Pina Colada Co. purchased equipment 3 years ago. The company's required rate of return is 12%, and the net present value of the project was $(900). Annual cost savings were: $10000 for year 1: $8000 for year 2; and $6000 for year 3. The amount of the initial investment was Present Value PV of an Annuity Year of 1 at 12% of 1 at 12% 0.893 0.893 2 3 0.797 1.690 0.712 2.402 O $18678. O $20116. O $20478. O $18316. SU
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- Using the information provided, what transaction represents the best application of the present value of an annuity due of $1? A. Falcon Products leases an office building for 8 years with annual lease payments of $100,000 to be made at the beginning of each year. B. Compass, Inc., signs a note of $32,000, which requires the company to pay back the principal plus interest in four years. C. Bahwat Company plans to deposit a lump sum of $100.000 for the construction of a solar farm In 4 years. D. NYC Industries leases a car for 4 yearly annual lease payments of $12,000, where payments are made at the end of each year.The management of River Corporation is considering the purchase of a new machine costing $380,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment: Year 1 2 O 10.5% O 5.5% O 25.5% Operating O 15.5% Income $20,000 20,000 20,000 20,000 20,000 Net Cash Flow $95,000 95,000 The average rate of return (rounded to one decimal place) for this investment is 95,000 95,000 95,000The management of Wyoming Corporation is considering the purchase of a new machine costing $375,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment: Year 1 2 $18,750 18,750 18,750 18,750 18,750 The average rate of return for this investment 3 4 Operating Income 5 Net Cash Flow $93,750 93,750 93,750 93,750 93,750
- Monroe Corporation is considering the purchase of new equipment. The equipment will cost $38,000 today. However, due to its greater operating capacity, Monroe expects the new equipment to earn additional revenues of $5,750 by the end of each year for the next 10 years. Required: 1-a. Assuming a discount rate of 7% compounded annually, calculate the present value of annuity. (FV of $1, PV of $1, FVA of $1, and PVA of $1) 1-b. Should Monroe make the purchase? Complete this question by entering your answers in the tabs below. Req 1A Req 1B Assuming a discount rate of 7.0% compounded annually, calculate the present value of annuity. (Use tables, Excel, or a financial calculator. Round your answer to 2 decimal places.) Present value of annuityThe management of Wyoming Corporation is considering the purchase of a new machine costing $375,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment: Year 1 2 3 4 5 Income from Operations $18,750 18,750 18,750 18,750 18,750 Net Cash Flow $93,750 93,750 93,750 93,750 93,750 The present value index for this investment is Oa. 0.95 Ob. 1.00 Oc. 1.05 Od. 1.25The management of Wyoming Corporation is considering the purchase of a new machine costing $375,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment: Year Income fromOperations Net CashFlow 1 $18,750 $93,750 2 18,750 93,750 3 18,750 93,750 4 18,750 93,750 5 18,750 93,750 The net present value for this investment is: The answer is $19,875. How did they get this number?
- The management of Wyoming Corporation is considering the purchase of a new machine costing $375,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for five years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment: Year Income fromOperations Net CashFlow 1 $18,750 $93,750 2 18,750 93,750 3 18,750 93,750 4 18,750 93,750 5 18,750 93,750 The average rate of return for this investment isThe management of Wyoming Corporation is considering the purchase of a new machine costing $375,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment: Year Operating Income Net CashFlow 1 $18,750 $93,750 2 18,750 93,750 3 18,750 93,750 4 18,750 93,750 5 18,750 93,750 The net present value for this investment is a. $19,875 b. $118,145 c. $(19,875) d. $(118,145)Monroe Corporation is considering the purchase of new equipment. The equipment will cost $42,000 today. However, due to its greater operating capacity, Monroe expects the new equipment to earn additional revenues of $6,750 by the end of each year for the next 10 years. 1-a. Assuming a discount rate of 9% compounded annually, calculate the present value of annuity. (FV of $1, PV of $1, FVA of $1, and PVA of $1)
- The management of Wyoming Corporation is considering the purchase of a new machine costing $375,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment: Year OperatingIncome Net CashFlow 1 $18,750 $93,750 2 18,750 93,750 3 18,750 93,750 4 18,750 93,750 5 18,750 93,750 The net present value for this investment is a. $118,145 b. $19,875 c. $(118,145) d. $(19,875) Please avoid solution image based thnxThe management of Wyoming Corporation is considering the purchase of a new machine costing $375,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment: Income from Net Cash Year Operations Flow 1 $18,750 $93,750 18,750 93,750 18,750 93,750 4 18,750 93,750 18,750 93,750 The present value index for this investment is Oa. 1.00 Оb. 1.05The management of Wyoming Corporation is considering the purchase of a new machine costing $375,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment: Year OperatingIncome Net CashFlow 1 $18,750 $93,750 2 18,750 93,750 3 18,750 93,750 4 18,750 93,750 5 18,750 93,750 The average rate of return for this investment is a.10% b.15% c.5% d.25%