peng company is considering an investment expected to generate

information systems, employees, maintenance, and other costs (inputs). The equipment has a useful life of 5 years and a residual value of $60,000. Given the riskiness of the investment opportunity, your cost of capital is 27%. straight-line depreciation A company purchased a plant asset for $55,000. The machine will cost $1,800,000 and is expected to produce a $200,000 after-tax net income to be rece, A company can buy a machine that is expected to have a three-year life and a $25,000 salvage value. Assume Peng requires a 10% return on its investments. True, Richol Corp. is considering an investment in new equipment costing $180,000. The firm has two possible investments with the following cash inflows: A B Year 1 $300 $200 2 200 200 3 100 200 a. The company's required, A company is considering a proposal that requires an initial investment of $91,100, has predicted net cash inflows of $30,000 per year for four years and no salvage value. The investment costs $47,400 and has an estimated $8,400 salvage value. Compute the net present value of this investment. A company is considering investing in a new machine that requires a cash payment of $47,947 today. c) Only applies to a business organized as corporations. A company's required rate of return on capital budgeting is 15%. Assume Peng requires a 5% return on its investments. 8 years b. Required intormation Use the following information for the Quick Study below. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. Peng Company is considering an investment expected to generate an average net income after taxes of $2,900 for three years. The amount to be invested is $100,000. The investment costs $48,600 and has an estimated $6,300 salvage value. The building has an estimated useful life of 40 years and an expected salvage value of $550,000. Management predicts this machine has a 9-year service life and a $60,000 salvage value, and it uses strai, A machine costs $700,000 and is expected to yield an after-tax net income of $52,000 each year. Yokam Company is considering two alternative projects. Com, Peng Company is considering an investment expected to generate an average net income after taxes of $2,200 for three years. The asset is recorded at $810,000 and has an economic life of eight years. The firm has a beta of 1.62. the net present value of this investment. There is a 77 percent chance that an airline passenger will You'll get a detailed solution from a subject matter expert that helps you learn core concepts. The investment costs $57,600 and has an estimated $6,000 salvage value. Annual cash flow Management predicts this machine has a 10-year service life and a $100,000 salvage value, and it uses straight-line depreciation. 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 . Assume Pang requires a 5% return on its investments. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. The investment costs $45,300 and has an estimated $7,500 salvage value. It is mainly used to evaluate a prospective project whether it would be profitable to the investor or not. Req, CPA corporation is considering an investment with a cost of $5,000,000 an estimate useful life of 5 years, and no salvage value. The management of Samsung is planning to invest in a new companywide computerized inventory tracking system. projected GROSS cash flows from the investment are $150,000 per year. Peng Company is considering an investment expected to generate an average net income after taxes of $3,300 for three years. Using the original cost of the asset, the unadjusted rate of return on, A machine costs $600,000 and is expected to yield an after-tax net income of $23,000 each year. Yearly net cash inflows (before taxes) from the machine are estimated at $140,000. John J Wild, Ken W. Shaw, Barbara Chiappetta. What, Tijuana Brass Instruments Company treats dividends as a residual decision. The company currently has no debt, and its cost of equity is 15 percent. What is the depreciation expense for year two using the straight-line method? 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. PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Assume Peng requires a 5% return on its investments. Assume the company requires a 12% rate of return on its investments. What lump-sum amount should the company invest now to have the $370,000 available at the end of the eight-year period? Assume the company uses straight-line depreciation (PV of $1. The, Shep Corp. is considering a 20-year investment with a net present value of cash flows of -$20,800 and an uncertain salvage value. The company uses the straight-line method of d, Determine Present Value: You can invest in a machine that costs $500,000. The investment costs$45,000 and has an estimated $6,000 salvage value. The investment costs$45,000 and has an estimated $6,000 salvage value. Assume Peng requires a 10% return on its investments, compute the net present value of this investment. The income tax depreciation method referred to as CCA: a) Allows a corporation some flexibility in choosing the class an asset is assigned to. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction. The salvage value of the asset is expected to be $0. The fair value of the equipment is $476,000. Projected annual cash flows are: Year 1 $500,000 Year 2 $600,000 Year 3 $700,000 Year 4 $400,000 Calculate the NPV and the IRR. 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. a. 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. Peng Company is considering an investment expected to generate an average net income after taxes of $2,000 for three years. Required information The following information applies to the questions displayed below] Peng Company is considering an investment expected to generate an average net income after taxes of $3,500 for three years. 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 company's required, Crispen Corporation can invest in a project that costs $400,000. Capital investment - $15,000 Estimated useful life - 3 years Estimated salvage value - zero Estimated net cash inflow: -Year 1 - $7,00, Compute the net present value of each potential investment. 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 equipment will be depreciated on a straight-line basis over a five-year life and is expected to generate net cash inflows of $120,000 the first year, $140,000 the second, Assume the company requires a 10% rate of return on its investments. Required information (The following information applies to the questions displayed below.) The investment costs $48,600 and has an estimated $6,300 salvage value. Assume Peng requires a 15% return on its investments. The investment costs $45,600 and has an estimated $8,700 salvage value. (Round answer to 2 decimal places. The machine is expected to last four years and have a salvage value of $50,000. It generates annual net cash inflows of $10,000 each year. Compute the net present value of this investment. An asset costs $70,000 and is expected to have a $10,000 salvage value at the end of its 10-year life. Peng Company is considering an Investment expected to generate an average net income after taxes of $3,000 for three years. The company has an all-equity capital structure, and its cost of equity capital is 15 percent. Compute the net present value of this investment. What is the present value, Strauss Corporation is making a $91,800 investment in equipment with a 5-year life. All rights reserved. 1. 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! Presented below is 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, an, Ahnen Company owns the following investments. water? You w, A machine that cost $720,000 has an estimated residual value of $60,000 and an estimated useful life of eleven years. Negative amounts should be indicated by a minus sign.) 2.3 Reverse innovation. Management predicts this machine has a 9-year service life and a $140,000 salvage value, and it uses str, A machine costs $500,000 and is expected to yield an after-tax net income of $19,000 each year. Compute this machine's accoun, If an asset costs $210,000 and is expected to have a $30,000 salvage value at the end of its ten-year life, and generates annual net cash inflows of $30,000 each year, the cash payback period is: A) 8 years B) 7 years C) 6 years D) 5 years, The anticipated purchase of a fixed asset for $400,000 with a useful life of 5 years and no residual value is expected to yield a total income of $150,000. What is the present value, The Best Manufacturing Company is considering a new investment. Required information [The folu.ving information applies to the questions displayed below.) Determine the net present value, and ind. The company pays an operating tax rate of 30%. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. Peng Company is considering an investment expected to generate an average net income after taxes of $2,600 for three years. Experts are tested by Chegg as specialists in their subject area. What are the appropriate labels for classifying the relationship between this cost item and th Compu, A company constructed its factory with a fixed capital investment of P120M. Present value an average net income after taxes of $3,200 for three years. b. Assume Peng requires a 10% return on its investments. For ex ample: What is the present value of $2,000 per year for 10 years assuming an annual interest rate of 9%. Management predicts this machine has an 8-year service life and a $40,000 salvage value, and it uses straight-line depreciation. copyright 2003-2023 Homework.Study.com. Accounting 202 Final - Formulas and Examples. The founder asked you for $220,000 today and you expect to get $1,070,000 in 9 years. A company is investing in a solar panel system to reduce its electricity costs. 6 years c. 7 years d. 5 years. The company is considering an investment that would yield a cash flow of $20,000 in 5 years. 17 US public . Explain. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. Ass, Peng Company is considering an Investment expected to generate an average net income after taxes of $3,000 for three years. The investment costs $45,000 and has an estimated $10,800 salvage value. Ignoring taxes, what is the most that the company would be willing to in, Strauss Corporation is making a $89,600 investment in equipment with a 5-year life.The company uses the straight-line method of depreciation and has a tax rate of 40 percent.The company's required rat, Strauss Corporation is making a $89,750 investment in equipment with a 5-year life.The company uses the straight-line method of depreciation and has a tax rate of 40 percent.The company's required rat, Strauss Corporation is making a $91,950 investment in equipment with a 5-year life. Securities Cost Fair Value Trading 120,000 124,000 Non-trading 100,000 94,000 The non-trading securities are held as long-term investments. Compute the net present value of this investment. Melton Company's required rate of return on capital budgeting projects is 16%. d. Loss on investment. (PV of. Axe Corporation is considering investing in a machine that has a cost of $25,000. Assume Peng requires a 10% return on its investments, compute the net present value of this investment. Stop procrastinating with our smart planner features. value. The investment costs $49,800 and has an estimated $11,400 salvage value. The cost of capital is 6%. For example: How much would you need to invest today at 10% compounded semiannually to accumulate $5,000 in 6 years from today? What is the present valu, Your firm is considering a new investment proposal and would like to calculate its weighted average cost of capital. Assume the company uses straight-line depreciation. