Your company is deciding whether to invest in a new machine. The
new machine will increase cash flow by $320,000 per year. You
believe the technology used in the machine has a 10-year life; in
other words, no matter when you purchase the machine, it will be
obsolete 10 years from today. The machine is currently priced at
$1,700,000. The cost of the machine will decline by $106,000 per
year until it reaches $1,170,000, where it will remain.
If your required return is 13 percent, calculate the NPV if you
purchase the machine today. (Do not round intermediate
calculations and round your answer to 2 decimal
places, e.g., 32.16.)
NPV $
If your required return is 13 percent, calculate the NPV if you
wait to purchase the machine until the indicated year. (A
negative answer should be indicated by a minus sign. Do not round
intermediate calculations and round your answers to 2 decimal
places, e.g., 32.16.)
| NPV | |
| Year 1 | $ |
| Year 2 | $ |
| Year 3 | $ |
| Year 4 | $ |
| Year 5 | $ |
| Year 6 | $ |
Should you purchase the machine?
Yes
No
If so, when should you purchase it?
Today
One year from now
Two years from now
In: Finance
Problem 9-5 Option to Wait
|
Your company is deciding whether to invest in a new machine. The new machine will increase cash flow by $310,000 per year. You believe the technology used in the machine has a 10-year life; in other words, no matter when you purchase the machine, it will be obsolete 10 years from today. The machine is currently priced at $1,650,000. The cost of the machine will decline by $102,000 per year until it reaches $1,140,000, where it will remain. |
|
If your required return is 13 percent, calculate the NPV if you purchase the machine today. (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) |
| NPV | $ |
|
If your required return is 13 percent, calculate the NPV if you wait to purchase the machine until the indicated year. (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places (e.g., 32.16).) |
| NPV | |
| Year 1 | $ |
| Year 2 | $ |
| Year 3 | $ |
| Year 4 | $ |
| Year 5 | $ |
| Year 6 | $ |
| Should you purchase the machine? | ||||
|
| If so, when should you purchase it? | ||||||
|
In: Accounting
MULTIPLE CHOICE PLEASE ANSWER ASAP. THANK YOU.
8. A company with working capital of $375,551 and a current ratio of 3.2 pays a $82,906 short-term liability. The amount of working capital immediately after payment is
a.$551,149
b.$463,350
c.$375,551
d.$87,799
11. Assume the following sales data for a company:
| Current year | $758,619 | |
| Preceding year | 520,482 |
What is the percentage increase in sales from the preceding year to the current year (rounded to one decimal place)?
a.31.4%
b.14.4%
c.77.1%
d.45.8%
12. Cash dividends of $72,881 were declared during the year. Cash dividends payable were $10,358 at the beginning of the year and $15,733 at the end of the year. The amount of cash for the payment of dividends during the year is
a.$67,506
b.$72,881
c.$83,239
d.$98,972
15. Accounts receivable from sales transactions were $49,594 at the beginning of the year and $67,778 at the end of the year. Net income reported on the income statement for the year was $143,428. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows prepared by the indirect method would be
a.$143,428
b.$18,184
c.$125,244
d.$161,612
In: Accounting
P9-11 (Algo) Computing Present Values LO9-7, 9-8
[The following information applies to the questions displayed below.]
On January 1, Boston Company completed the following transactions
(use a 7% annual interest rate for all transactions): (FV of $1, PV
of $1, FVA of $1, and PVA of $1) (Use the appropriate
factor(s) from the tables provided.)
Required:
1. In transactions (1-4), determine the present value of the debt. (Round your answer to nearest whole dollar.)
|
In: Finance
|
Your company is deciding whether to invest in a new machine. The new machine will increase cash flow by $316,000 per year. You believe the technology used in the machine has a 10-year life; in other words, no matter when you purchase the machine, it will be obsolete 10 years from today. The machine is currently priced at $1,690,000. The cost of the machine will decline by $106,000 per year until it reaches $1,160,000, where it will remain. |
|
If your required return is 13 percent, calculate the NPV today. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
|
NPV |
$ |
|
If your required return is 13 percent, calculate the NPV if you wait to purchase the machine until the indicated year. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) |
|
NPV |
|
|
Year 1 |
$ |
|
Year 2 |
$ |
|
Year 3 |
$ |
|
Year 4 |
$ |
|
Year 5 |
$ |
|
Year 6 |
$ |
|
Should you purchase the machine? |
|
If so, when should you purchase it? |
||||||
|
Top of Form
Bottom of Form
In: Finance
The following information relates to a company's accounts receivable: gross accounts receivable balance at the beginning of the year, $300,000; allowance for uncollectible accounts at the beginning of the year, $25,000 (credit balance); credit sales during the year, $1,500,000; accounts receivable written off during the year, $16,000; cash collections from customers, $1,450,000. Assuming the company estimates bad debts at an amount equal to 2% of credit sales.
1. Calculate bad debt expenses for the year.
2. Calculate the year-end balance in the allowance for uncollectible accounts.
In: Accounting
The following information relates to a company's accounts receivable: gross accounts receivable balance at the beginning of the year, $420,000; allowance for uncollectible accounts at the beginning of the year, $31,000 (credit balance); credit sales during the year, $1,550,000; accounts receivable written off during the year, $22,000; cash collections from customers, $1,600,000. Assuming the company estimates bad debts at an amount equal to 2% of credit sales.
1. Calculate bad debt expense for the year.
2. Calculate the year-end balance in the allowance for uncollectible accounts.
In: Accounting
you need to have $250,000 per year to live comfortable in retirement to allow for your passion for travel. You feel you will live to your 100th year (35 years after retirement). You believe that the rate of return on your investments will be 5% per year. How much of a retirement fund must you have in order to start paying yourself 250,000 per year on the first day of retirement and the beginning of each year thereafter until your 100th year? show work
In: Finance
Your roommate decides to buy an awesome computer for $10,000 at the end of the year. He/she thinks the computer will last for 5 years. At the end of the first year, he/she upgrades the RAM (a component inside the computer) for $1,000 but it is only expected to last 3 years. At the end of the second year, he/she adds a new cooling system to the computer for $2,000 and it is expected to last for the remaining life of the computer.
What is depreciation in year 1?
What is depreciation in year 3?
What is depreciation in the final year?
In: Finance
Alpha Corporation has been in business for two years. It incurred the following items last year (Year 1): Gross profits on sales 240000 Operating expenses 100000 Long-term capital gain 8000 Short-term capital loss 12000 Alpha reported the following items this year (Year 2): Gross profits on sales 600,000 Operating expenses 165,000 Long term capital gain 10000 Compute Alpha’s taxable income and tax liability for Year 1 and Year 2.
In: Accounting