Information for two alternative projects involving machinery investments follows: Initial investment Project 1 $ (123,000) Project 2 $ (93,000) Salvage value 0 13,000 Annual income 14,145 12,720 a. Compute accounting rate of return for each project. b. Based on accounting rate of return, which project is preferred? Complete this question by entering your answers in the tabs below. Required A Required B Compute accounting rate of return for each project. Project 1 Project 2 Accounting Rate of Return Denominator: Numerator: 1 = Accounting rate of return 0 0 < Required A Required B >

Information for two alternative projects involving machinery investments follows: Initial investment Project 1 $ (123,000) Project 2 $ (93,000) Salvage value 0 13,000 Annual income 14,145 12,720 a. Compute accounting rate of return for each project. b. Based on accounting rate of return, which project is preferred? Complete this question by entering your answers in the tabs below. Required A Required B Compute accounting rate of return for each project. Project 1 Project 2 Accounting Rate of Return Denominator: Numerator: 1 = Accounting rate of return 0 0 < Required A Required B >

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 3PB: Net present value method, present value index, and analysis for a service company First United Bank...

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(b) In order to choose between Project A and Project B, the project planner must make a decision. The following data pertains to the projects: Project P Project Q Capital cost of asset 60,000 60,000 Profits before depreciation Project A Project B Year 1 20,000 50,000 Year 2 30,000 20,000 Year 3 40,000 5,000 Year 4 50,000 5,000 Year 5 60,000 5,000 (i) From the analysis using payback period method, which project will be more preferred? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
by using on pe care information about the proposed investment follows: (Future Value of $1. Present Value of $1. Future Value Annuity of $1. Present Value Annuity of $1.) Note: Use appropriate factor(s) from the tables provided. Initial investment (for two hot air balloons) Useful life Salvage value Annual net income generated BBS's cost of capital Assume straight line depreciation method is used. Required: Help BBS evaluate this project by calculating each of the following: 1. Accounting rate of return Note: Round your answer to 2 decimal places. $ 505,000 1.Accounting rate of return 2. Payback period 3. Net present value Net present value assuming 14% cost of capital 10 years $ 45,000 $ 37,875 2. Payback period. Note: Round your answer to 2 decimal places. 3. Net present value (NPV) Note: Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round the final answer to nearest whole dollar. 11N 4. Recalculate the NPV assuming BBS's cost of capital…
REQUIRED Study the information given below and calculate the Accounting Rate of Return on initial investment (expressed to two decimal places) of each project. INFORMATION The following data relate to two investment projects, only one of which may be selected: Project A Project B R R Initial capital expenditure 180 000 180 000 Net cash inflow per year: Year 1 90 000 36 000 Year 2 72 000 36 000 Year 3 54 000 86 000 Year 4 36 000 94 000 Expected scrap value (not included in the figures above) 36 000 0 Note: Depreciation is calculated using the straight-line The cost of capital is 15%. REQUIRED Use the capital asset pricing model to calculate the cost of the ordinary shares from the information provided below. INFORMATION The financial managers of Computex have…
Information for two alternative projects involving machinery investments follows: Project 2 Project 1 $ (125,000) $ (95,000) 15,000 14,850 Initial investment Salvage value Annual income a. Compute accounting rate of return for each project. b. Based on accounting rate of return, which project is preferred? Complete this question by entering your answers in the tabs below. Required A Required B 0 16,250 Compute accounting rate of return for each project. Project 1 Project 2 Numerator: Accounting Rate of Return 1 7 Denominator: (Required A W Required B > Accounting rate of return
Information on four investment proposals is given below: Investment required Present value of cash inflows Net present value Life of the project 4 Required: 1. Compute the project profitability index for each investment proposal. (Round your answers to 2 decimal places.) 2. Rank the proposals in terms of preference. Investment Proposal A BUD C Project Profitability Index Investment Proposal A D $(106,000) $(116,000) $(86,000) $(144,000) 142,040 178,640 118,680 213,120 $36,048 $ 62,640 $ 32,680 $ 69,120 5 years 7 years years 6 years Rank Preference:
