Nona Sports is considering the purchase of new production equipment. The equipment will cost $135,000. It has an expected useful of life of 5 years, but will require refurbishing at the end of 3 years. The refurbishment will cost $5,000. The estimated salvage value at the end of the useful life is $10,000. The increased annual net income from the equipment is projected to be $40,000. Using a hurdle rate of 12%, calculate the NPV for the equipment.
*If you get 101426.1, 11307 , or 11230 those are all incorrect*
Nona Sports can acquire a new machine for $43,500. The machine should generate new cash inflows of $15,000 per year for 4 years. No salvage value is projected. Calculate the IRR for the investment to 4 decimal places. Set your calculator to END.
*need to be percentage 14% is incorrect*
Nona Pizza Company is considering the purchase of a new pizza oven. The oven will cost $5,000. It will have zero residual value at the end of its useful life of 5 years. The energy efficient oven is projected to generate annual cost savings of $1,800 per year. Calculate the NPV of the pizza oven investment using a 10% hurdle rate.
*1823.42 is incorrect*
In: Accounting
Sirius has decided to acquire a new equipment at a cost of $748,000. The equipment has an expected life of 6 years and will be depreciated using 5-year MACRS with rates of .20, .32, .192, .1152, .1152, and .0576 (note that 5-year MACRS depreciation actually takes place over 6 years). There is no actual salvage value. Travis Capital has offered to lease the equipment to Sirius for $153,000 a year for 6 years, with lease payment at the end of each year. Sirius has a cost of equity of 11 percent, a pre-tax cost of debt of 7 percent, and a marginal tax rate of 25 percent. Should Sirius lease or buy?
In: Accounting
In: Accounting
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In: Accounting
1. Mary Bighair is considering investing in a beauty salon that will cost her $17,000. The after-tax cash flows on the investment should be about $5,000 per year for the next 7 years. Her opportunity cost of capital is 11.2 percent. Find the Profitability Index (PI) of buying the beauty salon: (Do not round intermediate calculations; round final answer to four decimals, i.e. 123.4567)
2. Based on the Profitability Index (PI) results you obtained in the previous question, is the beauty salon a good investment? Why or why not? Explain fully.
In: Finance
Please write a brief response to the following post:
The cost factor is the main managing choice that drove Amazon's choice of delivering distinctive segments that goes into Kindle. Truly, these are the correct choices since the assembling costs will include upto the all out expense of the item, they needed to keep it low by keeping up great quality. So as to contend in the wild challenge, Kindle brought to the table the item at low cost and high usefulness which Asian nations lead at. Subsequently Amazon's choice of delivering distinctive part at better places are correct choices. The way that just $40– $50 of the esteem related with assembling the Kindle goes to U.S. organizations is certainly not an indication of decrease of American intensity, There are numerous makers in US and Germany, however since the mission of Kindly was to offer items at low value, they were left with no other choice. This reality just shows the high estimation of the American Dollar. In the event that Amazon had made all the required segments for Kindle, at that point the expense of the item would have raised. This would have made it troublesome for Kindle to enter the market. The challenge would have been intense, influencing the organization to settle on a few different systems so as to enter into market.
In: Economics
Square Manufacturing is considering investing in a robotics manufacturing line. Installation of the line will cost an estimated $9.7 million. This amount must be paid immediately even though construction will take three years to complete (years 0, 1, and 2). Year 3 will be spent testing the production line and, hence, it will not yield any positive cash flows. If the operation is very successful, the company can expect after-tax cash savings of $6.7 million per year in each of years 4 through 7. After reviewing the use of these systems with the management of other companies, Square’s controller has concluded that the operation will most probably result in annual savings of $4.9 million per year for each of years 4 through 7. However, it is entirely possible that the savings could be as low as $2.5 million per year for each of years 4 through 7. The company uses a 16 percent discount rate. Use Exhibit A.8.
Required:
Compute the NPV under the three scenarios. (Round PV factor to 3 decimal places. Enter your answers in thousands of dollars. Negative amounts should be indicated by a minus sign.)
1.best case
2.Expected
3. worst case
In: Accounting
1. Trading securities are at reported on the balance sheet at amortized cost.
True or False?
Answer ______
2. Warranty expense estimates are higher than warranty returns in a given year. This will result in a deferred tax asset.
True or False?
Answer ______
3. An increase in bonds payable is reported in the financing section of the indirect method statement of cash flows.
True or False?
Answer ______
4. A change in accounting estimate should be accounted for in current and future periods.
True or False?
Answer ______
5. Interest revenue on municipal bonds results in a permanent tax difference.
True or False?
Answer ______
6. A component of net periodic post retirement benefit cost is service cost.
True or False?
Answer ______
7. Retained Earnings is increased by the distribution of dividends.
True or False?
Answer ______
8. A change in the useful life of a fixed asset is a change in accounting estimate.
True or False?
Answer ______
In: Accounting
The steeper the marginal abatement cost function, the more a firm will reduce emissions in response to a given emission tax.
a.True
b.False
A two-part emission charge
a.would implement a high initial emission charge, then a lower charge for higher levels
b.is implemented when flat charges don’t reduce emission sufficiently
c.may allow a certain level of emissions to go untaxed then taxes emissions above that
d.both of the first two answers are correct
Under an emission charge system, firms will increase abatement as long a the emission charge is greater than the marginal abatement cost.
a.True
b.False
When marginal abatement costs differ across firms, an emissions tax will always achieve a given level of abatement at a lower total abatement cost than a proportionate cutback by all firms.
a.True
b.False
The complication of nonuniform emissions can be addressed by
a.equiproportionate cutbacks in emissions
b.a uniform emissions charge since that would be cost effective
c.zoned emission charges
d.cannot be effectively addressed with emissions charges
One disadvantage of an emissions tax system relative to an emission standard is that the response by firms to the tax, and hence the overall reduction in emissions, is usually not well know in advance of implementing the program.
a.True
b.False
In: Economics
Assuming you worked for a corporation that wanted to increase plant capacity with an estimated cost of $26m, what are some of the options you might suggest to the management to pay for such an expansion? what are the limitations of my question?
In: Finance