[Solved] Assignment 219135

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121.(Ignore income taxes in this problem.) Dunay Corporation is considering investing $810,000 in a project. The life of the project would be 9 years. The project would require additional working capital of $24,000, which would be released for use elsewhere at the end of the project. The annual net cash inflows would be $162,000. The salvage value of the assets used in the project would be $41,000. The company uses a discount rate of 17%.Required:Compute the net present value of the project.122.(Ignore income taxes in this problem.) Whatley Inc. is considering investing in a project that would require an initial investment of $460,000. The life of the project would be 5 years. The annual net cash inflows from the project would be $138,000. The salvage value of the assets at the end of the project would be $69,000. The company uses a discount rate of 15%.Required:Compute the net present value of the project.123.(Ignore income taxes in this problem.) Bill Anders retires in 8 years. He has $650,000 to invest and is considering a franchise for a fast-food outlet. He would have to purchase equipment costing $500,000 to equip the outlet and invest an additional $150,000 for inventories and other working capital needs.Other outlets in the fast-food chain have an annual net cash inflow of about $160,000. Mr. Anders would close the outlet in 8 years. He estimates that the equipment could be sold at that time for about 10% of its original cost. Mr. Anders’ required rate of return is 16%.Required:What is the investment’s net present value when the discount rate is 16 percent? Is this an acceptable investment?124.(Ignore income taxes in this problem.) Weilbacher Corporation is considering the purchase of a machine that would cost $240,000 and would last for 8 years. At the end of 8 years, the machine would have a salvage value of $50,000. The machine would reduce labor and other costs by $62,000 per year. The company requires a minimum pretax return of 16% on all investment projects.Required:Determine the net present value of the project. Show your work!125.(Ignore income taxes in this problem.) Jim Bingham is considering starting a small catering business. He would need to purchase a delivery van and various equipment costing $125,000 to equip the business and another $60,000 for inventories and other working capital needs. Rent for the building used by the business will be $35,000 per year. Jim’s marketing studies indicate that the annual cash inflow from the business will amount to $120,000. In addition to the building rent, annual cash outflow for operating costs will amount to $40,000. Jim wants to operate the catering business for only six years. He estimates that the equipment could be sold at that time for 4% of its original cost. Jim uses a 16% discount rate. Required:Would you advise Jim to make this investment?126.(Ignore income taxes in this problem.) Jane Summers has just inherited $600,000 from her mother’s estate. She is considering investing part of these funds in a small catering business. She would need to purchase a delivery van and various equipment costing $100,000 to equip the business and another$50,000 for inventories and other working capital needs. Rent on the building used by the business will be $24,000 per year. Jane’s marketing studies indicate that the annual cash inflow from the business will amount to $90,000. In addition to the building rent, other annual cash outflows for operating costs will amount to $30,000. Jane wants to operate the catering business for only six years. She estimates that the equipment could be sold at that time for about 10% of its original cost. Jane’s required rate of return is 16%.Required:Compute the net present value of this investment.127.(Ignore income taxes in this problem.) The management of Basler Corporation is considering the purchase of a machine that would cost $440,000, would last for 7 years, and would have no salvage value. The machine would reduce labor and other costs by $88,000 per year. The company requires a minimum pretax return of 12% on all investment projects.Required:Determine the net present value of the project. Show your work!128.(Ignore income taxes in this problem.) A newly developed device is being considered by Fairway Foods for use in processing and canning peaches. The device, which is available only on a royalty basis, is reported to be a great labor saver. Fairway’s production manager has gathered the following.jpg”>data:The new device must be obtained through a licensing arrangement with the developer. The license period lasts for only 8 years. Fairway Foods’ required rate of return is 10%.Required:By use of the incremental cost approach, compute the net present value of the proposed licensing of the new device. Show all computations in good form. Should the company enter into a licensing arrangement to use the new device?129.(Ignore income taxes in this problem.) Janes, Inc., is considering the purchase of a machine that would cost $430,000 and would last for 6 years, at the end of which, the machine would have a salvage value of $47,000. The machine would reduce labor and other costs by $109,000 per year. Additional working capital of $4,000 would be needed immediately, all of which would be recovered at the end of 6 years. The company requires a minimum pretax return of 17% on all investment projects.Required:Determine the net present value of the project. Show your work!130.(Ignore income taxes in this problem.) Juliar Inc. has provided the following data concerning a proposedinvestment project:.jpg”> The company uses a discount rate of 12%.Required:Compute the net present value of the project.131.(Ignore income taxes in this problem.) The management of Peregoy Corporation is considering the purchase of an automated molding machine that would cost $255,552, would have a useful life of 5 years, and would have no salvage value. The automated molding machine would result in cash savings of $64,000 per year due to lower labor and other costs.Required:Determine the internal rate of return on the investment in the new automated molding machine. Show your work!132.(Ignore income taxes in this problem.) Hayner Limos, Inc., is considering the purchase of a limousine that would cost $149,868, would have a useful life of 9 years, and would have no salvage value. The limousine would bring in cash inflows of $36,000 per year in excess of its cash operating costs. Required:Determine the internal rate of return on the investment in the new limousine. Show your work!133.