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- The Scampini Supplies Company recently purchased a new delivery truck. The new truck cost $22,500, and it is expected to generate net after-tax operating cash flows, including depreciation, of $6,250 per year. The truck has a 5-year expected life. The expected salvage values after tax adjustments for the truck are given here. The company’s cost of capital is 10%. Should the firm operate the truck until the end of its 5-year physical life? If not, then what is its optimal economic life? Would the introduction of salvage values, in addition to operating cash flows, ever reduce the expected NPV and/or IRR of a project?Sad Company is considering the purchase of a new machine that would cost $80,000. The machine would have a useful life of 8 years. Sad Company plans on using straight-line depreciation with an estimated salvage value of $0. Sad Company has a hurdle rate of 12% and is subject to an income tax rate of 80%. The annual cash income is estimated to be $50,000. PV . 1- The Accounting Rate of Return (AROR) is: 10 % 11 % 12 % 9 % 8 % 2-The Net Present Value (NPV) is: $10,424 $9,424 $11,424 $8,424 $11,424 3-The Profitability Index (PI) is: 1.02 1.12 1.22 0.92 0.82 The Payback period is: A. 4.044 years B. 4.144 years C. 4.244 years D. 4.344 years E. 4.444 years Using interpolation, the Internal Rate of Return (IRR) is: 14.4 % 13.4 % 12.4 % 15.4 % 16.4 %Gillespie Gold Products, Inc., is considering the purchase of new smelting equipment. The new equipment is expected to increase production and decrease costs, with a resulting increase in profits. First Cost is at $40,000; Savings per year is $10,000; Actual useful life is 5 years; Salvage value is $4000. a. Determine the ATCF using a tax rate of 42% and straight-line method of depreciation. b. If the average yearly inflation rate for the 5-year study period is 3.5%, what is the real-dollar ATCF that is equivalent to the actual-dollar ATCF? The base time period is year zero (b=0). PLEASE SHOW GIVEN AND REQUIRED THANK U
- Arizona Company is considering an investment in new machinery. The annual incremental profits/(losses) relating to the investment are estimated to be: $’000 Year 1 (11) Year 2 3 Year 3 34 Year 4 47 Year 5 8 Investment at the start of the project would be $175,000. The investment sum, assuming nil disposal value after five years, would be written off using the straight-line method. The depreciation has been included in the profit estimates above, which should be assumed to arise at each year end. Required: A Compute the net cash flow for each of the five years. Calculate the net present value (NPV) of the investment at a discount rate of 10% per annum (the company’s required rate of return) Discount factors at 10% are: Year 1 0.909 Year 2 0.826 Year 3 0.751 Year 4 0.683 Year 5…A machine was purchased two years ago for 60000 TL. At that time, it was assumed that the machine had a 6 years useful time with a salvage value of 6000 TL. The company used straight line depreciation method. Today the machine has a market value of 50000 TL. The tax rate is 35%. If the company wants to provide a replacement analysis what amount should be used for the initial investment value of this current machine in the analysis? Lütfen birini seçin: a.50000 b.52800 c.47200 d.62250 e.53500NUBD Co. is planning to acquire a new machine at a total cost of P360,000. The estimated life of the machine is 6 years with no salvage value. The straight-line method of depreciation will be used. NUBD estimates that the annual cash flow from operations, before income taxes, from using this machine amounts to P90,000. Assume that NUBD’s cost of capital is 8% and the income tax rate is 40%. (Use 3 decimal places for the PV factors)What would be the payback period for the machine?
- NUBD Co. is planning to acquire a new machine at a total cost of P360,000. The estimated life of the machine is 6 years with no salvage value. The straight-line method of depreciation will be used. NUBD estimates that the annual cash flow from operations, before income taxes, from using this machine amounts to P90,000. Assume that NUBD’s cost of capital is 7% and the income tax rate is 40%. (Use 3 decimal places for the PV factors)What would be the net present value?SeyLamb Footwear is considering the purchase of a new leather stitching machine to replace an existing machine. Assumed a required rate of return of 10% and a 50% tax rate. The company has a policy of charging depreciation on straight line method. No capital gain taxes are assumed. The following information relates to the project. Project Kuk Project Kak Initial Cash outlay 100,000 140,000 Salvage value Nil 20,000 Earnings before depreciation and taxes: Year 1 25,000 40,000 2 25,000 40,000 3 25,000 50,000 4 25,000 60,000 5 25,000 20,000 Required For each project calculate: (i) Pay-back Period (ii) Internal Rate of Return (iii)Profitability IndeLucky Cement wants to evaluate an acquisition of an equipment worth Rs 300,000. Its marginal tax rate is 35 percent. If purchased, the depreciation of equipment will take place at straight line method. The salvage value of the equipment is assumed to be 30,000 at the end of its useful life of 10 years. If the equipment is purchased, Lucky cement will finance the asset through borrowing from bank at annual before tax cost of 10%. If equipment is leased, Lucky Cement can have the equipment at Rs 38000 pre-tax rate per year, which is to be paid at the beginning of each year. Company’s weighted average after tax cost of capital is 10 percent. Compute the net advantage to leasing What alternative, leasing or owning, should be chosen? Explain
- Scholastic Co. is evaluating a machine with an initial cost of $450,000 and a five-year life that costs $85,000 per year to operate (assume sales = $0). The firm uses straight-line depreciation; the applicable discount rate is 9%. The machine will have a salvage value of $100,000 at the end of the project's life. The firm has a tax rate of 21%. Note: do not include the salvage value when calculating the annual depreciation expense. Calculate the NPV of the project. (Enter a negative value and round to 2 decimals)Scholastic Co. is evaluating a machine with an initial cost of $450,000 and a five-year life that costs $85,000 per year to operate (assume sales = $0). The firm uses straight-line depreciation; the applicable discount rate is 9%. The machine will have a salvage value of $100,000 at the end of the project's life. The firm has a tax rate of 21%. Note: do not include the salvage value when calculating the annual depreciation expense. Calculate the operating cash flow in year 1. (Enter a negative value)Scholastic Co. is evaluating a machine with an initial cost of $450,000 and a five-year life that costs $85,000 per year to operate (assume sales = $0). The firm uses straight-line depreciation; the applicable discount rate is 9%. The machine will have a salvage value of $100,000 at the end of the project's life. The firm has a tax rate of 21%. Note: do not include the salvage value when calculating the annual depreciation expense. Calculate the EAC for the project. (Enter a positive value and round to 2 decimals)
