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Here are better pictures to see everything that is correlated to the questions. Thank you! The management of Unter Corporation, an architectural design firm, is
Here are better pictures to see everything that is correlated to the questions. Thank you!
The management of Unter Corporation, an architectural design firm, is considering an investment with the following cash flows: Year' Investment Cash In'Flow 10 1 $ 15,999 $ 1,999 aims 2 $ 8,999 $ 2,999 p 3 $ 2,599 4 $ 4,999 5 $ 5,999 El 6 $ 6,999 7 $ 5,999 eBook 8 3; 4,999 9 $ 3,999 g 10 $ 2,000 Him Required: 1. Determine the payback period of the investment. E 2. Would the payback period be affected if the cash inflow in the last year were several times as large? Print \"i Complete this question by entering your answers in the tabs below. References Required 1 Required 2 Would the payback period be affected if the cash inflow in the last year were several times as large? 10 points Skipped References The management of Kunkel Company is considering the purchase of a $27,000 machine that would reduce operating costs by $7,000 per year. At the end of the machine's five-year useful life, it will have zero salvage value. The company's required rate of return is 12%. Click here to view Exhibit 1481 and Exhibit 14B2, to determine the appropriate discount factor(s) using table. Required: 1. Determine the net present value of the investment in the machine. 2. What is the difference between the total, undiscounted cash inflows and cash outflows over the entire life of the machine? Complete this question by entering your answers in the tabs below. Requiredl 1 RequiredZ E What is the difference between the total, undiscounted cash inflows and cash outflows over the entire life of the machine? 10 points Skipped References Wendell's Donut Shoppe is investigating the purchase ofa new $18,600 donut-making machine. The new machine would permit the company to reduce the amount of part-time help needed, at a cost savings of $3,800 per year. In addition, the new machine would allow the company to produce one new style of donut, resulting in the sale of 1,000 dozen more donuts each year. The company realizes a contribution margin of $1.20 per dozen donuts sold. The new machine would have a six-year useful life. Click here to view Exhibit 148-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables. Required: 1. What would be the total annual cash inflows associated with the new machine for capital budgeting purposes? (Round your final answer to the nearest whole dollar amount.) 2. What discount factor should be used to compute the new machine's internal rate of return? (Round your answers to 3 decimal places.) 3. What is the new machine's internal rate of return? (Round your answer to the nearest whole percentage, i.e. 0.123 should be considered as 12%.) 4. In addition to the data given previously, assume that the machine will have a $9,125 salvage value at the end of six years. Under these conditions, what is the internal rate of return? (Hint: You may find it helpful to use the net present value approach; find the discount rate that will cause the net present value to be closest to zero.) (Round your answer to the nearest whole percentage, i.e. 0.123 should be considered as 12%.) 1. Annual cash inflows 2. Discount factor 3. Internal rate of return 4. Internal rate of return 10 points skipped References Lukow Products is investigating the purchase of a piece of automated equipment that will save $400,000 each year in direct labor and inventory carrying costs. This equipment costs $2,500,000 and is expected to have a 15-year useful life with no salvage value. The company's required rate of return is 20% on all equipment purchases. Management anticipates that this equipment will provide intangible benefits such as greater flexibility and higher-quality output that will result in additional future cash inflows. Click here to view Exhibit 148-1 and Exhibit 1482 to determine the appropriate discount factor(s) using table. Required: 1. What is the net present value of the piece of equipment before considering its intangible benefits? (Enter negative amounts with a minus sign.) 2. What minimum dollar value per year must be provided by the equipment's intangible benefits tojustify the $2,500,000 investment? (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.) 1. Net present value 2. Minimum dollar value Information on four investment proposals is given below: Investment Proposal 10 A B C D points Investment r'equir'ed $ (98,888) $ (188,888) $ (78,888) $ (128,888) Pr'esent value of cash in-Flows 126,888 138,888 185,888 168,888 Skipped Net present value $ 36,888 $ 38,888 $ 35,999 $ 49,999 Life of the project 5 years 7 years 6 years 6 years Required: El 1. Compute the profitability index for each investment proposal. (Round your answers to 2 decimal places.) eBook 2. Rank the proposals in terms of preference. Hint E! Print rii References 10 points Skipped eBook Hint References The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $120,000. The machine would replace an old piece of equipment that costs $30,000 per year to operate. The new machine would cost $12,000 per year to operate. The old machine currently in use is fully depreciated and could be sold now for a salvage value of $40,000. The new machine would have a useful life oin years with no salvage value. Required: 1. What is the annual depreciation expense associated with the new bottling machine? 2. What is the annual incremental net operating income provided by the new bottling machine? 3. What is the amount of the initial investment associated with this project that should be used for calculating the simple rate of return? 4. What is the simple rate of return on the new bottling machine? (Round your answer to 1 decimal place i.e. 0.123 should be considered as 12.3%) 1. Depreciation expense 2. Incremental net operating income 3. Initial investment 4. Simple rate of return %Step by Step Solution
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