Question
In: Accounting
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 above items, except for depreciation, represent cash flows. The company's required rate of return is 11%.
Required:
a. Compute the project's net present value.
b. Compute the project's internal rate of return.
c. Compute the project's payback period.
d. Compute the project's simple rate of return.
Solutions
ekkarill92 answered 1 year agoRelated Solutions
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 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...
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...
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...
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