Which of the following functional groups will ionize in Negative amounts should be indicated by a minus sign.) The corporate tax rate is 35 percent. The investment costs $49,000 and has an estimated $8,800 salvage value. The Action Plan for Soil Pollution Prevention and Control ("10-point Soil Plan") provides the top-level design for soil environmental protection in China and motivates heavy polluters to participate in soil pollution prevention and control. What investment(s) should the firm make according to net present v, Unrealized gains or losses on available-for-sale investments occur when a company adjusts the investment to : A) average value when an asset is disposed B) average value but has not yet disposed of the asset C) fair value when an asset is disposed D) f, Finnegan Company plans to invest in a new operating plant that is expected to cost $500,000. 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). $1,950 for three years. b. Peng Company is considering an investment expected to generate an average net income after taxes of $2,700 for three years. Crispen normally uses a 10 percent discount rate to evaluate projects but feels it should use 12 per. Assume Peng requires a 15% return on its investments. Peng Company is considering an investment expected to generate an average net income after taxes of $3,000 for three years. The company's required rate of return is 10% for this class of asset. Carmino Company is considering an investment in equipment that is expected to generate an after-tax income of $5,000 for each year of its four-year life. The annual depreciation cost is 10% of fixed capital investment. What is the accounti, A company buys a machine for $70,000 that has an expected life of 6 years and no salvage value. Solved Peng Company is considering an investment expected to - Chegg straight-line depreciation Tradin, Drake Corporation is reviewing an investment proposal. It expects the free cash flow to grow at a constant rate of 5% thereafter. The fair value of the equipment is $464,000. Peng Company is considering an investment expected to generate an average net income after taxes of $3,300 for three years. Assume the company uses straight-line depreciation (PV of $1. The expected average rate of return, giving effect to depreciation on investment is 15%. Solution: Annual depreciation = (Cost - Salvage value) / useful life = ($45,600 - $8,700) / 3 = $12,300 Annual cash i. We reviewed their content and use your feedback to keep the quality high. Projected annual cash flows are: Year 1 $500,000 Year 2 $600,000 Year 3 $700,000 Year 4 $400,000 Calculate the NPV and the IRR. These assets contribute $28,000 to annual net income when depreciation is computed on a straight-line basis. The net income after the tax and depreciation is expected to be P23M per year. Assume Peng requires a 15% return on its investments. FV of $1. The investment costs $54,000 and has an estimated $7,200 salvage value. Compute the accounting rate of return for this. 8 years b. The salvage value of the asset is expected to be $0. All, Maude Company's required rate of return on capital budgeting projects is 9%. The investment costs $45,000 and has an estimated $6,000 salvage value. A company invests $175,000 in plant assets with an estimated 25-year service life and no salvage value. 17 US public . Using the orig, A building has a cost of $500,000 and accumulated depreciation of $40,000. The investment costs $45,300 and has an estimated $7,500 salvage value. 94% of StudySmarter users get better grades. The estimated life of the machine is 5yrs, with no salvage value. Req, A company is contemplating investing in a new piece of manufacturing machinery. (before depreciation and tax) $90,000 Depreciation p.a. 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. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. Compute the net present value of this investment. Peng Company is considering an investment expected to generate an Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. Experts are tested by Chegg as specialists in their subject area. Experts are tested by Chegg as specialists in their subject area. Assume Peng requires a 10% return on its investments, compute the net present value of this investment. (Round answer to 2 decimal places. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. Assume Peng requires a 5% return on its investments. Compute this machine's accounti, A machine costs $200,000 and is expected to yield an after-tax net income of $5,040 each year. It is considering investing in a project which costs $350,000 and is expected to generate cash inflows of $140,000 at the end of each year for three years. Negative amounts should be indicated by a minus sign. 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. The expected future net cash flows from the use of the asset are expected to be $580,000. Compute the net present value of this investment. What is the payback period in years ap, The Montana Company has decided to invest in a project that is expected to produce the following cash flows: $12,500 (year 1), $14,000 (year 2) and $9,000 (year 3). The net present value (NPV) is a capital budgeting tool. The investment costs $45,000 and has an estimated $6,000 salvage value. Assume Pang requires a 5% return on its investments. projected GROSS cash flows from the investment are $150,000 per year. 2. a. The estimated cash inflow from the project are as follows: Year Cash Inflow Present value factor at 10% 1 70,000 0.909 2 80,000 0.826 3 120,000 0.751 4 90,000 0.683 5 60,000 0.621 Ca, A company is considering investment in a Flexible Manufacturing System. The projected incremental income from the investment is as follows: The unadjusted rate of return on the in, Shields Company has gathered the following data on a proposed investment project: (Ignore income taxes.) Peng Company is considering an investment expected to generate an 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, and the net income for each year are presented in the schedule below. 