Question

In: Accounting

Jarvey Corporation is studying a project that would have a ten-year life and would require a...

Jarvey Corporation is studying a project that would have a ten-year life and would require a $450,000 investment in equipment which has no salvage value. The project would provide net operating income each year as follows for the life of the project (Ignore income taxes.):

Sales (cash)

$

500000

Less cash variable expenses

200000

Contribution margin

300000

Less fixed expenses:

Fixed cash expenses

$

150000

Depreciation expenses

45000

195000

Net operating income

$

105000

The company's required rate of return is 12%. Calculate: did you copy?y

  1. The payback period
  2. The net present value
  3. the internal rate of return (approximate value)

Solutions

Expert Solution


Related Solutions

Ursus, Inc., is considering a project that would have a ten-year life and would require a...
Ursus, Inc., is considering a project that would have a ten-year life and would require a $4,500,000 investment in equipment. At the end of ten years, the project would terminate and the equipment would have no salvage value. The project would provide net operating income each year as follows (Ignore income taxes.): Sales $ 2,900,000 Variable expenses 1,800,000 Contribution margin 1,100,000 Fixed expenses: Fixed out-of-pocket cash expenses $ 350,000 Depreciation 450,000 800,000 Net operating income $ 300,000 Click here to...
Ursus, Inc., is considering a project that would have a ten-year life and would require a...
Ursus, Inc., is considering a project that would have a ten-year life and would require a $1,806,000 investment in equipment. At the end of ten years, the project would terminate and the equipment would have no salvage value. The project would provide net operating income each year as follows (Ignore income taxes.): Sales $ 2,000,000 Variable expenses 1,350,000 Contribution margin 650,000 Fixed expenses: Fixed out-of-pocket cash expenses $ 230,000 Depreciation 180,600 410,600 Net operating income $ 239,400 Click here to...
1.Token, is considering a project that would have a ten-year life and would require a $5,980,000...
1.Token, is considering a project that would have a ten-year life and would require a $5,980,000 investment in equipment. At the end of ten years, the project would terminate and the equipment would have no salvage value. The project would provide net operating income each year as follows (Ignore income taxes.): Sales $ 4,000,000 Variable expenses 2,350,000 Contribution margin 1,650,000 Fixed expenses: Fixed out-of-pocket cash expenses $ 500,000 Depreciation 598,000 1,098,000 Net operating income $ 552,000 . All of the...
1.Token, is considering a project that would have a ten-year life and would require a $5,980,000...
1.Token, is considering a project that would have a ten-year life and would require a $5,980,000 investment in equipment. At the end of ten years, the project would terminate and the equipment would have no salvage value. The project would provide net operating income each year as follows (Ignore income taxes.): Sales $ 4,000,000 Variable expenses 2,350,000 Contribution margin 1,650,000 Fixed expenses: Fixed out-of-pocket cash expenses $ 500,000 Depreciation 598,000 1,098,000 Net operating income $ 552,000 . All of the...
Ursus, Inc., is considering a project that would have a eleven-year life and would require a...
Ursus, Inc., is considering a project that would have a eleven-year life and would require a $1,848,000 investment in equipment. At the end of eleven years, the project would terminate and the equipment would have no salvage value. The project would provide net operating income each year as follows (Ignore income taxes.): Sales $ 2,100,000 Variable expenses 1,400,000 Contribution margin 700,000 Fixed expenses: Fixed out-of-pocket cash expenses $ 370,000 Depreciation 168,000 538,000 Net operating income $ 162,000 Click here to...
Ursus, Inc., is considering a project that would have a eleven-year life and would require a...
Ursus, Inc., is considering a project that would have a eleven-year life and would require a $1,848,000 investment in equipment. At the end of eleven years, the project would terminate and the equipment would have no salvage value. The project would provide net operating income each year as follows (Ignore income taxes.): Sales $ 2,100,000 Variable expenses 1,400,000 Contribution margin 700,000 Fixed expenses: Fixed out-of-pocket cash expenses $ 370,000 Depreciation 168,000 538,000 Net operating income $ 162,000 Click here to...
Ursus, Inc., is considering a project that would have a eleven-year life and would require a...
Ursus, Inc., is considering a project that would have a eleven-year life and would require a $1,848,000 investment in equipment. At the end of eleven years, the project would terminate and the equipment would have no salvage value. The project would provide net operating income each year as follows (Ignore income taxes.): Sales $ 2,100,000 Variable expenses 1,400,000 Contribution margin 700,000 Fixed expenses: Fixed out-of-pocket cash expenses $ 370,000 Depreciation 168,000 538,000 Net operating income $ 162,000 Click here to...
Ursus, Inc., is considering a project that would have a five-year life and would require a...
Ursus, Inc., is considering a project that would have a five-year life and would require a $2,400,000 investment in equipment. At the end of five years, the project would terminate and the equipment would have no salvage value. The project would provide net operating income each year as follows (Ignore income taxes.): Sales $ 3,500,000 Variable expenses 2,100,000 Contribution margin 1,400,000 Fixed expenses: Fixed out-of-pocket cash expenses $ 600,000 Depreciation 480,000 1,080,000 Net operating income $ 320,000 Click here to...
15 Lamar Company is considering a project that would have an eight-year life and require a...
15 Lamar Company is considering a project that would have an eight-year life and require a $2,700,000 investment in equipment. At the end of 7 years, the project would terminate and the equipment would have no salvage value. The project would provide net operating income each year as follows: The company's discount rate is 11%. Sales ……………………………………………………………………………………………………………… $3,000,000 Variable expenses ………………………………………………………………………………………… 1,800,000 Contribution margin ……………………………………………………………………………………….. 1,200,000 Fixed expenses Advertising, salaries, and other fixed out-of-pocket costs …. $600,000 Depreciation ………………………………………………………………………….. 355,000...
Ausel’s is considering a ten-year project that will require $850,000 for new fixed assets that will...
Ausel’s is considering a ten-year project that will require $850,000 for new fixed assets that will be depreciated straight-line to a zero book value over the ten years. At the end of the project, the fixed assets can be sold for 15 percent of their original cost. The project is expected to generate annual sales of $928,000 and costs of $721,000. The tax rate is 35 percent and the required rate of return is 14.6 percent. What is the net...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT