Assignment 3Ch.5Name /ID/Section /Q1/ Ipswich Corporation isinvestment opportunity with the expected net cashinflows of $300,000 for four years. The residualvalue of the investment, at the end of four years,would be $70,000. The company uses a discount rateof 14%, and the initial investment is $290,000.Calculate the NPV of the investment.consideringanPresent value of an ordinary annuity of $1:12% 13% 14% 15%0.893 0.885 0.877 0.871.69 1.668 1.647 1.6262.402 2.361.322 2.2833.037 2.974 2.914 2.855Present value of $1:12% 13% 14% 15%0.893 0.885 0.877 0.87Q2/ A company is evaluating an investment. Thecompany uses the straight-line method ofdepreciation. Use the following information tocompute the accounting rate of return. Show yourcalculations and round to one decimal place.ProjectSR875,000InvestmentResidual valueOperating incomeYear I120,000Year 2120,000Year 3120,000Year 4120,000Year SQ3/ Your grandfather would like to share some of hisfortune with you. He offers to give you money underone of the following scenarios (you get to choose):1. $8,550 per year at the end of each of the next sevenyears2. $48,350 (lump sum) now3. $100,250 (lump sum) seven years from nowRequirements1. Calculate the present value of each scenario usingan 8% discount rate. Which scenario yields thehighest present value? Round to nearest wholedollar.

QI/ Ipswich Corporation is considering an investment opportunity with the expected net cash inflows of $300,000 for four years. The residual value of the investment, at the end of four years, would be $70,000. The company uses a discount rate of 14%, and the initial investment is $290,000. Calculate the NPV of the investment. Present value of an ordinary annuity of $1: 12% 13% 14% 15% 00.893 0.8850.877 0.87 1.69 1.668 1.6471.626 32.402 2.3612.3222.283 3.037 2.974 2.9142.855 3.605 3.5173.4333.352 Present value of $1: 12% 13% 14% 15% 00.893 0.8850.877 0.87 20.7970.783 0.769 0.756 30.7120.6930.675 0.658 0.6360.6130.592 0.572 0.5670.543 0.519 0.497

QI/ Ipswich Corporation is considering an investment opportunity with the expected net cash inflows of $300,000 for four years. The residual value of the investment, at the end of four years, would be $70,000. The company uses a discount rate of 14%, and the initial investment is $290,000. Calculate the NPV of the investment. Present value of an ordinary annuity of $1: 12% 13% 14% 15% 00.893 0.8850.877 0.87 1.69 1.668 1.6471.626 32.402 2.3612.3222.283 3.037 2.974 2.9142.855 3.605 3.5173.4333.352 Present value of $1: 12% 13% 14% 15% 00.893 0.8850.877 0.87 20.7970.783 0.769 0.756 30.7120.6930.675 0.658 0.6360.6130.592 0.572 0.5670.543 0.519 0.497

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 3BE

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Q1/ Ipswich Corporation is considering an investment opportunity with the expected net cash inflows of $300,000 for four years. The residual value of the investment, at the end of four years, would be $70,000. The company uses a discount rate of 14%, and the initial investment is $290,000. Calculate the NPV of the investment. Present value of an ordinary annuity of $1: 12% 13% 14% 15% 1. 0.893 0.885 0.877 0.87 2. 1.69 1.668 1.647 1.626 2.402 2.361 2.322 2.283 4 3.037 2.974 2.914 2.855 3.605 3.517 3.433 3.352 Present value of $1: 12% 13% 14% 15% 0.893 0.885 0.877 0.87 2. 0.797 0.783 0.769 0.756 0.712 0.693 0.675 0.658 4 0.636 0.613 0.592 0.572 0.567 0.543 0.519 0.497
Q1/ Ipswich Corporation is considering an investment opportunity with the expected net cash inflows of $300,000 for four years. The residual value of the investment, at the end of four years, would be $70,000. The company uses a discount rate of 14%, and the initial investment is $290,000. Calculate the NPV of the investment. Present value of an ordinary annuity of $1: 12% 13% 14% 15% 0.893 0.885 0.877 0.87 2 1.69 1.668 1.647 1.626 3 2.402 2.361 2.322 2.283 4 3.037 2.974 2.914 2.855 3.605 3.517 3.433 3.352 Present value of $1: 12% 13% 14% 15% 1 0.893 0.885 0.877 0.87 0.797 0.783 0.769 0.756 3 0.712 0.693 0.675 0.658 4 0.636 0.613 0.592 0.572 0.567 0.543 0.519 0.497 Q2/ A company is evaluating an investment. The company uses the straight-line method of depreciation. Use the following information to compute the accounting rate of return. Show your calculations and round to one decimal place. Project Investment SR875,000 Residual value Operating income: Year 1 120,000 Year 2 120,000 Year…
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