Reverse innovations are defined as "clean slate, super value products that are technologically advanced created to meet the unique needs of relevant segments, initially adopted in the emerging markets followed by the developed countries" (Malodia et al., 2020, p. 1010).The adjective "reverse" means the flow of innovation is from developing to developed economies. a. What is the payback period in years ap, The Montana Company has decided to invest in a project that is expected to produce the following cash flows: $12,500 (year 1), $14,000 (year 2) and $9,000 (year 3). The Action Plan for Soil Pollution Prevention and Control ("10-point Soil Plan") provides the top-level design for soil environmental protection in China and motivates heavy polluters to participate in soil pollution prevention and control. What rate of return should you expect for your investment in Fir, If a company owns more than 20% of the stock of another company and the stock is being held as a long-term investment, which method would the investor normally use to account for this investment? Peng Company is considering an investment expected to generate an average net income after taxes of $3,400 for three years. Management predicts this machine has a 9-year service life and a $140,000 salvage value, and it uses str, A machine costs $500,000 and is expected to yield an after-tax net income of $19,000 each year. The investment costs $48,600 and has an estimated $6,300 salvage value. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. Project 2 requires an initial investment of $4,000,000 and has a present value of cash flows of $6,000,000. check bags. A. The expected average rate of return, giving effect to depreciation on investment is 15%. The company uses the straight-line method of d, Determine Present Value: You can invest in a machine that costs $500,000. You have the following information on a potential investment. The company pays an operating tax rate of 30%. Assume Peng requires a 5% return on its investments. The machine will generate annual cash flows of $21,000 for the next three years. Experts are tested by Chegg as specialists in their subject area. The new present value of after tax cash flows from an investment less the amount invested. The system, A machine costs $700,000 and is expected to yield an after-tax net income of $30,000 each year. copyright 2003-2023 Homework.Study.com. Which option should the company choose to invest in? Park Co. is considering an investment that requires immediate payment of $27,000 and provides expected cash inflows of $9,000 annually for four years. The related cash flows, net of taxes, are ex, You have the following information on a potential investment. Given the riskiness of the investment opportunity, your cost of capital is 27%. Our experts can answer your tough homework and study questions. The investment costs $49,500 and has an estimated $10,800 salvage value. c) Only applies to a business organized as corporations. A company is deciding to invest in a new project at a cost of $2 million dollars. The investment costs $45,000 and has an estimated $6,000 salvage value. t, A machine costs $380,000, has a $20,000 salvage value, is expected to last eight years, and will generate an after-tax income of $60,000 per year after straight-line depreciation. Compute the net present value of this investment. The machine will cost $1,812,000 and is expected to produce a $203,000 after-tax net income to be re, A company can buy a machine that is expected to have a three-year life and a $23,000 salvage value. and EVA of S1) (Use appropriate factor(s) from the tables provided. The excess cost over the book value of an investment that is due to expected above-average earnings is labeled on the consolidated balance sheet as: a. The management of Bischke Corporation is investigating an investment in equipment that would have a useful life of 8 years. Option 1 generates $25,000 of cash inflow per year and has zero residual value. The following data concerns a proposed equipment purchase: Cost $136,400 Salvage value $3,600 Estimated useful life 4 years Annual net cash flows $45,700 Depreciation method Straight-line The annual average investment amount used to calculate the accounti, Landmark Company is considering an investment in new equipment costing $500,000. earnings equal sales minus the cost of sales Assume Peng requires a 15% return on its investments. To help in this, compute the cost of capital for the firm for the following: a. C. Appearing as a witness for a taxpayer The investment costs $45,000 and has an estimated $6,000 salvage value. The building is expected to generate net cash inflows of $15,000 per year for the next 30 years. Assume Peng requires a 5% return on its investments. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. Peng Company is considering an investment expected to generate an average net income after taxes of $3,300 for three years. Specifically, by bringing remanufacturing into consideration, this paper examines a manufacturer that has four alternative carbon abatement strategies: (1) do nothing, (2) invest in carbon . The investment costs $48,600 and has an estimated $6,300 salvage value. Compu, Lanyard Company is considering an investment that will generate $600,000 in cash inflows per year for 7-years and has $240,000 of cash outflows for the same period (before income taxes). c. Retained earnings. It is mainly used to evaluate a prospective project whether it would be profitable to the investor or not. The company s required rate of return is 13 percent. The machine will cost $1,772,000 and is expected to produce a $193,000 after-tax net income to be re, A company can buy a machine that is expected to have a three-year life and a $36,000 salvage value. The investment costs $49,800 and has an estimated $11,400 salvage value. