Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Can someone help me answer question six for Module 11 assignment? Name: Module 11 Assignment. Answer the following questions by filling in the blanks and

image text in transcribed

image text in transcribed

image text in transcribed

Can someone help me answer question six for Module 11 assignment?

Name: Module 11 Assignment. Answer the following questions by filling in the blanks and making the appropriate calculations. Round to the nearest dollar, unless otherwise noted. Assume the following information for all of the questions in this assignment. TOM's Tomatoes and Herbs, LLC is considering investing in two alternative projects to improve the processing and packaging of TOM's Old World Spaghetti Sauce. Investment A has a lifespan of 10 years and initial costs of $12,000. Investment B has a lifespan of 7 years and initial costs of $15,000. TOM's Tomatoes and Herbs, LLC assumes a 6 percent discount rate on potential investments. Investment A Projected After-Tax Benefits per Year Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 Investment B Projected After-Tax Benefits per Year Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 $4,000 $4,000 $3,000 $3,000 $2,000 $2,000 Year 7 $2,000 1]What is the Payback Period of each potential investment by TOM's Tomatoes and Herbs, LLC? Round to the nearest tenth Investment A: Investment B: 2) If TOM's Tomatoes and Herbs, LLC has a required Payback period of 3 years, which project would be chosen and why? 3) Calculate annual depreciation for each investment using the straight line depreciation method. The salvage value for Investment A is $2,000 and for Investment B, the salvage value is $1,000 Annual Depreciation for Investment A Annual Depreciation for Investment B Name 4) What are the Average Annual Rates of Return of each investment? Remember on Jan 1 of Year 1, the value of the investment is the initial cost. You must remove annual depreciation to get the value on Dec 31. Jan 1 of Year 2 is the same as the value on Dec 31 of the year prior and so on. Round to the nearest dollar for the toble and nearest tenth for the percentage. Investment A Investment B Value After- Tax Benefits Value Jan 1 Dec Average Annual Value After- Tax Benefits Value Jan 1 31 Average Annual Value Value Dec 31 Year 1 Year 1 Year 2 Year 2 Year 3 Year 3 Year 4 Year 4 Year 5 Year 5 Year 6 Year 6 Year 7 Year 7 Year 8 Average: Year 9 Average Annual Rate of Return: % Year 10 Which investment would TOM's choose? Average: Average Annual Rate of Return: % 5) What is the Equivalent Annual Cost of each investment to TOM's Tomatoes and Herbs, LLC? ves Investment A: Investment B: Name: 6) Fill in the following table to calculate the net present value and benefit/cost ratio of each investment. Round to the nearest dollar or hundredth in the benefit/cost ratio. Investment A Yearly Present After- X Value tax Year After-tax Present Value of Benefits Investment B Yearly Present After- X Value tax Year After-tax Present Value of Benefits Benefit Factor Benefit Factor 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 9 10 Present Value of Total Benefits Present Value of Total Benefits Less Initial Cost Less Initial Cost Net Present Value Net Present Value Benefit/Cost Ratio Benefit/Cost Ratio If TOM's Tomatoes and Herbs, LLC can only afford to invest in one project, which project should they invest in and why

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions