TOPIC: ANNUITIESINSTRUCTION: SHOW COMPLETE SOLUTION WITH CORRESPONDING CASHFLOW DIAGRAM AND BOX THE FINAL ANSWERHydroklean, an environmental soil cleaning company, borrowed P3.5M to finance start-up costs for a site reclamationproject. How much must the company receive every six months in revenue to earn a rate of return of 15%compounded semiannually for the 5-year project period?

In this we need to calculate present value factor and from that we can get required payment.

Answered: TOPIC: ANNUITIES INSTRUCTION: SHOW…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 17EB: Caduceus Company is considering the purchase of a new piece of factory equipment that will cost...

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Similar questions

A firm is trying to decide between two equipment for a production activity. The following information is available. Equip 1 Equip 2 Initial investment $25,000 $17,000 7 years 7 years $0 Useful life Salvage value Operating cost per hour $0 $4.30 $5.00 At a MARR of 8% per year, determine the breakeven number of operating hours per year. Click the icon to view the interest and annuity table for discrete compounding when i = 8% per year. The breakeven number of operating hours per year is O A. 1,866 O B. 2,195 O C. 1,756
Give typing answer with explanation and conclusion Galvanized Products is considering the purchase of a new computer system for their enterprise data management system. The vendor has quoted a purchase price of $100,000. Galvanized Products is planning to borrow 1/4th of the purchase price from a bank at 15% compounded annually. The loan is to be repaid using equal annual payments over a 3-year period. The computer system is expected to last 5 years and has a salvage value of $5,000 at that time. Over the 5-year period, Galvanized Products expects to pay a technician $25,000 per year to maintain the system but will save $45,000 per year through increased efficiencies. Galvanized Products uses a MARR of 21%/year to evaluate investments. What is the future worth of this investment?
A manufacturing company is trying to decide between the two machines shown below. Determine which machine should be selected on the basis of rate of return. Assume the MARR is 20% per year. Machine A Machine B Initial Cost, $ -18,000 -35,000 Annual operating cost, $/year -4,000 -3,600 Salvage value, $ 1,000 2,700 Life, years 3 6
Please view the following video before answering this question. Video Example 4.3 Click here to access the TVM Factor Table Calculator Consider a palletizer at a bottling plant that has a first cost of $141,000, operating and maintenance costs of $16,500 per year, and an estimated net salvage value of $23,500 at the end of 33 years. Assume an interest rate of 6.00%. What is the present equivalent cost of the investment if the planning horizon is 33 years? O $387,900 O $362,900 O $372,363 O $423,400
Your company is planning to purchase a new log splitter for is lawn and garden business. The new splitter has an initial investment of $180,000. It is expected to generate $25,000 of annual cash flows, provide incremental cash revenues of $150,000, and incur incremental cash expenses of $100,000 annually. What is the payback period and accounting rate of return (ARR)?
A restaurant is considering the purchase of new tables and chairs for their dining room with an initial investment cost of $515,000, and the restaurant expects an annual net cash flow of $103,000 per year. What is the payback period?
If a copy center is considering the purchase of a new copy machine with an initial investment cost of $150,000 and the center expects an annual net cash flow of $20,000 per year, what is the payback period?
Gardner Denver Company is considering the purchase of a new piece of factory equipment that will cost $420,000 and will generate $95,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further Instructions on internal rate of return in Excel, see Appendix C.
Caduceus Company is considering the purchase of a new piece of factory equipment that will cost $565,000 and will generate $135,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return In Excel, see Appendix C.
Gina Ripley, president of Dearing Company, is considering the purchase of a computer-aided manufacturing system. The annual net cash benefits and savings associated with the system are described as follows: The system will cost 9,000,000 and last 10 years. The companys cost of capital is 12 percent. Required: 1. Calculate the payback period for the system. Assume that the company has a policy of only accepting projects with a payback of five years or less. Would the system be acquired? 2. Calculate the NPV and IRR for the project. Should the system be purchasedeven if it does not meet the payback criterion? 3. The project manager reviewed the projected cash flows and pointed out that two items had been missed. First, the system would have a salvage value, net of any tax effects, of 1,000,000 at the end of 10 years. Second, the increased quality and delivery performance would allow the company to increase its market share by 20 percent. This would produce an additional annual net benefit of 300,000. Recalculate the payback period, NPV, and IRR given this new information. (For the IRR computation, initially ignore salvage value.) Does the decision change? Suppose that the salvage value is only half what is projected. Does this make a difference in the outcome? Does salvage value have any real bearing on the companys decision?
A company purchase a piece of manufacturing equipment for an additional income. The expected income is $4,500 per semester. Its useful life is 9 years. Expenses are estimated to be $500 semiannually. If the purchase price is $44,000 and there is a salvage value of $4,500, what is the prospective rate of return (IRR) of this investment? The IRR is compounded semiannually. O a. IRR = 3% semiannual O b. IRR = 12% semiannual O c. IRR = 8.02% semiannual O d. IRR = 6% semiannual
A firm is trying to decide between two equipment for a production activity. The following information is available. Equip 1 $31,000 4 years SO Equip 2 $22.000 Initial investment Useful life 4 years So Salvage value Operating cost per hour $4.40 $5.00 At a MARR of 4% per year, determine the breakeven number of operating hours per year. Click the icon to view the interest and annuity table for discrete compounding when i= 4% per year. ..... The breakeven number of operating hours per year is O A. 3,512 More info О В. 5,372 ОС. 4,958 Discrete Compounding; i= 4% O D. 4,132 Single Payment Compound Amount Uniform Series Compound Sinking Capital Recovery Factor Present Amount Present Fund Factor Worth Factor Factor Worth Factor Factor To Find P To Find A To Find A Given P To Find F To Find F To Find P Given A PIA Given P Given F Given A Given F F/P P/F FIA A/F A/P 0.9615 0.9615 1.8861 1 1.0400 1.0000 1.0000 1.0400 2 1.0816 0.9246 2.0400 0.4902 0.5302 1.1249 0.8890 3.1216 2.7751 0.3203 0.3603…

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