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. Compu, A company constructed its factory with a fixed capital investment of P120M. The investment costs $56,100 and has an estimated $7,500 salvage value. If the accounting rate of return is 12%, what was the purchase price of the mac. The estimated cash inflow from the project are as follows: Year Cash Inflow Present value factor at 10% 1 70,000 0.909 2 80,000 0.826 3 120,000 0.751 4 90,000 0.683 5 60,000 0.621 Ca, A company is considering investment in a Flexible Manufacturing System. The company uses straight-line depreciation. The asset has an estimated salvage value of $12,000, and an estimated useful life of 10 years. QS 25-7 Computation of accounting rate of return LO P2 Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. Present value They first apply the real options approach to assess the investment values as well as the distribution of energies such as biomass, coal, natural . Management predicts this machine has a 10-year service life and a $100,000 salvage value, and it uses straight-line depreciation. The machine will cost $1,796,000 and is expected to produce a $199,000 after-tax net income to be received at the end of each year. Assume Peng requires a 10% return on its investments. Experts are tested by Chegg as specialists in their subject area. Cash flow Compute this machine's accounti, On 1/1, a company buys equipment with a cost of $8,100, an estimated salvage value of $1,100, and an estimated useful life of 7 years. What is the accounting rate of return? Currently, U.S. Treasury bills are yielding 6.75% and the expected return for the S & P 500 is 18.2%. The payback period for this investment is: a) 3.9 years b) 3 years, Hung Company accumulates the following data concerning a proposed capital investment: cash cost of $216, 236, net annual cash flows of $43,800, and present value factor of cash inflows for 10 years 5.22 (rounded). Yearly net cash inflows (before taxes) from the machine are estimated at $140,000. You would need to invest S2,784 today ($5,000 0.5568). Required information Use the following information for the Quick Study below. What is the present valu, Strauss Corporation is making an $85,200 investment in equipment with a 5-year life. The investment costs $45,600 and has an estimated $8,700 salvage value. The investment costs $52,200 and has an estimated $9,000 salvage value. If a potential investments internal rate of return is above the companys hurdle rate, should the investment be made? Amount x PV Factor = Present Value Cash Flow Annual cash flow Select Chart Present Value of an Annuity of 1 II Residual value II Net present value. Peng Company is considering an investment expected to generate an average net income after taxes of $2,500 for three years. If the accounting ra, A company buys a machine for $76,000 that has an expected life of 7 years and no salvage value. Assume the company uses straight-line depreciation. It is considering investing in a project that costs $50,000 and is expected to generate cash inflows of $20,000 at the end of each year for 3 years. What amount should Crane Company pay for this investment to earn an 9% return? Accounting Rate of Return Choose Denominator: Choose Numerator: - Accounting Rate of Return Accounting rate of return. Using the original cost of the asset, what will be the unadjusted rat, A company can buy a machine that is expected to have a three-year life and a $31,000 salvage value. What is the most that the company would be willing to invest in this project? Assume the company uses straight-line depreciation. Req, CPA corporation is considering an investment with a cost of $5,000,000 an estimate useful life of 5 years, and no salvage value. Compute. The warehouse will cost $370,000 to build. The expected future net cash flows from the use of the asset are expected to be $580,000. QS 11-8 Net present value LO P3Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. 7 years c. 6 years d. 5 years, The amount of the estimated average income for a proposed investment of $90,000 in a fixed asset, giving effect to depreciation (straight-line method), with a useful life of 4 years, no residual value. The asset is recorded at $810,000 and has an economic life of eight years. The business environment, namely market uncertainty and competition intensity, is also analysed in association with the firm's strategic orientation. Axe anticipates annual net income after taxes of $1,500 from selling the product produced by the new machin, A company can buy a machine that is expected to have a three-year life and a $21,000 salvage value. Solution: Annual depreciation = (Cost - Salvage value) / useful life = ($45,600 - $8,700) / 3 = $12,300 Annual cash i. Peng Company is considering an investment expected to generate an average net income after taxes of $2,200 for three years. Choose Numerator: Accounting Rate of Return Choose Denominator: = Accounting Rate of Return = Accounting rate of return, Required