Angela's Pet Shop is considering the purchase of a new delivery van. Angela Smith, owner of the shop, has compiled the followingestimates in trying to determine whether the delivery van should be purchased:Cost of the vanAnnual net cash flowsSalvage valueEstimated useful lifeCost of capitalPresent value of an annuity of 1Present value of 1Click here to view PV tables.(a)Net present valueAngela's assistant manager is trying to convince Angela that the van has other benefits that she hasn't considered in the initialestimates. These additional benefits, including the free advertising the store's name painted on the van's doors will provide, areexpected to increase net cash flows by $500 each year.$40,100Should the van be purchased?Van6,800$should not4,800Your answer has been saved. See score details after the due date.8 years10%Calculate the net present value of the van, based on the initial estimates. (Enter negative amounts using either a negative signpreceding the number e.g. -45 or parentheses e.g. (45). For calculation purposes, use 5 decimal places as displayed in the factor tableprovided. Round answer to O decimal places, e.g. 5,275.)5.334930.46651✓ be purchased.-1583Attempts: 1 of 1 used (b)Your answer has been saved. See score details after the due date.Calculate the net present value, incorporating the additional benefits suggested by the assistant manager. (For calculationpurposes, use 5 decimal places as displayed in the factor table provided. Round answer to O decimal places, e.g. 5,275.)(c)Net present value $Should the van be purchased?Van shouldbe purchased.1084Determine how much the additional benefits would have to be worth in order for the van to be purchased.Save for LaterAdditional benefits would need to have a total present value of at least $Attempts: 1 of 1 usedAttempts: 0 of 1 used Submit Answer

Name: Angela's Pet Shop is considering the purchase of a new delivery van.
Uploaded: 2024-03-05T11:42:36.000Z
Channel: Bartleby
Description: Angela's Pet Shop is considering the purchase of a new delivery van. Angela Smith, owner of the shop, has compiled the followingestimates in trying to determine whether the delivery van should be purchased:Cost of the vanAnnual net cash flowsSalvage

Net present value refers to the measure used to evaluate the feasibility and the profitability of…

Business

Finance

(b) Your answer has been saved. See score details after the due date. Calculate the net present value, incorporating the additional benefits suggested by the assistant manager. (For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round answer to 0 decimal places, e.g. 5,275.) Net present value Should the van be purchased? Van should (c) $ be purchased. Save for Later 1084 Determine how much the additional benefits would have to be worth in order for the van to be purchased. Additional benefits would need to have a total present value of at least $ Attempts: 1 of 1 used Attempts: 0 of 1 used Submit Answer

(b) Your answer has been saved. See score details after the due date. Calculate the net present value, incorporating the additional benefits suggested by the assistant manager. (For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round answer to 0 decimal places, e.g. 5,275.) Net present value Should the van be purchased? Van should (c) $ be purchased. Save for Later 1084 Determine how much the additional benefits would have to be worth in order for the van to be purchased. Additional benefits would need to have a total present value of at least $ Attempts: 1 of 1 used Attempts: 0 of 1 used Submit Answer

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 1MAD: San Lucas Corporation is considering investment in robotic machinery based upon the following...

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D. Discuss the payback method and what the payback periods of the old backhoes and new backhoes reveal about whether the company should purchase new backhoes or continue using the old backhoes. Calculate the profitability index for keeping the old backhoes and purchasing new backhoes. The following information is available to use in deciding whether to purchase the new backhoes or old backhoes. Using the 8% Present Value of an Annuity of 1. Old Backhoes New Backhoes Purchase cost when new $90,000 $200,000 Salvage value now $42,000 Investment in major overhaul needed in next year $55,000 Salvage value in 8 years $15,000 $90,000 Remaining life 8 years 8 years Net cash flow generated each year $30,425 $43,900 Answer that Bartebly provided is down below. My Questions is: Can you display what Pv factor you used to get the approximate present value calculations. My Question: Can you also provide the…
D. Discuss the payback method and what the payback periods of the old backhoes and new backhoes reveal about whether the company should purchase new backhoes or continue using the old backhoes. Calculate the profitability index for keeping the old backhoes and purchasing new backhoes. The following information is available to use in deciding whether to purchase the new backhoes or old backhoes. Using the 8% Present Value of an Annuity of 1. Old Backhoes New Backhoes Purchase cost when new $90,000 $200,000 Salvage value now $42,000 Investment in major overhaul needed in next year $55,000 Salvage value in 8 years $15,000 $90,000 Remaining life 8 years 8 years Net cash flow generated each year $30,425 $43,900 Answer that Bartebly provided is down below. My Questions is: Can you display what Pv factor you used to get the a present value calculations. can you leave the the present value calculations to 6 digits.…
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Carla Vista Clinic is considering investing in new heart-monitoring equipment. It has two options. Option A would have an initial lower cost but would require a significant expenditure for rebuilding after 4 years. Option B would require no rebuilding expenditure, but its maintenance costs would be higher. Since the Option B machine is of initial higher quality, it is expected to have a salvage value at the end of its useful life. The following estimates were made of the cash flows. The company's cost of capital is 5%. Option A Option B Initial cost $194,000 $291,000 Annual cash inflows $72,600 $82,000 Annual cash outflows $28,100 $25,100 Cost to rebuild (end of year 4) $51,200 $0 Salvage value $0 $9,000 Estimated useful life 7 years 7 years Click here to view the factor table. (a) Your answer is partially correct. Compute the (1) net present value, (2) profitability index, and (3) internal rate of return for each option. (Hint: To solve for internal rate of return, experiment with…
Carla Vista Clinic is considering investing in new heart-monitoring equipment. It has two options. Option A would have an initial lower cost but would require a significant expenditure for rebuilding after 4 years. Option B would require no rebuilding expenditure, but its maintenance costs would be higher. Since the Option B machine is of initial higher quality, it is expected to have a salvage value at the end of its useful life. The following estimates were made of the cash flows. The company's cost of capital is 5%. Initial cost Annual cash inflows Annual cash outflows Cost to rebuild (end of year 4) Salvage value Estimated useful life Option A $194,000 $72,600 $28,100 $51,200 $0 7 years Option B $291,000 $82,000 $25,100 $0 $9,000 7 years
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