2003-2023 Chegg Inc. All rights reserved. (Round each present value calculation to the nearest dollar. Q: Peng Company is considering an investment expected to generate an average net. The salvage value is defined as the estimated book value of any asset after deducting all the depreciation on the asset. Peng Company is considering an investment expected to generate an average net income after taxes of $3,100 for three years. The company is expected to add $9,000 per year to the net income. Compute the net present value of this investment. What is the average amount invested in a machine during its predicted five-year life if it costs $200,000 and has a $20,000 salvage value? The profitability index for this project is: a. ROI is equal to turnover multiplied by earning as a percent of sales. 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 $3,300 for three years. The company is expected to add $9,000 per year to the net income. Corresponding with the IRS in writing We reviewed their content and use your feedback to keep the quality high. 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. , e following two costs of production, respectively: (1) the paper; and (2) the authors' one-time fees. Project 2 requires an initial investment of $4,000,000 and has a present value of cash flows of $6,000,000. Calculate the payback period for the proposed e, You have the following information on a potential investment. All other trademarks and copyrights are the property of their respective owners. The salvage value of the asset is expected to be $0. 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. Trading securities (fair value) = $70,000 Available-for-sale securities (fair value) = $40,000 Held-to-maturity securities (amortized cost) = $47,000 At what amount will Ahnen report investments in its current, A company is contemplating investing in a new piece of manufacturing machinery. Assume Peng requires a 5% return on its investments. Ronis' investment in asset base is $1,500,000, and they assume a capital charge of 10%. Melton Company's required rate of return on capital budgeting projects is 16%. All other trademarks and copyrights are the property of their respective owners. The income tax depreciation method referred to as CCA: a) Allows a corporation some flexibility in choosing the class an asset is assigned to. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. The cost of the asset is $120,000, Babirusa Company is considering the following investment: Assume straight-line depreciation is used. Peng Company is considering an investment expected to generate an average net income after taxes of $2,900 for three years. Negative amounts should be indicated by #12 Assume Peng requires a 15% return on its investments. A company has two investment choices that cost $3,000 each: one that brings in $10,000 in revenue at 8% interest in two years, and another that brings in $11,000 revenue at the same interest rate . Investment required in equipment $530,000 ; Annual cash inflows $74,000 ; Salvage value $0 ; Li, Your company has been presented with an opportunity to invest in a project. Stop procrastinating with our smart planner features. Multiple Choice, returns on investment is computed in the following manner. The company's desired rate of return used in the present value calculations was, A company is considering investment in a project that costs Rs. 45,000+6000=51,000. 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 investment costs $47,400 and has an estimated $8,400 salvage value. To find the NPV using a financial calacutor: 1. Annual cash flow Assume that the company can invest m, For the year 2015, Ronis Corporation earned a profit of $360,000 on total sales revenue of $2,000,000. 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. Assume the company requires a 12% rate of return on its investments. What is the most that the company would be willing to invest in this project? Calculate its book value at the end of year 6. Calculate its book value at the end of year 10. What are the investment's net present value and inte. 0.9, Merrill Corp. has the following information available about a potential capital investment: Initial investment $1,800 000 Annual net income $200,000 Expected life 8 years Salvage value $240,000 Merrill's cost of capital 10% Assume the straight-line deprec, Drake Corporation is reviewing an investment proposal. X The net present value is given as the present value of inflows minus the present value of outflows from the project. Peng Company is considering an investment expected to generate an average net income after taxes of $2, 400 for three years. Negative amounts should be indicated by a minus sign.) Given the riskiness of the investment opportunity, your cost of capital is 27%. The company uses the straight-line method of d, Determine Present Value: You can invest in a machine that costs $500,000. copyright 2003-2023 Homework.Study.com. Management estimates that this machine will generate annual after-tax net income of $540. In the next using the GC how can i determine the ratio of diastereomers. The asset has an estimated salvage value of $12,000, and an estimated useful life of 10 years. 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. Footnote 7 Although DS567 refers to paragraph (b)(iii) of article 73 of the TRIPS, considering its high coincidence with the text of article XXI of the GATT and the consistency of "judicial practice" of the panel in the specific trial process, Footnote 8 this chapter will categorize both sources as a security . The company is considering an investment that would yield an after-tax cash flow of $30,000 in four years. The investment costs $56,100 and has an estimated $7,500 salvage value. = Assume the company uses straight-line depreciation. The investment costs $45,000 and has an estimated $6.000 salvage value. Anglemenesis Company is planning to spend $84,000 for a new machine that is to be depreciated on a straight-line basis over 10 years with no salvage value. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. The equipment will be depreciated on a straight-line basis over 5-year life and is expected to generate net cash inflows of $45,000 the first year, $65,000 the second year, and $, The Seago Company is planning to purchase $436,400 of equipment with an estimated seven-year life and no estimated salvage value. Peng Company is considering an investment expected to generate an Dynamic modeling and analysis of multi-product flexible production line Answered: Peng Company is considering an | bartleby The asset is recorded at $810,000 and has an economic life of eight years. Assume that net income is received evenly throughout each year and straight-line depreciation is used.