Question
They are all different question. 1. Lakeside, Inc., is considering replacing old production equipment with state-of-the-art technology that will allow production cost savings of $5,000
They are all different question.
1. Lakeside, Inc., is considering replacing old production equipment with state-of-the-art technology that will allow production cost savings of $5,000 per month. The new equipment will have a five-year life and cost $210,000, with an estimated salvage value of $40,000. Lakesides cost of capital is 8%. Required: Calculate the payback period and the accounting rate of return for the new production equipment. (Round your answers to 2 decimal places.)
2.
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The following capital expenditure projects have been proposed for management's consideration at Scott, Inc., for the upcoming budget year: Use Table 6-4 and Table 6-5. (Use appropriate factor(s) from the tables provided. Round the PV factors to 4 decimals.)
Project | |||||||||||||||||||||
Year(s) | A | B | C | D | E | ||||||||||||||||
Initial investment | 0 | $ | (62,000 | ) | $ | (74,000 | ) | $ | (148,000 | ) | $ | (148,000 | ) | $ | (300,000 | ) | |||||
Amount of net cash return | 1 | 13,000 | 0 | 47,400 | 14,800 | 90,000 | |||||||||||||||
2 | 13,000 | 0 | 47,400 | 29,600 | 90,000 | ||||||||||||||||
3 | 13,000 | 29,600 | 47,400 | 44,400 | 47,500 | ||||||||||||||||
4 | 13,000 | 29,600 | 47,400 | 59,200 | 47,500 | ||||||||||||||||
5 | 13,000 | 29,600 | 47,400 | 74,000 | 47,500 | ||||||||||||||||
Per year | 6-10 | 13,000 | 17,800 | 0 | 0 | 47,500 | |||||||||||||||
NPV (14% discount rate) | $ | 3,244 | $ | ? | $ | ? | $ | ? | $ | 7,484 | |||||||||||
Present value ratio | 1.05 | ? | ? | ? | ? | ||||||||||||||||
a. Calculate the net present value of projects B, C, and D, using 14% as the cost of capital for Scott, Inc. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations.) b. Calculate the present value ratio for projects B, C, D, and E. (Do not round intermediate calculations. Round your answers to 2 decimal places.) 3. Cowboy Recording Studio is considering the investment of $142,300 in a new recording equipment. It is estimated that the new equipment will generate additional cash flow of $21,000 per year for each year of its 7-year life and will have a salvage value of $13,000 at the end of its life. Cowboyss financial managers estimate that the firms cost of capital is 10%. Use Table 6-4 and Table 6-5. (Use appropriate factor(s) from the tables provided. Round the PV factors to 4 decimals.)
Required: a. Calculate the net present value, present value ratio, irr and payback period of the investment. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations.) |
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