X The investment costs $59,500 and has an estimated $9,300 salvage value. Justice has long been an important aspect in managing and ensuring long-term successful buyer-supplier relationships because it is capable of explaining and predicting a wide range of relevant behaviours, attitudes and outcomes in such relationships (Alghababsheh et al., 2022; Griffith et al., 2006).It encompasses three dimensions in the buyer-supplier relationship, namely distributive . The investment costs $47,400 and has an estimated $8,400 salvage value. a. The company anticipates a yearly after-tax net income of $1,805. 2003-2023 Chegg Inc. All rights reserved. ), Summary of Strategic Management southern African concepts and case fourth edition, chapters 1 to 4, What of the following is not considered practice before the IRS per Circular 230? Given the riskiness of the investment opportunity, your cost of capital is 27%. A company buys a machine for $76,000 that has an expected life of 6 years and no salvage value. Assume Peng requires a 10% 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 excess cost over the book value of an investment that is due to expected above-average earnings is labeled on the consolidated balance sheet as: a. Question. Assume Peng requires a 5% return on its investments. Compute. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. The investment costs $45,000 and has an estimated $6,000 salvage value. On whether to accept or reject a project, the NPV is interpreted on the result of the calculation. The company requires a 10% rate of return on its investments. Assume the company uses straight-line . Required: Prepare the, X Company is thinking about adding a new product line. Required information [The following information applies to the questions displayed below.) The cash inflow of each investment is as follows: Year Cash inflow A Cash inflow B Cash inflow C 1 $300 $500 $100 2 $300 $400 $2, Jimmy Co. is considering a 12-year project that is estimated to cost $1,050,000 and has no residual value. The company uses straight-line depreciation. Note: NPV is always a sensitive problem bec. Required information [The folu.ving information applies to the questions displayed below.) Peng Company is considering an investment expected to generate an average net income after taxes of $2,700 for three years. 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. Peng Company is considering an investment expected to generate an average net income after taxes of. The product line is estimated to generate cash inflows of $300,000 the first year, $250,000 the second year, and $200,000 each year thereafter for ten more years. 2003-2023 Chegg Inc. All rights reserved. First we determine the depreciation expense per year. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. For l6, = 8%), the FV factor is 7.3359. Compute the net present value of this investment. What amount should Elmdale Company pay for this investment to earn a 8% return? Compute the net present value of this investment. The initial cost and estimates of the book value of the investment at the end of the year, the net cash flows for each year, and the net income, Crane Company is considering an investment that will return a lump sum of $898, 900, 6 years from now. An asset costs $70,000 and is expected to have a $10,000 salvage value at the end of its 10-year life. Capital investment - $15,000 Estimated useful life - 3 years Estimated salvage value - zero Estimated net cash inflow Year 1 - $7,000 Year, A company bought a machine that has an expected life of 7 years and no salvage value. The company anticipates a yearly net income of $2,950 after taxes of 34%, with the cash flows to be received evenly throughout each year. The expected average rate of return, giving effect to depreciation on investment is 15%. The management of Bischke Corporation is investigating an investment in equipment that would have a useful life of 8 years. A. b. The payback period, You are considering investing in a start up company. The company uses the straight-line method of d, Determine Present Value: You can invest in a machine that costs $500,000. (Round your computations and answers to 0 decimal p, BAP Corporation is reviewing an investment proposal. The company anticipates a yearly net income of $3,300 after taxes of 30%, with the cash flows to be rece, A company bought a machine that has an expected life of seven years and no salvage value. Amount x PV Factor = Present Value Cash Flow Annual cash flow Select Chart Present Value of an Annuity of 1 II Residual value II Net present value. Assume Peng requires a 5% return on its investments. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. Compu, Lanyard Company is considering an investment that will generate $600,000 in cash inflows per year for 7-years and has $240,000 of cash outflows for the same period (before income taxes). The investment costs $51,600 and has an estimated $10,800 salvage value. The investment costs $45,000 and has an estimated $6,000 salvage value. Required information [The following information applies to the questions displayed below.) Assume the company uses straight-line . Jimmy Co. seeks to earn an average rate of return of 18% on all capital projects. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. The management of Samsung is planning to invest in a new companywide computerized inventory tracking system. investment costs $51,600 and has an estimated $10,800 salvage Assume Peng requires a 15% return on its investments. The investment costs $57,600 and has an estimated $6,000 salvage value. It is mainly used to evaluate a prospective project whether it would be profitable to the investor or not. 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. The investment costs$45,000 and has an estimated $6,000 salvage value. Assume Peng requires a 5% return on its investments. Year 0 ($400,000) initial investment Year 1 $140,000 Year 2 120,000 Year 3 100,000 Year 4 80,000, A company has a minimum required rate of return of 10%. Management predicts this machine has a 10-year service life and a $100,000 salvage value, and it uses straight-line depreciation. Yokam Company is considering two alternative projects. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. Determine. 6 years c. 7 years d. 5 years. What is the return on investment? Prepare the journal, You have the following information on a potential investment. Experts are tested by Chegg as specialists in their subject area. 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. For (n= 10, i= 9%), the PV factor is 6.4177. If the accounting ra, A company buys a machine for $76,000 that has an expected life of 7 years and no salvage value. What is the minimum salvage value that would make the investment attractive assuming a discount rate of 12%? distributed with a mean of 78 when mixing oil and water is the change in entropy positive or $2,000 per year for 10 years is the equivalent of $12,835 today ($2,000 6.4177) Learn about what net present value is, how it is calculated both for a lump sum and for a stream of income over multiple years. Createyouraccount. Assume the company uses straight-line depreciation. The investment costs $45,600 and has an estimated $8,700 salvage value. Accounting Rate of Return Choose Denominator: Choose Numerator: 7 = Accounting Rate of Return = Accounting rate of return, Required information [The following information applies to the questions displayed below.] Assume the company uses straight-line depreciation. Input the cash flow values by pressing the CF button. and EVA of S1) (Use appropriate factor(s) from the tables provided. b) Ignores estimated salvage value. Peng Company is considering an investment expected to generate an average net income after taxes of $2,000 for three years. 15900 The investment costs $45,600 and has an estimated $8,700 salvage value. The investment costs $45,000 and has an estimated $6,000 salvage value. Compute the net present value of this investment. What is the NPV of the investment, The Zinger Corporation is considering an investment that has the following data: Year 1 Year 2 Year 3 Year 4 Year 5 Investment $8,000 $3,000 Cash inflow $2,000 $2,000 $5,000 $4,000 $4,000 Cash inflows occur evenly throughout the year. Assume the company requires a 12% rate of return on its investments. Compute the payback period. 