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.
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please show all work
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Average swimsuit expenses:
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Direct labor 25
Variable overhead 15
Annual fixed cost:
Selling $20,500
Administrative 48,000
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Year | Nominal GDP | Real GDP | GDP Deflator |
1 (2007) | 3,753 | ____________ | 81 |
2 (2008) | 4,551 | 5,009 | ____________ |
3 (2009) | 5,150 | ____________ | 100.00 |
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5 (2011) | ____________ | 6,175 | 158 |
Enter the missing values : the inflation/growth rates as indicated below.
Inflation rate year 1-2 ____________
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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
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Assume that the machine had been sold on January 9, for $310,000, journalize the entry to record the sale.
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| 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.)
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