Consider the following project-balance profiles for proposed investment projects, where the project-balance figures are rounded to the nearest dollar: (a) Compute the net present worth of each investment.(b) Determine the project balance at the end of period 2 for Project C ifA2 = $500.(c) Determine the cash flows for each project.(d) Identify the net future worth of each project.
Question1: 1. Determine the Payback Period and write a conclusion for the two projects E and R based on the information provided in the table below: Year Cash Flow (E) Cash Flow (R) 0 -3700 -2900 1 400 500 2 500 600 3 700 700 4 800 900 5 1000 1100 6 1200 1300 Question2: 1. Discuss the critical importance of work schedule in project management.2. Discuss the contribution of cost estimation in the completion of successful project.3. A firm is planning a project which consists of the following ten jobs and precedence relations are identified with their node numbers: Jobs (i-j) 1-2 1-3 2-3 2-4 2-5 3-5 4-7 5-6 6-7 7-8 Durations (days) 9 5 12 7 8 11 10 3 4 6 a. Draw an arrow diagram representing the project.b. Determine the critical pathc. What is the duration of the project? Question3: A company is planning to purchase a new machine to expand the range of its products.…
You are given the following data for a project that is to be evaluated using the APV method. Year EBIT CAPEX 0 O $201.765 O $193,822 O $185,617 O $222,872 O $213,918 1 $127.000 $60,000 2 Depreciation Increase in NWC Year-end net debt $80,000 Cost of net debt = 8% Unlevered cost of capital = 11.8% Corporate tax rate = 30% Calculate the total value of the project at t = 0. using the APV method. $72,000 $50,000 $100,000 $133,000 $40,000 $80,000 $60,000 $140,000 3 $138.500 $10,000 $84,000 $30,000 $140,000
Use the information provided to answer the questions.5.1 Use the information provided below to calculate the following. Where applicable, use the presentvalue tables provided in APPENDICES 1 and 2 that appear after QUESTION 5.5.1.1 Calculate the Payback Period of Project A (expressed in years, months and days). 5.1.2Calculate the Accounting Rate of Return (on average investment) of Project B (expressed to twodecimal places). 5.1.3 Calculate the Net Present Value of each project (with amounts rounded off to the nearest Rand). 5.1.4 Use your answers from question 5.1.3 to recommend the project that should be chosen. Motivateyour choice.
Use the following information for problems 1 to 5. Assume that the projects are mutually exclusive. Year Cash Flow (A) Cash Flow (B) 0 ($525,600) ($425,600) 1 $323,100 $235,900 2 $180,200 $163,900 3 $145,000 $135,000 4 $88,220 $79,000 What is the IRR for each of these projects? Using the IRR decision rule, which project should the company accept? Is this decision necessarily correct? If the required return is 13 percent, what is the NPV for each of these projects? Which project will the company choose if it applies the NPV decision rule? Over what range of discount rates would the company choose Project A? Project B? At what discount rate would the company be indifferent between these two projects? Explain. Compute the payback period for each project. Compute the profitability index for each project.
Question #1a) What is a â€œtransfer price?â€b) List and describe 3 main reasons for using transfer prices.Question #2Consider the following information about a potential project:Investment requiredExpected annual project revenueExpected annual project expensesRequired rate of returnCurrent division return on investment$3,000,000$6,000,000$5,550,00011%18%a) Calculate the projectâ€™s return on investment.b) Based solely on ROI, is this project in the firmâ€™s best interests? Why or why not?c) Is this project in the division managerâ€™s best interests? Why or why not?d) Perform DuPont Analysis on this project.e) What is the projectâ€™s residual income?Question #3List and describe five traits that can differentiate a customer that is relatively inexpensive to service from a customer that is relatively expensive to service.Question #4List and describe five actions a firm can take if a customer appears…
Merrill Corporation has the following information available about a potential capital investment: Initial investment Annual net income Expected life Salvage value Merrill's cost of capital Assume straight line depreciation method is used. Required: 1. Calculate the project's net present value. (Future Value of $1,Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) Note: Use appropriate factor(s) from the tables provided. 2. Without making any calculations, determine whether the internal rate of return (IRR) is more or less than 7 percent. 3. Calculate the net present value using a 9 percent discount rate. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) $ 2,500,000 $ 160,000 Req 1 and 2 Req 3 and 4 8 years $ 170,000 Note: Use appropriate factor(s) from the tables provided. 4. Without making any calculations, determine whether the internal rate of return (IRR) is more or less than 9 percent. 7 Complete this…