information [The following information applies to the questions displayed below.) What investment(s) should the firm make according to net present v, Unrealized gains or losses on available-for-sale investments occur when a company adjusts the investment to : A) average value when an asset is disposed B) average value but has not yet disposed of the asset C) fair value when an asset is disposed D) f, Finnegan Company plans to invest in a new operating plant that is expected to cost $500,000. Learn about what net present value is, how it is calculated both for a lump sum and for a stream of income over multiple years. A machine costs $190,000, has a $10,000 salvage value, is expected to last nine years, and will generate an after-tax income of $30,000 per year after straight-line depreciation. Required information (The following information applies to the questions displayed below.) The company currently has no debt, and its cost of equity is 15 percent. The approximate net present value of this project, The Zinger Corporation is considering an investment that has the following data: Year 1 Year 2 Year 3 Year 4 Year 5 Investment $17,500 $4,900 Cash inflow $3,900 $3,900 $10,000 $5,900 $5,900 Cash inflows occur evenly throughout the year. Ignoring taxes, what is the most that the company would be willing to in, Strauss Corporation is making a $89,600 investment in equipment with a 5-year life.The company uses the straight-line method of depreciation and has a tax rate of 40 percent.The company's required rat, Strauss Corporation is making a $89,750 investment in equipment with a 5-year life.The company uses the straight-line method of depreciation and has a tax rate of 40 percent.The company's required rat, Strauss Corporation is making a $91,950 investment in equipment with a 5-year life. Accounting 202 Final - Formulas and Examples. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. Required information (The following information applies to the questions displayed below.] ROI is equal to turnover multiplied by earning as a percent of sales. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. What is the present value, The Best Manufacturing Company is considering a new investment. What is the present value, Strauss Corporation is making a $91,800 investment in equipment with a 5-year life. Negative amounts should be indicated by a minus sign. The machine is expected to last four years and have a salvage value of $50,000. Yea, A company projects an increase in net income of $40,000 each year for the next five years if it invests $500,000 in new equipment. 8 years b. Negative amounts should be indicated by a minus sign.) Compute the payback period. Select Chart Amount * PV Factor - Present Value Cash Flow Annual cash flow Residual value. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. What is the present valu, Your firm is considering a new investment proposal and would like to calculate its weighted average cost of capital. Apex Industries expects to earn $25 million in operating profit next year. Since bond yields are expected to stay low and public equity returns are likely to be below historical annualized returns over the next 10 years, institutional investorspension funds, insurance companies, endowments, foundations, investment companies, banks, and family officesare increasing allocation to private capital. The fair value. You can specify conditions of storing and accessing cookies in your browser, Peng Company is considering an investment expected to generate an average net income after taxes of $2,600 for three years. The investment costs $45,000 and has an estimated $6,000 salvage value. Zhang et al. The investment costs $45,600 and has an estimated $6,600 salvage value Compute the accounting rate of return for this investment, assume the company uses straight-line depreciation. The investment costs $59.100 and has an estimated $6.900 salvage value. The investment costs $47,400 and has an estimated $8,400 salvage value. Management predicts this machine has a 10-year service life and a $100,000 salvage value, and it uses straight-line depreciation. A. These assets contribute $28,000 to annual net income when depreciation is computed on a straight-line basis. Negative amounts should be indicated by a minus sign.) Experts are tested by Chegg as specialists in their subject area. Which of the following functional groups will ionize in Yokam Company is considering two alternative projects. Get access to this video and our entire Q&A library, How to Calculate Net Present Value: Definition, Formula & Analysis. Calculate the payback period for the proposed e, You have the following information on a potential investment. (PV of $1. The expected future net cash flows from the use of the asset are expected to be $595,000. What is the average amount invested in a machine during its predicted five-year life if it costs $200,000 and has a $20,000 salvage value? The investment costs $45,000 and has an estimated $6,000 salvage value. investment costs $51,600 and has an estimated $10,800 salvage What is the annual depreciation expense using the straight line method? Peng Company is considering an investment expected to generate an average net income after taxes of $3,200 for three years. What is the accountin, A company buys a machine for $77,000 that has an expected life of 6 years and no salvage value. The investment costs $51,900 and has an