Questions
Average Rate of Return Method, Net Present Value Method, and Analysis The capital investment committee of...

Average Rate of Return Method, Net Present Value Method, and Analysis

The capital investment committee of Ellis Transport and Storage Inc. is considering two investment projects. The estimated income from operations and net cash flows from each investment are as follows:

Warehouse Tracking Technology
Year Income from
Operations
Net Cash
Flow
Income from
Operations
Net Cash
Flow
1 $44,100 $145,000 $93,000 $232,000
2 44,100 145,000 71,000 196,000
3 44,100 145,000 35,000 138,000
4 44,100 145,000 15,000 94,000
5 44,100 145,000 6,500 65,000
Total $220,500 $725,000 $220,500 $725,000

Each project requires an investment of $420,000. Straight-line depreciation will be used, and no residual value is expected. The committee has selected a rate of 10% for purposes of the net present value analysis.

Present Value of $1 at Compound Interest
Year 6% 10% 12% 15% 20%
1 0.943 0.909 0.893 0.870 0.833
2 0.890 0.826 0.797 0.756 0.694
3 0.840 0.751 0.712 0.658 0.579
4 0.792 0.683 0.636 0.572 0.482
5 0.747 0.621 0.567 0.497 0.402
6 0.705 0.564 0.507 0.432 0.335
7 0.665 0.513 0.452 0.376 0.279
8 0.627 0.467 0.404 0.327 0.233
9 0.592 0.424 0.361 0.284 0.194
10 0.558 0.386 0.322 0.247 0.162

Required:

1a. Compute the average rate of return for each investment. If required, round your answer to one decimal place.

Average Rate of Return
Warehouse %
Tracking Technology %

1b. Compute the net present value for each investment. Use the present value of $1 table above. If required, use the minus sign to indicate a negative net present value.

Warehouse Tracking Technology
Present value of net cash flow total $ $
Less amount to be invested $ $
Net present value $ $

2. The warehouse has a smaller  net present value as tracking technology cash flows occur earlier  in time. Thus, if only one of the two projects can be accepted, the tracking technology  would be the more attractive.

In: Accounting

A loan with a current value of 34,500 has a payment plan that starts with a...


A loan with a current value of 34,500 has a payment plan that starts with a high end of year payment that goes down by the same amount each year until the loan is paid off. Using an interest rate of 8.0% and the first year payment of 8200, calculated by how much the end of year payment will go down to pay off the loan after just 7 years. Note use the sign to show if the payment goes up or down as the plan may not

In: Accounting

Alternative A has an initial acquisition cost of $10,000 and an annual average operating and maintenance...

Alternative A has an initial acquisition cost of $10,000 and an annual average operating and maintenance cost of $1402 per down time. Alternative B has a higher acquisition cost of $20,000, but has a lower annual average operating and maintenance cost of $500 per down time. With an expected lifetime of 5 years for both alternatives, and an annual interest of 5%, determine the break even number of down times per year.

please show all work

In: Accounting

Think about Major League Baseball! The owners of the major league teams are arguing that they...

Think about Major League Baseball! The owners of the major league teams are arguing that they may have to shut the season down unless the players agree to a significant salary cut. If the players agree, the owners will be able to play games this season.


Explain loss-minimization and shut down cases for perfectly competitive firms. Explain why baseball owners may have to resort to a shut-down case and why they may be able to use a loss-minimization case.

In: Economics

STRATEGIC COST MANAGEMENT - BREAK-EVEN POINT AND CVP ANALYSIS

Cornwell Company is in business since 2010, makes swimwear for professional athletes. Analysis of the firm's record for the year reavelas the following:

                Average swimsuit selling price                      $140

                Average swimsuit expenses:

                    Direct Material                                           $60

                    Direct labor                                                  25

                    Variable overhead                                        15

               Annual fixed cost:

                    Selling                                                       $20,500

                    Administrative                                            48,000

The company's tax rate is 40 percent. Daisy Rin, company president, has asked you to help her answer: What is the break-even point in number of swimsuits and in dollar?

In: Accounting

Using the table below calculate the missing values.


Using the table below calculate the missing values.

Year

Nominal GDP

Real GDP

GDP Deflator

1 (2007)

3,753

____________

81

2 (2008)

4,551

5,009

____________

3 (2009)

5,150

____________

100.00

4 (2010)

5,666

5,255

____________

5 (2011)

____________

6,175          

158





Enter the missing values : the inflation/growth rates as indicated below.

Inflation rate year 1-2 ____________

Inflation rate year 3-4 ____________

Real growth rate yr. 2-3 ____________

Real growth rate yr. 4-5 ____________

In: Economics

A machine acquired on January 4, 2009, at a cost of $425,000, has an estimated useful...

A machine acquired on January 4, 2009, at a cost of $425,000, has an estimated useful life of nine years and an estimated residual value of $65,000. (10 points)

What was the amount of depreciation for the years 2009, 2010, and 2011, using the straight-line method of depreciation?

What was the book value of the machine on January 1, 2012?

                     

Assume that the machine was sold on January 9, 2012, for $290,000 journalize the entry to record the sale                                                               

_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Assume that the machine had been sold on January 9, for $310,000, journalize the entry to record the sale.

_____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

In: Accounting

A machine acquired on January 4, 2009, at a cost of $425,000, has an estimated useful...

  1. A machine acquired on January 4, 2009, at a cost of $425,000, has an estimated useful life of nine years and an estimated residual value of $65,000. (10 points)

  1. What was the amount of depreciation for the years 2009, 2010, and 2011, using the straight-line method of depreciation?

  1. What was the book value of the machine on January 1, 2012?  

                       

  1. Assume that the machine was sold on January 9, 2012, for $290,000 journalize the entry to record the sale                                                               

_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

  1. Assume that the machine had been sold on January 9, for $310,000, journalize the entry to record the sale.

_____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

In: Accounting

Why is it important to know the patient's learning style(s)? 2) How is awareness of learning...

Why is it important to know the patient's learning style(s)?

2) How is awareness of learning style relate to health assessment?

3) Discuss the rationale for obtaining a family history.

4) Discuss the rationale for obtaining a systems review.

5) Please identify, read, and post the citation (in proper APA format) for an evidenced-based article regarding the complete health history. The article should be from a peer-reviewed journal since 2010. Please provide a 1-3 sentence commentary on the article and how it relates to the discussion.

In: Nursing

Sally Reynolds sells real estate along the coastal area of Northern California. Below are her total...

Sally Reynolds sells real estate along the coastal area of Northern California. Below are her total annual commissions between 2007 and 2017.

Year Amount (thousands)
2007 292.16
2008 233.80
2009 206.97
2010 202.67
2011 164.69
2012 206.53
2013 237.51
2014 225.57
2015 255.33
2016 248.14
2017 269.11

Click here for the Excel Data File

Find the mean, median, and mode of the commissions she earned for the 11 years. (Round your answers to 2 decimal places.)

In: Statistics and Probability