At 1

The management of Ro Corporation is investigating automating a process. Old equipment, with a current salvage value of $24,000,

dexar [7]

Answer:

The simple rate of return on the investment is closest to 19.16%

Explanation:

In order to calculate the the simple rate of return on the investment we would have to use the following formula:

simple rate of return = <u>Annual incremental net operating income</u>

Initial investment

<u />

Initial investment = Cost of the new machine - salvage value of old machine

Initial investment = $384,000 - $24,000 = $360,000

Annual cost savings = $133,000

Annual depreciation = $384,000/6 = $64,000

Therefore, Annual incremental net operating income = $133,000 - $64,000 = $69,000

Therefore, simple rate of return = $69,000 / $360,000 = 19.16%

The simple rate of return on the investment is closest to 19.16%

6 0

3 years ago

You must estimate the intrinsic value of Lowell Technologies’ stock. The end-of-year free cash flow (FCF1) is expected to be $30

Hunter-Best [27]

Answer:

Firm's estimated intrinsic value per share of common stock = $40.00

Explanation:

Intrinsic value:

Intrinsic value is a way of describing the perceived or true value of an asset.

Formula:

Intrinsic value = free cash flow / required rate - growth rate

As the end-of-year free cash flow (FCF1) = $30 and it is expected to grow at a constant rate of 5.0% a year thereafter.

so FCF2 = 30 (1 + 5%)

FCF2 = 31.5

Value at year 1 = FCF2 / required rate - growth rate

Therefore by putting the values in the above formula, we get

Value at year 1 = 31.5 / 0.08 - 0.05

Value at year 1 = 31.5 / 0.03

Value at year 1 = 1,050

As the company’s WACC is 8.0%, so

Value today = 30 / (1 + 0.08)1 + 1,050 / (1 + 0.08)1

Value today = $1,000 million

As stated in the question it has $200 million of long-term debt, and there are 20.0 million shares of common stock outstanding.

Intrinsic value = (1,000 - 200) / 20

Intrinsic value = $40.00

8 0

3 years ago

The standard costs and actual costs for direct materials for the manufacture of 3,000 actual units of product are as follows: St

svetoff [14.1K]

Answer:

$2,250 favorable

Explanation:

The direct material price variance is computed as;

= ( Standard price - Actual price ) × Actual quantity

Given that;

Standard price = $8.75

Actual price = $8

Actual quantity = 3,000 units

Direct material price variance

= ( $8.75 - $8 ) × 3,000

= ( $0.75 ) × 3,000

= $2,250 favorable

6 0

2 years ago

The sales tax in Massachusetts is 5%. Joanne bought a wood stove with a sales tax of $15. What was the cost of the wood stove be

Leya [2.2K]

Answer:

$315

Explanation:

The before-tax cost of the wood stove would comprise of 100% sales price plus 5% sales tax as hinted.

If 5%=$15=sales tax

before-tax sales price=100% sales price+5% sales tax

before-tax sales price=105%

sales tax of 5%=$15

1%=$15/5

1%=$3

105%=$3*105

105%(before tax sales price)=$315

7 0

2 years ago

On December 1, Showcase Interiors purchased a shipment of furniture from Colonial House by paying $10,500 cash and issuing an in

Westkost [7]

Answer:

A) using an excel spreadsheet and the NPV function, I calculated the present value of the note to be $24,036.49

=NPV(1.5%, 24 values of 1200 each) = $24,036.49

B)

December 1, merchandise purchase:

Dr Merchandise inventory 34,536.49

Cr Cash 10,500

Cr Notes payable - Colonial House 24,036.49

Cr Interest payable - Colonial House 4,763.51

December 31, first installment in note payable:

Dr Notes payable - Colonial House 768

Dr Interest payable - Colonial House 432

Cr Cash 1,200

Interest = $28,800 x 1.5% = $432

C) If the note payable is classified as a current liability:

Current liabilities:

Notes payable - Colonial House $23,268.49

Interest payable - Colonial House $4,331.51

8 0

2 years ago

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