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please help solve Read Publishing is considering the purchase of a used printing press costing $84,200. The printing press would generate a net cash inflow
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- Read Publishing is considering the purchase of a used printing press costing $84,200. The printing press would generate a net cash inflow of $37,422 a year for 3 years. At the end of 3 years, the press would have no salvage value. The company's cost of capital is 10 percent. The company uses straight-line depreciation. The present value factors of an annuity of $1.00 for different rates of return are as follows:
| Cost of Capital | ||||
Period | 8% | 10% | 12% | 14% | 16% |
2 | 1.78 | 1.74 | 1.69 | 1.65 | 1.61 |
3 | 2.58 | 2.49 | 2.40 | 2.32 | 2.25 |
4 | 3.31 | 3.17 | 3.04 | 2.91 | 2.80 |
The investment?s net present value is:
- $ 5,480
- $ 19,200
- $ 76,800
- $ 8,981
- Read Publishing is considering the purchase of a used printing press costing $84,200. The printing press would generate a net cash inflow of $37,422 a year for 3 years. At the end of 3 years, the press would have no salvage value. The company's cost of capital is 10 percent. The company uses straight-line depreciation. The present value factors of an annuity of $1.00 for different rates of return are as follows:
| Cost of Capital | ||||
Period | 8% | 10% | 12% | 14% | 16% |
2 | 1.78 | 1.74 | 1.69 | 1.65 | 1.61 |
3 | 2.58 | 2.49 | 2.40 | 2.32 | 2.25 |
4 | 3.31 | 3.17 | 3.04 | 2.91 | 2.80 |
The investments internal rate of return (rounded to the nearest percent) is:
- 10%
- 16%
- 14%
- 12%
- Urbana Corporation is considering the purchase of a new machine costing $75,000. The machine would generate net cash inflows of $24,214 per year for 5 years. At the end of 5 years, the machine would have no salvage value. Urbana?s cost of capital is 12 percent. Urbana uses straight-line depreciation. The investment?s accounting rate of return (rounded to three decimal points) on initial investment is:
- 12.285 percent
- 10.270 percent
- 30.545 percent
- 81.613 percent
- The investment?s payback period in years (rounded to two decimal points) is:
- 3.30
- 3.10
- 4.00
- 9.48
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