume the present value of salvage value is $12,000, present value of cost savings after-tax is $220,000, and PVCCATS is $60,000. What is the project's
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- San Lucas Corporation is considering investment in robotic machinery based upon the following estimates: a. Determine the net present value of the equipment, assuming a desired rate of return of 10% and annual net cash flows of 700,000. Use the present value tables appearing in Exhibits 2 and 5 of this chapter. b. Determine the net present value of the equipment, assuming a desired rate of return of 10% and annual net cash flows of 500,000, 700,000, and 900,000. Use the present value tables (Exhibits 2 and 5) provided in the chapter in determining your answer. c. Determine the minimum annual net cash flow necessary to generate a positive net present value, assuming a desired rate of return of 10%. Round to the nearest dollar. d. Interpret the results of parts (a), (b), and (c).An engineering company is evaluating two different options for buying a triaxial testing machine. The expected cash flow for two different options and other required data are given in Table. By considering data given in Table, which option should be preferred by the engineering company. Give all calculation steps. First Cost (TL) Annual Operating COsts (TL) Annual Revenue (TL) Salvage Value (TL) Economic Life (TL) Option A 120000 14000 50000 30000 5 Option B 150000 10000 60000 350000 5 Interest Rate - 0.05 Discount Rate - 0.05Determine which equipment should be favored, comparing the net present values of the two proposals and assuming a minimum rate of return of 15%. Use the present value table appearing above. Processing Mill Electric Shovel EE Present value of net cash flow total Less amount to be invested Net present value Which project should be favored?
- XYZ Company is looking to invest in some new machinery to replace its current malfunctioning one. The new machine, which costs P420,000, would increase annual revenue by P200,000 and annual cash expenses by P50,000. The machine is estimated to have a useful life of 12 years and P30,000 salvage value. A. Accounting rate of return on initial investment B. Accounting rate of return on average investment.Payback, Accounting Rate of Return, Net Present Value, Internal Rate of Return Follow the format shown in Exhibit 12B.1 and Exhibit 12B.2 as you complete the requirement below. Blaylock Company wants to buy a numerically controlled (NC) machine to be used in producing specially machined parts for manufacturers of trenching machines. The outlay required is $800,000. The NC equipment will last five years with no expected salvage value. The expected after-tax cash flows associated with the project follow: Year Cash Revenues Cash Expenses 1 $1,600,000 $1,200,000 2 1,600,000 1,200,000 3 1,600,000 1,200,000 4 1,600,000 1,200,000 5 1,600,000 1,200,000 Required: Compute the investment's Net Present Value, assuming a required rate of return of 8 percent. Round present value calculations and your final answer to the nearest dollar.NPV = $fill in the blank 1Payback, Accounting Rate of Return, Net Present Value, Internal Rate ofReturnBlaylock Company wants to buy a numerically controlled (NC) machineto be used in producing specially machined parts for manufacturers oftractors. The outlay required is $384,000. The NC equipment will last 5years with no expected salvage value. The expected after-tax cash flowsassociated with the project follow: Required:Compute the payback period for the NC equipment.Compute the NC equipment's ARR. Round the percentage to one decimalplace.Compute the investment's NPV, assuming a required rate of return of10%.Compute the investment's IRR.
- Use the following data to answer questions (a) to (d). A company is considering the purchase of a copier that costs RM 50,000. Assume the required rate of return is 10% and the following is cash flow schedule: Year 1: RM 20,000 Year 2: RM 30,000 Year 3: RM 20,000 What is the project’s payback period? What is the project’s NPV? What is the project’s IRR? What is the project’s profitability index (PI)?Yokam Company is considering two alternative projects. Project 1 requires an initial investment of $400,000 and has a present value of cash flows of $1,100,000. Project 2 requires an initial investment of $4,000,000 and has a present value of cash flows of $6,000,000. 1. Compute the profitability index for each project. 2. Based on the profitability index, which project should the company prefer? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the profitability index for each project. Project 1 Project 2 Choose Numerator: Profitability Index T 7 Choose Denominator: 4 of 5 180 # Next > G OPut answer in table format Yokam Company is considering two alternative projects. Project 1 requires an initial investment of $560,000 and has a present value of cash flows of $2,200,000.0. Project 2 requires an initial investment of $5,000,000 and has a present value of cash flows of $7,000,000. 1. Compute the profitability index for each project.2. Based on the profitability index, which project should the company prefer?
- Use the following information to evaluate a new project to purchase an equipment. The new equipment has a 5-year economic life, and it will be depreciated by the straight-line method. Revenues and other operating costs are expected to be constant over the project's life. What is the project's Year 5 cash flow? Equipment cost Shipping and installation cost Investment in net operating working capital Salvage value Sales revenue, each year Operating costs (excluding depreciation) Tax rate Select one: O a. $90,120 O b. $81,200 O c. $79,250 O d. $83,600 $110,000 $10,000 $40,000 $20,000 $50,000 $24,000 40%Newport Corporation is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase) in net cash flow of $200,000. The equipment will have an initial cost of $900,000 and a 6-year useful life with no expected salvage value. What is the accounting rate of return? Multiple Choice 16.67% 22.22% 5.56% 44.44%Please view the following video before answering this question. Video Example 4.3 Click here to access the TVM Factor Table Calculator Consider a palletizer at a bottling plant that has a first cost of $141,000, operating and maintenance costs of $16,500 per year, and an estimated net salvage value of $23,500 at the end of 33 years. Assume an interest rate of 6.00%. What is the present equivalent cost of the investment if the planning horizon is 33 years? O $387,900 O $362,900 O $372,363 O $423,400