Managerial Accounting

1.

Conrad Manufacturing Co. is considering investing in specialized equipment costing $1,000,000. The equipment has a useful life of four years and a residual value of $10,000. Depreciation is calculated using the straight line method. The expected net cash inows are expected to be $490,000 per year. What is the average annual operating income from the asset? O A. $242,500 0 B. $240,000 0 C. $127,500 0 D. $237,500 Tiger Company is considering making a new product that requires an initial investment in a piece of equipment of $470,000. The equipment has a useful life of three years and a residual value of $12,000. Depreciation is calculated using the straight - line method. The expected net cash inflows are expected to be $240,000 per year. What is the ARR of the investment? O A. 36.24% O B. 35.46% O C. 37.16% O D. 34.58%Rocco Manufacturing is considering the following investment proposal:Proposal Y Investment $510,000 Useful life 4 years Estimated annual net cash inflows received at the end of each year $100,000 Residual value $0 Depreciation method Straight - line Annual discount rate 9% Compute the present value of the future cash inflows from Proposal Y. Present value of an ordinary annuity of $1: 8% 9% 10% 0.926 0.917 0.909 1.783 1.759 1.736 2.577 2.531 2.487 " UI A W N - 3.312 3.240 3. 170 3.993 3.890 3.791 4.623 4.486 4.355 Present value of $1: 3% 9% 10% 0.926 0.917 0.909 0.857 0.842 0.826 0.794 0.772 0.751 O UA W N- 0.735 0.708 0.683 0.681 0.650 0.621 0.630 0.596 0.564O A. $317,000 O B. $389,000 O C. $331,200 O D. $324,000Rocco Manufacturing is considering the following investment proposal: Proposal Y Investment $509,000 Useful life 4 years Estimated annual net cash inflows received at the end of each year $94,000 Residual value 50 Depreciation method Straight - line Annual discount rate 9% Compute the present value of the future cash inflows from Proposal Y. Present value of an ordinary annuity of $1: 8% 3% 10% 0.926 0.917 0.909 1.783 1.759 1.736 2.577 2.531 2.487 O U A W N- 3.312 3.240 3. 170 3.993 3.890 3.791 4.623 4.486 4.355 Present value of $1: 8% 9% 10% 0.926 0.917 0.909 0.857 0.842 0.826 0.794 0.772 0.751 O U A W N - 0.735 0.708 0.683 0.681 0.650 0.621 0.630 0.596 0.564Proposal A Investment $680,000 Useful life 6 years Estimated annual net cash inflows received at the end of each year $97,000 Residual value $0 Depreciation method Straight - line Annual discount rate 8% Compute the present value of the future cash inflows from Proposal Y. Present value of an ordinary annuity of $1: 8% 9% 10% 0.926 0.917 0.909 1.783 1.759 1.736 2.577 2.531 2.487 3.312 3.240 3.170 OUT A W 3.993 3.890 3.791 4.623 4.486 4.355 Present value of $1: 8% 9% 10% 0.926 0.917 0.909 0.857 0.842 0.826 0.794 0.772 0.751 O) UI A W N - 0.735 0.708 0.683 0.681 0.650 0.621 0.630 0.596 0.564