estimated $10,800 salvage value. Determine the net present value, and ind. Goodwill. Peng Company is considering an investment expected to generate The The company uses the straight-line method of depreciation and has a tax rate of 40 percent. The company's required rate of return is 13 percent. Assu, Peng Company is considering an investment expected to generate an average net income after taxes of $3,000 for three years. Assume all sales revenue is received, Elmdale Company is considering an investment that will return a lump sum of $769,700, 7 years from now. It is considering investing in a project that costs $210,000 and is expected to generate cash inflows of $85,000 at the end of each year for 4 years. You w, A machine that cost $720,000 has an estimated residual value of $60,000 and an estimated useful life of eleven years. Management predicts this machine has a 8-year service life and a $80,000 salvage value, and it uses strai, A machine costs $300,000 and is expected to yield an after-tax net income of $9,000 each year. See Answer. Peng Company is considering an investment expected to generate an average net income after taxes of $3,300 for three years. The net present value (NPV) is a capital budgeting tool. It is considering investing in a project which costs $350,000 and is expected to generate cash inflows of $140,000 at the end of each year for three years. What is Roni, You are considering an investment in First Allegiance Corp. Assume Peng requires a 5% return on its investments. Assume Peng requires a 10% return on its investments. Projected annual cash flows are: Year 1 $500,000 Year 2 $600,000 Year 3 $700,000 Year 4 $400,000 Calculate the NPV and the IRR. Answer is complete but user contributions licensed under cc by-sa 4.0, Peng Company is considering an investment expected to generate an average net income after taxes of $2,500 for three years. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. Peng Company is considering an investment expected to generate an average net income after taxes of $3,500 for three years. Capital investment: $15,000 Estimated useful life: 3 years Estimated salvage value: zero Estimated net cash inflow Year 1: $7,000 Year 2: You have the following information on a potential investment. a. 2003-2023 Chegg Inc. All rights reserved. Peng Company is considering an investment expected to generate an average net income after taxes of $2,600 for three years. The investment costs $56,100 and has an estimated $7,500 salvage value. A new operating system for an existing machine is expected to cost $, A machine costs $700,000 and is expected to yield an after-tax net income of $52,000 each year. The net present value of the investment is A) $1,470 B) ($13,550) C) $6,450, The Zinger Corporation Is considering an Investment that has the following data: Cash Inflows occur evenly throughout the year. 17 US public . The following information applies to the questions displayed below.J Peng Company is considering an investment expected to generate an average net income after taxes of $2,800 for three years. Management predicts this machine has a 9-year service life and a $80,000 salvage value, and it uses strai, A machine costs $200,000 and is expected to yield an after-tax net income of $5,000 each year. Depreciation is calculated using the straight-line method. The investment costs $57,600 and has an estimated $6,000 salvage value. The expected future net cash flows from the use of the asset are expected to be $580,000. Management predicts this machine has a 10-year service life and a $100,000 salvage value, and it uses st, A machine costs $700,000 and is expected to yield an after-tax net income of $30,000 each year. The present value of the future cash flows at the company's desired rate of return is $100,000. The company has projected the following annual cash flows f, Lt. Dan Corporation invested $80,000 in a manufacturing equipment. If the hurdle rate is 6%, what is the investment's net present value? You have the following information on a potential investment. Compute this machines accounting rate of return. Assume Peng requires a 10% return on its investments. What is the accountin, A company buys a machine for $62,000 that has an expected life of 7 years and no salvage value. A machine costs $210,000, has a $14,000 salvage value, is expected to last ten years, and will generate an after-tax income of $43,000 per year after straight-line depreciation. Createyouraccount. Sign up for free to discover our expert answers. investment costs $48,900 and has an estimated $12,000 salvage Comp, Pang Company is considering an investment expected to generate an average net income after taxes of $2,900 for three years. Capital investment - $15,000 Estimated useful life - 3 years Estimated salvage value - zero Estimated net cash inflow: -Year 1 - $7,00, Compute the net present value of each potential investment. Find step-by-step Accounting solutions and your answer to the following textbook question: Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. Assume the company requires a 12% rate of return on its investments. The initial cost and estimates of the book value of the investment at the end of each year, the net cash flows for each year, and the net income for each year are presented in the schedule below. value. Cash Flow Annual cash flow Present Value of an Annuity of1 Residual value Present Value of 1 Select