Required information [The following information applies to the questions displayed below.] You'll get a detailed solution from a subject matter expert that helps you learn core concepts. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. Management predicts this machine has a 8-year service life and a $80,000 salvage value, and it uses strai, A machine costs $300,000 and is expected to yield an after-tax net income of $9,000 each year. What is the present value, Strauss Corporation is making a $71,900 investment in equipment with a 5-year life. The investment costs $58, 500 and has an estimated $7, 500 salvage value. Experts are tested by Chegg as specialists in their subject area. the accounting rate of return for this investment; assume the company uses straight-line depreciation. The company uses the straight-line method of depreciation and has a tax rate of 40 per cent. 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. $ $ Accounting Rate of Return Choose . The equipment has a five-year life and an estimated salvage value of $50,000. Strauss Corporation is making an $89,000 investment in equipment with a 5-year life. The business environment, namely market uncertainty and competition intensity, is also analysed in association with the firm's strategic orientation. 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 expected future net cash flows from the use of the asset are expected to be $580,000. What is the accounting rate of return? These assets contribute $28,000 to annual net income when depreciation is computed on a straight-line basis. earnings equal sales minus the cost of sales The project would require a $28,000 initial investment and has a salvage value of $2,000, A company has a minimum required rate of return of 9%. Assume the company uses straight-line . What is the annual depreciation expense using the straight line method? X The investment costs $56,100 and has an estimated $7,500 salvage value. Using the original cost of the asset, the unadjusted rate of return o, The Charles Company is planning to invest $450,000 in a factory machine. Compute the payback period. ), Exercise 26-11 BAP Corporation is reviewing an investment proposal. Accounting 202 Final - Formulas and Examples. All, Maude Company's required rate of return on capital budgeting projects is 9%. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. A machine costs $190,000, has a $10,000 salvage value, is expected to last nine years, and will generate an after-tax income of $30,000 per year after straight-line depreciation. Corresponding with the IRS in writing Assume Peng requires a 5% return on its investments. The income tax depreciation method referred to as CCA: a) Allows a corporation some flexibility in choosing the class an asset is assigned to. Assume Peng requires a 5% return on its investments. What is the present value, Strauss Corporation is making a $87,550 investment in equipment with a 5-year life. 2. Assume Peng requires a 15% 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 amount, to be invested, is $100,000. The salvage value of the asset is expected to be $0. What is the accounti, A company buys a machine for $79,000 that has an expected life of 4 years and no salvage value. The payback period for this investment is: a) 3.9 years b) 3 years, Hung Company accumulates the following data concerning a proposed capital investment: cash cost of $216, 236, net annual cash flows of $43,800, and present value factor of cash inflows for 10 years 5.22 (rounded). 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.) Annual cash flow Carbon capture and storage (CCS) brings new entrants to subsurface exploration and reservoir engineering who require very high levels of confidence in the technology, in the geological analysis and in understanding the risks before committing large 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. 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. EV of $1. A company is considering investing in a new machine that requires a cash payment of $47,947 today. After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction. 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%. 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 net income for each year are presented in the schedule below. All rights reserved. The investment costs $47,400 and has an estimated $8,400 salvage value. Reverse innovations are defined as "clean slate, super value products that are technologically advanced created to meet the unique needs of relevant segments, initially adopted in the emerging markets followed by the developed countries" (Malodia et al., 2020, p. 1010).The adjective "reverse" means the flow of innovation is from developing to developed economies. The investment costs $45,000 and has an estimated $6,000 salvage value. Sweden, Denmark and Norway, encounter several regulations and initiatives considering CSR and SRI such as the European Green Deal. Project 2 requires an initial investment of $4,000,000 and has a present value of cash flows of $6,000,000. 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. X Management predicts this machine has a 10-year service life and a $100,000 salvage value, and it uses straight-line depreciation. All other trademarks and copyrights are the property of their respective owners. Required intormation Use the following information for the Quick Study below. Using the orig, A building has a cost of $500,000 and accumulated depreciation of $40,000. The investment costs $45,600 and has an estimated $8,700 salvage value. The investment costs $45,300 and has an estimated $7,500 salvage value. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. The investment costs $48,600 and has an estimated $6,300 salvage value. