Question
In: Accounting
Merrill Corp. has the following information available about a potential capital investment: Initial investment $ 1,200,000...
Merrill Corp. has the following information available about a
potential capital investment:
| Initial investment | $ | 1,200,000 | |||||
| Annual net income | $ | 120,000 | |||||
| Expected life | 8 | years | |||||
| Salvage value | $ | 130,000 | |||||
| Merrill’s cost of capital | 10 | % | |||||
Assume straight line depreciation method is used.
Required:
1. Calculate the project’s net present value.
2. Without making any calculations, determine whether the internal rate of return (IRR) is more or less than 10 percent.
3. Calculate the net present value using a 13 percent discount rate.
4. Without making any calculations, determine whether the internal rate of return (IRR) is more or less than 13 percent.
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Merrill Corp. has the following information available about a potential capital investment: Initial investment $ 1,800,000...
Merrill Corp. has the following information available about a
potential capital investment:
Initial investment
$
1,800,000
Annual net income
$
200,000
Expected life
8
years
Salvage value
$
240,000
Merrill’s cost of capital
10
%
Assume straight line depreciation method is used.
Required:
1. Calculate the project’s net present
value.
2. Without making any calculations, determine
whether the internal rate of return (IRR) is more or less than 10
percent.
3. Calculate the net present value using a 15
percent...
Merrill Corp. has the following information available about a potential capital investment: Initial investment $ 900,000...
Merrill Corp. has the following information available about a
potential capital investment:
Initial investment
$
900,000
Annual net income
$
90,000
Expected life
8
years
Salvage value
$
100,000
Merrill’s cost of capital
7
%
Assume straight line depreciation method is used.
Required:
1. Calculate the project’s net present value. (Future
Value of $1, Present Value of $1, Future Value Annuity of $1,
Present Value Annuity of $1.) (Use appropriate factor(s)
from the tables provided. Do not round intermediate calculations....
Merrill Corp. has the following information available about a potential capital investment: Initial investment $ 1,100,000...
Merrill Corp. has the following information available about a
potential capital investment:
Initial investment
$
1,100,000
Annual net income
$
110,000
Expected life
8
years
Salvage value
$
120,000
Merrill’s cost of capital
7
%
Assume straight line depreciation method is used.
Required:
1. Calculate the project’s net present value. (Future
Value of $1, Present Value of $1, Future Value Annuity of $1,
Present Value Annuity of $1.) (Use appropriate factor(s)
from the tables provided. Do not round intermediate calculations....
Merrill Corp. has the following information available about a potential capital investment: Initial investment $ 800,000...
Merrill Corp. has the following information available about a
potential capital investment:
Initial investment
$
800,000
Annual net income
$
80,000
Expected life
8
years
Salvage value
$
90,000
Merrill’s cost of capital
7
%
Assume straight line depreciation method is used.
Required:
1. Calculate the project’s net present value. (Future Value of
$1, Present Value of $1, Future Value Annuity of $1, Present Value
Annuity of $1.) (Use appropriate factor(s) from the tables
provided. Do not round intermediate calculations....
Merrill Corp. has the following information available about a potential capital investment: Initial investment $ 700,000...
Merrill Corp. has the following information available about a
potential capital investment:
Initial investment
$
700,000
Annual net income
$
70,000
Expected life
8
years
Salvage value
$
80,000
Merrill’s cost of capital
7
%
Assume straight line depreciation method is used.
Required:
1. Calculate the project’s net present value. (Future
Value of $1, Present Value of $1, Future Value Annuity of $1,
Present Value Annuity of $1.) (Use appropriate factor(s)
from the tables provided. Do not round intermediate calculations....
Merrill Corp. has the following information available about a potential capital investment: Initial investment $ 2,200,000...
Merrill Corp. has the following information available about a
potential capital investment:
Initial investment $ 2,200,000
Annual net income $ 190,000
Expected life 8 years
Salvage value $ 200,000
Merrill’s cost of capital 8 %
Assume straight line depreciation method is used.
Required: 1. Calculate the project’s net present value.
2. Without making any calculations, determine whether the
internal rate of return (IRR) is more or less than 8 percent.
3. Calculate the net present value using a 12 percent...
Merrill Corp. has the following information available about a potential capital investment: Initial investment $ 2,400,000...
Merrill Corp. has the following information available about a
potential capital investment:
Initial investment
$
2,400,000
Annual net income
$
170,000
Expected life
8
years
Salvage value
$
180,000
Merrill’s cost of capital
8
%
Assume straight line depreciation method is used.
Required:
1. Calculate the project’s net present value. (Future
Value of $1, Present Value of $1, Future Value Annuity of $1,
Present Value Annuity of $1.) (Use appropriate factor(s)
from the tables provided. Do not round intermediate calculations....
Merrill Corp. has the following information available about a potential capital investment: Initial investment $ 2,600,000...
Merrill Corp. has the following information available about a
potential capital investment:
Initial investment
$
2,600,000
Annual net income
$
150,000
Expected life
8
years
Salvage value
$
160,000
Merrill’s cost of capital
6
%
Assume straight line depreciation method is used.
Required:
1. Calculate the project’s net present value. (Future
Value of $1, Present Value of $1, Future Value Annuity of $1,
Present Value Annuity of $1.) (Use appropriate factor(s)
from the tables provided. Do not round intermediate calculations....
Merrill Corp. has the following information available about a potential capital investment: Initial investment $ 1,100,000...
Merrill Corp. has the following information available about a
potential capital investment:
Initial investment
$
1,100,000
Annual net income
$
110,000
Expected life
8
years
Salvage value
$
120,000
Merrill’s cost of capital
7
%
Assume straight line depreciation method is used.
Required:
1. Calculate the project’s net present value. (Future
Value of $1, Present Value of $1, Future Value Annuity of $1,
Present Value Annuity of $1.) (Use appropriate factor(s)
from the tables provided. Do not round intermediate calculations....
Merrill Corp. has the following information available about a potential capital investment: Initial Investment 1,700,000 Annual...
Merrill Corp. has the following information available about a
potential capital investment:
Initial Investment
1,700,000
Annual Net income
190,000
Expected Life
8 years
Salvage Value
250,000
Merills Cost of Capital
10%
Assume straight line depreciation method is used.
Required:
1. Calculate the project’s net present
value.
2. Without making any calculations, determine
whether the internal rate of return (IRR) is more or less than 10
percent.
3. Calculate the net present value using a 15
percent discount rate.
4. Without...
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