Metro Car Washes Inc Is Reviewing an Investment Proposal Calculate Npv

ma_ch16_hw1.docx

MA CH16 HW1

1.value 14.28 points

Jack and Jill's Place is a nonprofit nursery school run by the parents of the enrolled children. Since the school is out of boondocks, it has a well rather than a city water supply. Lately, the well has become unreliable, and the school has had to bring in bottled drinking h2o. The school's governing board is considering drilling a new well (at the top of the loma, naturally). The lath estimates that a new well would cost $2,825 and save the schoolhouse $500 annually for 10 years. The school's hurdle rate is 8 per centum.

a.	Compute the new well's net nowadays value. (Circular "PV Factor" to iii decimal places, intermediate and final answers to the nearest whole dollar amount. Omit the "$" sign in your response.)

b.	Should the governing lath corroborate the new well?

two.value: 14.28 points

Vancouver Shakespearean Theater'due south board of directors is because the replacement of the theater'southward lighting organization. The old organization requires two people to operate information technology, simply the new system would require only a unmarried operator. The new lighting system will cost $129,750 and salve the theater $27,000 annually for the next eight years.

1-a.

Prepare a table showing the proposed lighting organisation's net present value for each of the following discount rates: 8 percent, 10 percent, 12 percentage, 14 percent, and 16 per centum. (Input all amounts as positive values except negative amounts of Net Present Value. Circular the "Discount factor" to three decimal places and other answers to the nearest dollar amount. Omit the "$" sign in your response.)

Disbelieve Rate	Annuity Discount Factor	Almanac Savings	Present Value of Almanac Savings	Acquisition Cost	Net Present Value
viii	%		$	$	$	$
x	%
12	%
14	%
16	%

1-b.	Comment on the Net Present Value pattern.
	The net nowadays value declines as the discount rate increases. The cyberspace present value increases every bit the discount rate increases.
[The following information applies to the questions displayed below.]

In Dec of 20x4, Atlas Chemic Corporation sold a forklift for $9,255. The machine was purchased in 20x1 for $50,000. Since then $38,845 in depreciation has been recorded on the forklift.

 3.value: 14.28 points

1.	What was the forklift'southward book value at the time of sale? (Omit the "$" sign in your response.)

eBook Link references

Worksheet

Difficulty: Easy

Learning Objective: 16-04 Determine the after-tax cash flows in an investment analysis.

iv.value: 14.28 points

2.	Compute the proceeds or loss on the sale. (Input the amount every bit positive value. Omit the "$" sign in your response.)

eBook Link references

[The following data applies to the questions displayed beneath.]

The management of Niagra National Bank is considering an investment in automated teller machines. The machines would toll $124,200 and have a useful life of seven years. The bank's controller has estimated that the automated teller machines will save the bank $27,000 after taxes during each yr of their life (including the depreciation tax shield). The machines will have no salvage value.

   rev: 04-fifteen-2011

5.value: xiv.28 points

1.	Compute the payback catamenia for the proposed investment. (Circular your respond to one decimal place.)

eBook Links (3) references

Worksheet	Learning Objective: 16-01 Use the net-present-value method and the internal-rate-of-render method to evaluate an investment proposal.	Learning Objective: sixteen-08 Utilise the payback method and bookkeeping-charge per unit-of-render method to evaluate capital investment projects.
Difficulty: Piece of cake	Learning Objective: 16-06 Evaluate an investment proposal using a discounted-greenbacks-period analysis, giving total consideration to income-tax issues.

 6. value: 14.28 points

iii.	Which of the following statements are true? (You may select more than ane respond. Click the box with a check mark for the correct answer and click to empty the box for the wrong answer.)
	The net-present-value method is preferable to the payback method. The payback method is preferable to the net-present-value method. The payback period criterion fails to account for the time value of coin. If management uses the payback method, the investment will be approved only if the required payback menstruum is iv.six years or more. The cut-off value for the payback period is very much dependent on the bank's hurdle rate. The cut-off value for the payback catamenia has zero to practise with the banking concern's hurdle rate.

eBook Links (three) references

[The following information applies to the questions displayed below.]

Metro Motorcar Washes, Inc. is reviewing an investment proposal. The initial cost too every bit the estimate of the book value of the investment at the cease of each year, the internet afterward-tax cash flows for each year, and the net income for each year are presented in the following schedule. The salvage value of the investment at the end of each year is equal to its book value. There would be no salve value at the stop of the investment'southward life.

Year	Initial Cost and Book Value	Almanac Net After-Tax Cash Inflows	Annual Net Income
0	$	105,000
ane		70,000		$	fifty,000		$	fifteen,000
2		42,000			45,000			17,000
iii		21,000			forty,000			19,000
four		7,000			35,000			21,000
v		0			xxx,000			23,000

Direction uses a 16 percent afterward-taxation target rate of return for new investment proposals.

   rev: 04-15-2011

7. value: xiv.32 points

two.	Calculate the accounting rate of render on the investment proposal. Base of operations your calculation on the initial cost of the investment. (Round your respond to 1 decimal place. Omit the "%" sign in your response.)

Bookkeeping rate of return

%

eBook Links (iii) references

-ii-2

http://ezto.mhedu

-2-2

http://ezto.mhedu

0

-two-2

-ii-2

http://ezto.mhedu

0

-2-ii

http://ezto.mhedu

(Click to select)

0

http://ezto.mhedu

-two-2

http://ezto.mhedu

0

-2-2

http://ezto.mhedu

checked

unanswered

unanswered

unanswered

unanswered

unanswered

0

brinkeranciverivens.blogspot.com

Source: https://www.sweetstudy.com/sites/default/files/q5/12/09/ma_ch16_hw1.docx

Share this post