(Ignore income taxes in this problem.) The management of Eastridge Corporation is considering the purchase of a machine that would cost $50,470 and would have a useful life of 7 years. The machine would have no salvage value. The machine would reduce labor and other operating costs by $14,000 per year.Required:Determine the internal rate of return on the investment in the new machine. Show your work!134.(Ignore income taxes in this problem.) Rosenholm Corporation uses a discount rate of 18% in its capital budgeting. Partial analysis of an investment in automated equipment with a useful life of 5 years has thus far yielded a net present value of -$327,960. This analysis did not include any estimates of the intangible benefits of automating this process nor did it include any estimate of the salvage value of the equipment. Required:a. Ignoring any salvage value, how large would the additional cash flow per year from the intangible benefits have to be to make the investment in the automated equipment financially attractive?b. Ignoring any cash flows from intangible benefits, how large would the salvage value of the automated equipment have to be to make the investment in the automated equipment financially attractive?135.(Ignore income taxes in this problem.) Verdin Corporation uses a discount rate of 16% in its capital budgeting. Management is considering an investment in telecommunications equipment with a useful life of 6 years. Excluding the salvage value of the equipment, the net present value of the investment in the equipment is -$166,194.Required:How large would the salvage value of the telecommunications equipment have to be to make the investment in the telecommunications equipment financially attractive?136.(Ignore income taxes in this problem.) The management of an amusement park is considering purchasing a new ride for $40,000 that would have a useful life of 10 years and a salvage value of $4,000. The ride would require annual operating costs of $19,000 throughout its useful life. The company’s discount rate is 8%. Management is unsure about how much additional ticket revenue the new ride would generate-particularly because customers pay a flat fee when they enter the park that entitles them to unlimited rides. Hopefully, the presence of the ride would attract new customers.Required:How much additional revenue would the ride have to generate per year to make it an attractive investment?137.(Ignore income taxes in this problem.) The management of Rosengarten Corporation is investigating the purchase of a new satellite routing system with a useful life of 7 years. The company uses a discount rate of 8% in its capital budgeting. The net present value of the investment, excluding its intangible benefits, is -$607,020.Required:How large would the additional cash flow per year from the intangible benefits have to be to make the investment in the automated equipment financially attractive?138.(Ignore income taxes in this problem.) Ahlman Corporation is considering the following three investment.jpg”>projects: Required:Rank the investment projects using the project profitability index. Show your work139.(Ignore income taxes in this problem.) The management of Suddreth Corporation is considering thefollowing three investment projects:.jpg”> The only cash outflows are the initial investments in the projects.Required:Rank the investment projects using the project profitability index. Show your work140.(Ignore income taxes in this problem.) Brewer Company is considering purchasing a machine that would cost $537,600 and have a useful life of 9 years. The machine would reduce cash operating costs by $82,708 per year. The machine would have a salvage value of $107,520 at the end of the project. Required:a. Compute the payback period for the machine.b. Compute the simple rate of return for the machine.141.(Ignore income taxes in this problem.) Gocke Company is considering purchasing a machine that would cost $478,800 and have a useful life of 5 years. The machine would reduce cash operating costs by $114,000 per year. The machine would have no salvage value.Required:a. Compute the payback period for the machine.b. Compute the simple rate of return for the machine.142.(Ignore income taxes in this problem.) Limon Corporation is considering a project that would require an initial investment of $204,000 and would last for 6 years. The incremental annual revenues and expensesfor each of the 6 years would be as follows:.jpg”> At the end of the project, the scrap value of the project’s assets would be $12,000. Required:Determine the payback period of the project. Show your work!143.(Ignore income taxes in this problem.) The management of Fowkes Corporation is considering a project that would require an initial investment of $331,000 and would last for 8 years. The annual net operating income from the project would be $54,000, including depreciation of $40,000. At the end of the project, the scrap value of the project’s assets would be $11,000.Required:Determine the payback period of the project. Show your work!144.(Ignore income taxes in this problem.) Sheridon Corporation is investigating automating a process by purchasing a new machine for $483,000 that would have a 7 year useful life and no salvage value. By automating the process, the company would save $140,000 per year in cash operating costs. Thecompany’s current equipment would be sold for scrap now, yielding $29,000. The annual depreciation on the new machine would be $69,000.Required:Determine the simple rate of return on the investment to the nearest tenth of a percent. Show your work!145.(Ignore income taxes in this problem.) The management of Orebaugh Corporation is investigating automating a process by replacing old equipment by a new machine. The old equipment would be sold for scrap now for $15,000. The new machine would cost $445,000, would have a 5 year useful life, and would have no salvage value. By automating the process, the company would save $165,000 per year in cash operating costs.Required:Determine the simple rate of return on the investment to the nearest tenth of a percent. Show your work!146.(Ignore income taxes in this problem.) Pal Corporation is contemplating purchasing equipment that would increase sales revenues by $438,000 per year and cash operating expenses by $258,000 per year. The equipment would cost $504,000 and have a 9 year life with no salvage value. The annual depreciation would be $56,000.Required:Determine the simple rate of return on the investment to the nearest tenth of a percent. Show your work!147.(Ignore income taxes in this problem.) The management of Ossenfort Corporation is investigating purchasing equipment that would cost $440,000 and have a 8 year life with no salvage value. The equipment would allow an expansion of capacity that would increase sales revenues by $192,000 per year and cash operating expenses by $61,000 per year.Required:Determine the simple rate

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