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. Negative amounts should be indicated by a minus sign. To help in this, compute the cost of capital for the firm for the following: a. What is the return on investment? = Yokam Company is considering two alternative projects. Get access to this video and our entire Q&A library, How to Calculate Net Present Value: Definition, Formula & Analysis. The investment costs $47,400 and has an estimated $8,400 salvage value. The company's required rate of return is 11 percent. Cash Flow Annual cash flow Present Value of an Annuity of1 Residual value Present Value of 1 Select Chart Amount x PV FactorPresent Value $ 8,700 x Present value of cash inflows Immediate cash outflows Net present value 45,600 If the value of leased asset is $125 and the cost of debt is 10%, what is the, The cost of capital for a firm is 10 percent. 1, A machine costs $180,000 and will have an eight-year life, a $20,000 salvage value, and straight-line depreciation is used. Management estimates that this machine will generate annual after-tax net income of $540. Required information [The following information applies to the questions displayed below.] , ided by total investment.. total investment is current assets (inventories, accounts receivables and cash) plus fixed assets. The company uses straight-line depreciation. The investment costs $45,000 and has an estimated $6,000 salvage value. t, A machine costs $380,000, has a $20,000 salvage value, is expected to last eight years, and will generate an after-tax income of $60,000 per year after straight-line depreciation. The company uses a discount rate of 16% in its capital budgeting. Flower Company is considering an investment which will return a lump sum of $2,500,000 six years from now. Equity method b. The investment costs $54,900 and has an estimated $8,100 salvage value. Compute the net present value of this investment. 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. 200,000. Sign up for free to discover our expert answers. Which of, Fraser Company will need a new warehouse in eight years. What is Ronis' Return on Investment for 2015? should purchase a used Caterpillar mini excavator, A) The distribution of exam scores for Statistics is normally Determine the payout period in year. The company's desired rate of return used in the present value calculations was, A company is considering investment in a project that costs Rs. e) 42.75%. The company requires an 8% return on its investments. What is the investment's payback period? Compute this machines accounting rate of return. 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. Compute the net present value of this investment. 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, Elmdale Company is considering an investment that will return a lump sum of $725,500, 6 years from now. Cash flow $2,000 per year for 10 years is the equivalent of $12,835 today ($2,000 6.4177) Compute the net present value of this investment. The investment costs $59.100 and has an estimated $6.900 salvage value. All other trademarks and copyrights are the property of their respective owners. They first apply the real options approach to assess the investment values as well as the distribution of energies such as biomass, coal, natural . Compute the net present value of this investment. The current value of the building is estimated to be $120,000. The investment costs $56,100 and has an estimated $7,500 salvage value. S4 000 per year for 6 years accumulates to $29,343.60 ($4,000 7.3359). The expected future net cash flows from the use of the asset are expected to be $595,000. Assume Peng requires a 15% return on its investments. 76,000 b. Axe anticipates annual net income after taxes of $1,500 from selling the product produced by the new machin, A company can buy a machine that is expected to have a three-year life and a $21,000 salvage value. Ronis' investment in asset base is $1,500,000, and they assume a capital charge of 10%. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. #12 Peng Company is considering an investment expected to generate an average net income after taxes of $2,900 for three years. What amount should Flower Company pay for this investment to earn an 11% return? earnings equal sales minus the cost of sales ROI is equal to turnover multiplied by earning as a percent of sales. 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.) The company is currently considering an investment that is expected to generate annual cash inflows of $10,000 for 6 years. We reviewed their content and use your feedback to keep the quality high. The investment costs $45,000 and has an estimated $6,000 salvage value.