S. Ken Flint retired as president of Colour Tile Company, but he is currently on a consulting contract for $59,000 per year for the next 12 years. (Use a Financial calculator to arrive at the answers. Round the final answers to the nearest whole doller.) a. If Mt. Flint's opportunity cost (potential return) is 11 percent, what is the present value of his consulting contract? Present value $ 383049 b. Assuming Mr. Flint will not retire for two more years and will not start to receive his 12 payments until the end of the third year, what would be the value of his deferred annuity? Present value $310891 c. Recalculate part a assuming the contract stipulates that payments are to be made at the beginning of each year $ Present value

S. Ken Flint retired as president of Colour Tile Company, but he is currently on a consulting contract for $59,000 per year for the next 12 years. (Use a Financial calculator to arrive at the answers. Round the final answers to the nearest whole doller.) a. If Mt. Flint's opportunity cost (potential return) is 11 percent, what is the present value of his consulting contract? Present value $ 383049 b. Assuming Mr. Flint will not retire for two more years and will not start to receive his 12 payments until the end of the third year, what would be the value of his deferred annuity? Present value $310891 c. Recalculate part a assuming the contract stipulates that payments are to be made at the beginning of each year $ Present value

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 10PA: The Ham and Egg Restaurant is considering an investment in a new oven that has a cost of $60,000,...

See similar textbooks

Similar questions

Les Moore retired as president of Goodman Snack Foods Company but is currently on a consulting contract for $49,000 per year for the next 14 years. Use Appendix B and Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods. If Mr. Moore’s opportunity cost (potential return) is 11 percent, what is the present value of his consulting contract? Note: Do not round intermediate calculations. Round your final answer to 2 decimal places. Assuming Mr. Moore will not retire for two more years and will not start to receive his 14 payments until the end of the third year, what would be the value of his deferred annuity? Note: Do not round intermediate calculations. Round your final answer to 2 decimal places.
An engineer with Haliburton calculated the AW values shown for retaining a presently owned machine additional years. A challenger has an economic service life of 7 years with AW = $-86,000 per year. Assuming all future costsremain as estimated for the analysis, (a) when should the company replace the defender and with what machine, and (b) when should the companypurchase the challenger? The MARR is 12% per year. Assume used machines like the one presently owned will always be available.
I request to you d,nt use excel to solve.only typed answer gives. Q)A construction company has an option to purchase a certain machine for $60,000 at any time between Now and 6 years from now. If the company plans to purchase the machine 6 years from now , the equivalent present amount that the company is paying for the machine at 10 % per year interest is closest to
An engineer is planning to purchase a CHB machine worth 180,000 that can produce a uniform annual revenue of 25,500 with a salvage value of 5,000 after 6 years. If the engineer is expecting to earn at least 15% of his capital, should he invest? Show your conclusion using: a.) using present worth method b.) future worth method. (SHOW THE SOLUTION AND DO NOT USE EXCEL).
How do I solve this problem? I am not sure what formulas to use.24. Les Moore retired as president of Goodman Snack Foods Company but is currently on a consulting contract for $35,000 per year for the next 10 years.a. If Mr. Moore's opportunity cost (potential return) is 10 percent, what is the present value of his consulting contract?b. Assuming Mr. Moore will not retire for two more years and will not start to receive his 10 payments until the end of the third year, what would be the value of his deferred annuity?
(NOTE: ENTER YOUR ANSWER WITHOUT THE$ AND COMMA, ROUNDED TO THE NEAREST DOLLAR, for instance as 10023, not as $10,022.78.) A rental property manager anticipates a major repair, with a cost of $62906, will be necessary 5 years from now. Assuming the manager can earn 8% per year by placing funds in the company's investment pool, how much does he need to put in the investment pool today to have enough to finance the repair in 5 years? DO NOT ROUND IN YOUR CALCULATION STEPS (USE CALCULATOR MEMORY FUNCTIONS)! Answer:
Gardner Denver Company is considering the purchase of a new piece of factory equipment that will cost $420,000 and will generate $95,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further Instructions on internal rate of return in Excel, see Appendix C.
The Ham and Egg Restaurant is considering an investment in a new oven that has a cost of $60,000, with annual net cash flows of $9,950 for 8 years. The required rate of return is 6%. Compute the net present value of this investment to determine whether or not you would recommend that Ham and Egg invest in this oven.
An engineer is planning to purchase a CHB machine worth 180,000 that can produce a uniform annual revenue of 25,500 with a salvage value of 5,000 after 6 years. If the engineer is expecting to earn at least 15% of his capital, should he invest? Show your conclusion using present worth method and future worth method.
Assume that a money manager is considering the buy of a $35,000 machine and that he appraises that the machine will give a return (net of working expenses) of $10,000 each year for a very long time. Accept that the going pace of interest is a) 8 percent, b) 2% would it be advisable for him to get it?
Gardner Denver Company is considering the purchase of a new piece of factory equipment that will cost $360,500 and will generate $100,000 per year for 5 years. Calculate the IRR for this piece of equipment. (Click here to see present value and future value tables) fill in the blank 1%
1. Samos Excavating is considering purchasing some new equipment for the company. Due to the expense involved, the equipment company is giving Samos the option of choosing among four different payments plans. 1) $500,000 due immediately in cash 2) $150,000 down payment due immediately; $60,000 per year for 10 years, beginning at the end of the current year 3) $150,000 down payment due immediately; $30,000 per year for 4 years beginning at the end of the current year; $80,000 per year for 8 years beginning at the end of the fourth year after the initial purchase 4) $65,000 due immediately and at the beginning of each of the next 11 years Required: Samos will select the payment plan with the lowest present value. The effective interest rate during the future periods is 10%. Which option should Samos choose?