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. Find step-by-step Accounting solutions and your answer to the following textbook question: Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. Assume Peng requires a 10% return on its investments, compute the net present value of this investment. The company is considering an investment that would yield an after-tax cash flow of $30,000 in four years. The system requires a cash payment of $125,374.60 today. The investment costs$45,000 and has an estimated $6,000 salvage value. What investment(s) should the firm make according to net present v, Unrealized gains or losses on available-for-sale investments occur when a company adjusts the investment to : A) average value when an asset is disposed B) average value but has not yet disposed of the asset C) fair value when an asset is disposed D) f, Finnegan Company plans to invest in a new operating plant that is expected to cost $500,000. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. 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. Assume the company uses straight-line depreciation (PV of $1. The estimated cash flow for the investment are as follows: N Description Cash flow ($) 0 price of the system Fo 1-4 revenue per, Joe Sixpack Inc. is considering an investment that will cost is $400,000. You have the following information on a potential investment. Peng Company is considering an investment expected to generate an average net income after taxes of $3,250 for three years. Compute this machine's accoun, A machine costs $500,000 and is expected to yield an after-tax net income of $15,000 each year. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. Negative amounts should be indicated by a minus sign. Assume Peng requires a 10% return on its investments. If a table of present v, A company can buy a machine that is expected to have a three-year life and a $29,000 salvage value. The company uses straight-line depreciation. Compute the payback period. Using the straight line method of depreciation, calculate accumul, Lucky Company Is considering a capital investment in machinery: Initial investment $1,400,000 Residual value $300,000 Expected annual net cash inflows $200,000 Expected useful life 10 years Required r, The following data concerns a proposed equipment purchase: Cost $161,100 Salvage value $4,900 Estimated useful life 4 years Annual net cash flows $47,000 Depreciation method Straight-line The annual average investment amount used to calculate the accounti, You have the following information on a potential investment: Capital investment $85,000 Estimated useful life 4 years Estimated salvage value $0 Estimated annual net cash inflows: Year 1 $18,000 Ye, The Seago Company is planning to purchase $524,500 of equipment with an estimated seven-year life and no estimated salvage value. 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. Assume Peng requires a 15% return on its investments. What is the current value of the company? What is the present value, The Best Manufacturing Company is considering a new investment. The investment costs $45,000 and has an estimated $6,000 salvage value. The lease term is five years. A new operating system for an existing machine is expected to cost $690,000 and have a useful life of six years. Annual savings in cash operating costs are expected to total $200,000. Project 1 requires an initial investment of $400,000 and has a present value of cash flows of $1,100,000. A bond that has a $1,000 par value (face value) and a con, Strauss Corporation is making a $70,000 investment in equipment with a 5-year life. 45,000+6000=51,000. The asset has no salvage value. The investment costs $45,000 and has an estimated $10,800 salvage value. At the beginning of 2007, the company has a deferred tax asset of $360 pertain, Your company has been presented with an opportunity to invest in a project that is summarized as follows: Investment required $60,000,000 Annual gross income $14,000,000 Annual operating Costs 5,500,000 Salvage Value after 10 years 0 The project is expec, 1. The current value of the building is estimated to be $300,000. 8 years b. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. What rate of return should you expect for your investment in Fir, If a company owns more than 20% of the stock of another company and the stock is being held as a long-term investment, which method would the investor normally use to account for this investment? Assume that the company can invest m, For the year 2015, Ronis Corporation earned a profit of $360,000 on total sales revenue of $2,000,000. Which of, Fraser Company will need a new warehouse in eight years. Compute the net present value of this investment. A company has three independent investment opportunities. This site is using cookies under cookie policy . Depreciation is calculated using the straight-line method. Management predicts this machine has a 12-year service life and a $40,000 salvage value, and it uses straight-line depreciation. It generates annual net cash inflows of $10,000 each year. Cash flow The present value of an annuity due for five years is 6.109. Required information Use the following information for the Quick Study below. 2003-2023 Chegg Inc. All rights reserved. If a table of present v, Grouper Company owns equipment that cost $1,044,000 and has accumulated depreciation of $440,800. Estimate Longlife's cost of retained earnings. The NPV is computed as: {eq}\displaystyle \text{Present value of annuity (PVA) } = P * \frac{1 - (1 + r)^{-t}}{r} {/eq}, Become a Study.com member to unlock this answer! PVA of $1. Assu, Peng Company is considering an investment expected to generate an average net income after taxes of $3,000 for three years. Assume Peng requires a 10% return on its investments, compute the net present value of this investment. Management predicts this machine has a 10-year service life and a $105,000 salvage value, and it uses straight-line depreciation. The company has projected the following annual for the investment. 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. Assume the company uses straight-line depreciation. Apex Industries expects to earn $25 million in operating profit next year.