2003-2023 Chegg Inc. All rights reserved. If an asset costs $70,000 and is expected to have a $10,000 salvage value at the end of its ten-year life and generates annual net cash inflows of $10,000 each year, the cash payback period is _____. Compute this machine's accounti, On 1/1, a company buys equipment with a cost of $8,100, an estimated salvage value of $1,100, and an estimated useful life of 7 years. TABLE B.3 Present Value of an Annuity of 1 Rat Periods 1% 2% 4% 5% 6% 7% 5% 10% 12% 15% 0.9901 0.9804 0.9709 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.8929 0.8696 1.9704 1.9416 1.9135 1.88611.8594 1.8334 8080 1.7833 1.759 .7355 16901 1.6257 2.9410 2.8839 2.8286 2.7751 2.7232 2.6730 2.6243 2.5771 2.5313 2.4869 2.4018 2.2832 3.9020 3.8077 3.7171 3.6299 3.5460 3.4651 3.3872 3.3121 3.2397 3.1699 3.0373 2.8550 3.9927 3.8897 3.7908 3.6048 3.3522 5.7955 5.6014 5.4172 5.2421 5.0757 4.9173 4.7665 4.6229 4.4859 4.3553 4.1114 3.7845 5.3893 5.2064 5.0330 4.8684 4.5638 4.1604 7.6517 7.3255 7.0197 6.73276.4632 6.2098 5.9713 5.7466 5.5348 5.3349 4.9676 4.4873 8.5660 8.1622 7.7861 7.4353 7.1078 6.8017 6.5152 6.2469 5.9952 5.7590 5.3282 4.7716 9.4713 8.9826 8.5302 8.1109 7.7217 7.3601 7.0236 6.7101 6.4177 6.1446 5.6502 5.0188 7.1390 6.8052 6.4951 5.93775.2337 11.255 10.5753 9.95409.3851 8.8633 8.3838 7.9427 7.5361 7.1607 6.8137 6.1944 5.4206 12.1337 11.3484 10.6350 9.9856 9.3936 8.8527 8.3577 7.9038 7.4869 7.1034 6.4235 5.5831 13.0037 12.1062 11.2961 10.5631 9.8986 9.2950 8.7455 8.2442 7.7862 7.3667 6.6282 5.7245 13.8651 .8493 11.9379 11.1184 10.3797 9.7122 9.1079 8.5595 8.0607 7.6061 6.8109 5.8474 14.7179 13.5777 12.5611 11.6523 10.8378 10.1059 9.4466 8.8514 8.3126 7.8237 6.9740 5.9542 15.5623 14.2919 13.1661 12.1657 11.2741 10.4773 9.7632 9.1216 8.5436 8.0216 7.1196 6.0472 16.3983 14.9920 13.7535 12.6593 11.6896 10.8276 10.0591 9.3719 8.7556 8.2014 7.2497 6.1280 17.2260 15.6785 14.3238 13.1339 12.0853 11.1581 10.3356 9.6036 8.9501 8.3649 7.3658 6.1982 18.0456 16.3514 14.8775 13.5903 12.4622 11.4699 10.5940 9.8181 9.1285 8.5136 7.4694 6.2593 22.0232 19.5235 17.4131 15.6221 14.0939 12.7834 11.6536 10.6748 9.8226 9.0770 7.8431 6.4641 25.8077 22.3965 19.6004 17.2920 5.3725 13.7648 12.4090 11.2578 10.2737 9.4269 8.0552 6.5660 29.4086 24.9986 21.4872 18.6646 16.3742 14.4982 12.9477 11.6546 10.5668 9.6442 8.1755 6.6166 32.8347 27.3555 23.1148 19.7928 17.1591 15.0463 13.3317 11.9246 10.7574 9.7791 8.2438 6.6418 4.8534 4.7135 4.57974.4518 4.3295 4.2124 4.1002 6.7282 6.4720 6.2303 6.0021 5.7864 5.5824 10.3676 9.7868 26 8.7605 8.3064 7.8869 7.4987 12 13 14 15 16 19 20 25 30 35 40 Used to calculate the present value of a series of equal payments made at the end of each period. 2.3 Reverse innovation. The warehouse will cost $370,000 to build. Sweden, Denmark and Norway, encounter several regulations and initiatives considering CSR and SRI such as the European Green Deal. Capital investment $900,000 Estimated useful life 6 years Estimated salvage value zero Estimated annual net cash inflow $213,000 Required, Sparky Company invested in an asset with a useful life of 5 years. What is the most that the company would be willing to invest in this project? Enter the email address you signed up with and we'll email you a reset link. $ $ Accounting Rate of Return Choose . 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. The facts on the project are as tabulated. If a table of present v, Grouper Company owns equipment that cost $1,044,000 and has accumulated depreciation of $440,800. The Controller asks you to use a depreciation method that would produce the highest charge against income after three years. The investment costs $45,000 and has an estimated $6,000 salvage value. Negative amounts should be indicated by a minus sign.) 1. The company is expected to add $9,000 per year to the net income. The investment costs $58, 500 and has an estimated $7, 500 salvage value. Our experts can answer your tough homework and study questions. 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. Select Chart Amount x PV Factor = Present Value Cash Flow Annual cash flow Residual value Net present value, Required information [The folu.ving information applies to the questions displayed below.) Furthermore, the implication of strategic orientation for . 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 . The d) Provides an, Dango Corporation is reviewing an investment proposal. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. The investment costs $56,100 and has an estimated $7,500 salvage value. Compute the accounting rate of return for this investment assume the company uses straight-line depreciation BOOK Accounting Rate of Return Choose Denominator: Choose Numerator = = Accounting Rate of Return Accounting rate of retum Print teferences. The IRR on the project is 12%. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. Accounting 202 Final - Formulas and Examples. Goodwill. Management predicts this machine has a 10-year service life and a $120,000 salvage value, and it uses straight-line depreciation. Management predicts this machine has a 10-year service life and a $100,000 salvage value, and it uses straight-line depreciation. The fair value of the equipment is $476,000. Park Co. is considering an investment that requires immediate payment of $27,000 and provides expected cash inflows of $9,000 annually for four years. Required information (The following information applies to the questions displayed below.] It is considering investing in a project that costs $50,000 and is expected to generate cash inflows of $20,000 at the end of each year for 3 years. Negative amounts should be indicated by #12 A company's required rate of return on capital budgeting is 15%. TABLE B.1 Present Value of 1 Rate Perlods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% 0.9901 0.9804 0.9709 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.8929 0.8696 0.9803 0.9612 0.9426 0.9246 0.9070 0.8900 0.8734 0.8573 0.8417 0.8264 0.7972 0.7561 0.9706 0.9423 0.9151 0.8890 0.8638 0.8396 08163 .793 0.7722 7513 7118 06575 0.9610 0.9238 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6355 0.5718 0.9515 0.9057 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5674 0.4972 0.9420 0.8880 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5066 0.4323 0.9327 0.8706 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4523 0.3759 0.9235 0.8535 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4039 0.3269 0.9143 0.8368 0.7664 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3606 0.2843 0.9053 0.8203 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3220 0.2472 0.8963 0.8043 0.7224 0.6496 0.5847 0.5268 0.4751 0.4289 0.3875 0.3505 0.2875 0.2149 0.8874 0.7885 0.7014 0.6246 0.5568 0.4970 0.4440 0.3971 0.3555 0.3186 0.2567 0.1869 0.8787 0.7730 0.6810 0.6006 0.5303 0.4688 0.4150 0.3677 0.3262 0.2897 0.2292 0.1625 0.8700 0.7579 0.6611 0.5775 0.5051 0.4423 0.3878 0.3405 0.2992 0.2633 0.2046 0.1413 0.8613 0.7430 0.6419 0.5553 0.4810 0.4173 0.3624 0.3152 0.2745 0.2394 0.1827 0.1229 0.8528 0.7284 0.6232 0.5339 0.4581 0.3936 0.3387 0.2919 0.2519 0.2176 0.1631 0.1069 0.8444 0.7142 0.6050 0.5134 0.4363 0.3714 0.3166 0.2703 0.2311 0.1978 0.1456 0.0929 0.8360 0.7002 0.5874 0.4936 0.4155 0.3503 0.2959 0.2502 0.2120 0.1799 0.1300 0.0808 0.8277 0.6864 0.5703 0.4746 0.3957 0.3305 0.2765 0.2317 0.1945 0.1635 0.1161 0.0703 0.8195 0.6730 0.5537 0.4564 0.3769 0.3118 0.2584 0.2145 0.1784 0.1486 0.1037 0.0611 0.7798 0.6095 0.4776 0.3751 0.2953 0.2330 0.1842 0.1460 0.1160 0.0923 0.0588 0.0304 0.7419 0.5521 0.4120 0.3083 0.2314 0.174 0.1314 0.0994 0.0754 0.0573 0.0334 0.0151 0.7059 0.5000 0.3554 0.2534 0.1813 0.1301 0.0937 0.0676 0.0490 0.0356 0.0189 0.0075 0.6717 0.4529 0.3066 0.2083 0.1420 0.0972 0.0668 0.0460 0.0318 0.0221 0.0107 0.0037 9 10 12 13 14 15 16 18 19 20 25 30 35 40 * Used to compute the present value of a known future amount. 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 Zinger Corporation is considering an investment that has the following data: Cash inflows occur evenly throughout the year. The company currently has no debt, and its cost of equity is 15 percent. a cost of $19,800. Since bond yields are expected to stay low and public equity returns are likely to be below historical annualized returns over the next 10 years, institutional investorspension funds, insurance companies, endowments, foundations, investment companies, banks, and family officesare increasing allocation to private capital. A company is considering investing in a new machine that requires a cash payment of $47,947 today. The company anticipates a yearly net income of $3,300 after taxes of 38%, with the cash flows to be received evenly throughout each year. What lump-sum amount should the company invest now to have the $370,000 available at the end of the eight-year period? Assume Peng requires a 15% return on its investments. The initial outlay of the project would be $800,000 and the project's assets would have a residual value of $50,000 at the end o. The fair value. [22] also highlight the importance of power companies improving investment portfolio planning for various energy production resources to ensure expected production value and reduce risk. Compute the net present value of each potential investment. Select chart Compute the accounting sane of return for this investment assume the company uses straight-line depreciation. The machine will cost $1,796,000 and is expected to produce a $199,000 after-tax net income to be received at the end of each year. The machine will cost $1,812,000 and is