Chart Amount x PV FactorPresent Value $ 8,700 x Present value of cash inflows Immediate cash outflows Net present value 45,600 The machine will cost $1,780,000 and is expected to produce a $195,000 after-tax net income to be re, A company can buy a machine that is expected to have a three-year life and a $33,000 salvage value. Using the straight line method of depreciation, calculate accumul, Lucky Company Is considering a capital investment in machinery: Initial investment $1,400,000 Residual value $300,000 Expected annual net cash inflows $200,000 Expected useful life 10 years Required r, The following data concerns a proposed equipment purchase: Cost $161,100 Salvage value $4,900 Estimated useful life 4 years Annual net cash flows $47,000 Depreciation method Straight-line The annual average investment amount used to calculate the accounti, You have the following information on a potential investment: Capital investment $85,000 Estimated useful life 4 years Estimated salvage value $0 Estimated annual net cash inflows: Year 1 $18,000 Ye, The Seago Company is planning to purchase $524,500 of equipment with an estimated seven-year life and no estimated salvage value. Present value of an annuity of 1 1. Furthermore, the implication of strategic orientation for . Which of, Fraser Company will need a new warehouse in eight years. The investment costs $45,300 and has an estimated $7,500 salvage value. gifts. For example: How much would you need to invest today at 10% compounded semiannually to accumulate $5,000 in 6 years from today? It expects to generate $2 million in net earnings after taxes in the coming year. Required information [The following information applies to the questions displayed below.) The investment costs $45,000 and has an estimated $6,000 salvage value. The salvage value is defined as the estimated book value of any asset after deducting all the depreciation on the asset. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. A company is considering investing in a new machine that requires a cash payment of $47,947 today. Assume Peng requires a 5% return on its investments. The investment costs $51,600 and has an estimated $10,800 salvage value. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Experts are tested by Chegg as specialists in their subject area. Assume Peng requires a 10% return on its investments. 2.72. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. TABLE B.1 Present Value of 1 Rate Perlods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% 0.9901 0.9804 0.9709 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.8929 0.8696 0.9803 0.9612 0.9426 0.9246 0.9070 0.8900 0.8734 0.8573 0.8417 0.8264 0.7972 0.7561 0.9706 0.9423 0.9151 0.8890 0.8638 0.8396 08163 .793 0.7722 7513 7118 06575 0.9610 0.9238 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6355 0.5718 0.9515 0.9057 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5674 0.4972 0.9420 0.8880 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5066 0.4323 0.9327 0.8706 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4523 0.3759 0.9235 0.8535 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4039 0.3269 0.9143 0.8368 0.7664 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3606 0.2843 0.9053 0.8203 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3220 0.2472 0.8963 0.8043 0.7224 0.6496 0.5847 0.5268 0.4751 0.4289 0.3875 0.3505 0.2875 0.2149 0.8874 0.7885 0.7014 0.6246 0.5568 0.4970 0.4440 0.3971 0.3555 0.3186 0.2567 0.1869 0.8787 0.7730 0.6810 0.6006 0.5303 0.4688 0.4150 0.3677 0.3262 0.2897 0.2292 0.1625 0.8700 0.7579 0.6611 0.5775 0.5051 0.4423 0.3878 0.3405 0.2992 0.2633 0.2046 0.1413 0.8613 0.7430 0.6419 0.5553 0.4810 0.4173 0.3624 0.3152 0.2745 0.2394 0.1827 0.1229 0.8528 0.7284 0.6232 0.5339 0.4581 0.3936 0.3387 0.2919 0.2519 0.2176 0.1631 0.1069 0.8444 0.7142 0.6050 0.5134 0.4363 0.3714 0.3166 0.2703 0.2311 0.1978 0.1456 0.0929 0.8360 0.7002 0.5874 0.4936 0.4155 0.3503 0.2959 0.2502 0.2120 0.1799 0.1300 0.0808 0.8277 0.6864 0.5703 0.4746 0.3957 0.3305 0.2765 0.2317 0.1945 0.1635 0.1161 0.0703 0.8195 0.6730 0.5537 0.4564 0.3769 0.3118 0.2584 0.2145 0.1784 0.1486 0.1037 0.0611 0.7798 0.6095 0.4776 0.3751 0.2953 0.2330 0.1842 0.1460 0.1160 0.0923 0.0588 0.0304 0.7419 0.5521 0.4120 0.3083 0.2314 0.174 0.1314 0.0994 0.0754 0.0573 0.0334 0.0151 0.7059 0.5000 0.3554 0.2534 0.1813 0.1301 0.0937 0.0676 0.0490 0.0356 0.0189 0.0075 0.6717 0.4529 0.3066 0.2083 0.1420 0.0972 0.0668 0.0460 0.0318 0.0221 0.0107 0.0037 9 10 12 13 14 15 16 18 19 20 25 30 35 40 * Used to compute the present value of a known future amount. The initial cost and estimates of the book value of the investment at the end of each year, the net cash flows for each year, and, The Zinger Corporation is considering an investment that has the following data: Cash inflows occur evenly throughout the year. The facts on the project are as tabulated. Compute the payback period. Compute this machine's accounti, A machine costs $500,000 and is expected to yield an after-tax net income of $19,000 each year. Peng Company is considering an investment expected to generate an average net income after taxes of $2,100 for three years. Its aim is the transition to a climate-neutral and . Enter the email address you signed up with and we'll email you a reset link. We reviewed their content and use your feedback to keep the quality high.
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