expected to produce a $203,000 after-tax net income to be re, A company can buy a machine that is expected to have a three-year life and a $23,000 salvage value. Solution: Annual depreciation = (Cost - Salvage value) / useful life = ($45,600 - $8,700) / 3 = $12,300 Annual cash i. Best study tips and tricks for your exams. The following data concerns a proposed equipment purchase: Cost $136,400 Salvage value $3,600 Estimated useful life 4 years Annual net cash flows $45,700 Depreciation method Straight-line The annual average investment amount used to calculate the accounti, Landmark Company is considering an investment in new equipment costing $500,000. Ass, Peng Company is considering an Investment expected to generate an average net income after taxes of $3,000 for three years. Compute the payback period. Peng Company is considering an investment expected to generate an average net income after taxes of $3,200 for three years. Project 2 requires an initial investment of $4,000,000 and has a present value of cash flows of $6,000,000. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. Firm Value Young Corporation expects an EBIT of $16,000 every year forever. The present value of the future cash flows at the company's desired rate of return is $100,000. Assume Peng requires a 10% return on its investments. c. Retained earnings. The investment costs $48,000 and has an estimated $10,200 salvage value. The expected net cash inflows from, A building has a cost of $750,000 and accumulated depreciation of $125,000. d) 9.50%. The investment costs $48,600 and has an estimated $6,300 salvage value. To make this happen, the firm, Wilcox Company is considering an investment that will generate cash revenues of $120,000 per year for 8 years, and have cash expenses of $60,000 per year for 8 years. The Galley purchased some 3-year MACRS property two years ago at What is the most that the company would be willing to invest in this, A company has a minimum required rate of return of 9%. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. 2. The investment costs $54,900 and has an estimated $8,100 salvage value. The net present value of the investment is A) $1,470 B) ($13,550) C) $6,450, The Zinger Corporation Is considering an Investment that has the following data: Cash Inflows occur evenly throughout the year. Option 1 generates $25,000 of cash inflow per year and has zero residual value. The investment costs $45,000 and has an estimated $6,000 salvage value. The asset has no salvage value. Thomas Company can acquire an $850,000 lathe that will benefit the firm over the next 7 years. The building is expected to generate net cash inflows of $15,000 per year for the next 30 years. The company's required rate of return is 11 percent. PVA of $1. Assume Pang requires a 5% return on its investments. You w, A machine that cost $720,000 has an estimated residual value of $60,000 and an estimated useful life of eleven years. ), Exercise 26-11 BAP Corporation is reviewing an investment proposal. EV of $1. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. d. Loss on investment. 2.72. Crispen normally uses a 10 percent discount rate to evaluate projects but feels it should use 12 per. Compute the payback period. Financial projections for the investment are tabulated here. To find the NPV using a financial calacutor: 1. Assume Peng requires a 5% return on its investments. What amount should Elmdale Company pay for this investment to earn a 12% return? For example: How much would you need to invest today at 10% compounded semiannually to accumulate $5,000 in 6 years from today? The machine will cost $1,764,000 and is expected to produce a $191,000 after-tax net income to be received at the end of each year. #12 Peng Company is considering an investment expected to generate an average net income after taxes of $2,900 for three years. copyright 2003-2023 Homework.Study.com. Peng Company is considering an investment expected to generate an average net income after taxes of $3,250 for three years. Required information [The following information applies to the questions displayed below.) gifts. Everything you need for your studies in one place. Coins can be redeemed for fabulous Compute this machine s accoun, A machine costs $700,000 and is expected to yield an after-tax net income of $52,000 each year. Using a sample of Chinese-listed firms with key soil pollution regulation from 2013 to 2020, this study utilized the Difference-in-Differences method .