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FromTheMoon [43]
3 years ago
13

Zachary Manufacturing Company has an opportunity to purchase some technologically advanced equipment that will reduce the compan

y’s cash outflow for operating expenses by $1,287,000 per year. The cost of the equipment is $9,187,846.67. Zachary expects it to have a 11-year useful life and a zero salvage value. The company has established an investment opportunity hurdle rate of 15 percent and uses the straight-line method for depreciation. (PV of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.)
Required:
a. Calculate the internal rate of return of the investment opportunity. (Do not round intermediate calculations.)
b. Indicate whether the investment opportunity should be accepted.
1. Internal Rate of Return
2. Should the investment opportunity be accepted?
Business
2 answers:
Svet_ta [14]3 years ago
6 0

Answer:

IRR = 8%

Don't accept the project

Explanation:

The internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested.

IRR can be calculated using a financial calculator:

Cash flow in year 0 = -9,187,846.67

Cash flow each year from year 1 to 11 = 1287000

IRR = 8%

Because the IRR is less than the hurdle rate, the project shouldn't be accepted.

To find the IRR using a financial calacutor:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. After inputting all the cash flows, press the IRR button and then press the compute button.

I hope my answer helps you

AveGali [126]3 years ago
4 0

Answer:

a) IRR

IRR = 9%

b)

Since the IRR is less than the hurdle rate , the project should be rejected. An IRR with higher than the hurdle rate implies that the project would decrase the wealth of ths shareholders

Explanation:

IRR = a% + ( NPVa/(NPVa + NPVb)× (b-a)%

NPV = PV of annual savings - initial cost

PV of annual savings = A× (1- (1+r)^(-n) )/r

A- annual savings in operating cost , r- rate of return, n- number of years

NPVa

PV of annual savings = 1,287,000 × (1- 1.15^(-11))/0.15=  6,735,787.15  

NPV = 6,735,787.15   - 9,187,846.67.= 2,452,059.52  

NPVb

PV of annual savings  =  (1,287,000 × (1- 1.03^(-11))/0.03=11908127.23

NPV b = 11908127.23 -9187846.67 =2720280.564

IRR = 3% + ( 2720280.564 /(2720280.564 +2,452,059.52) )× (15-3)%

IRR = 9%

Since the IRR is less than the hurdle rate , the project should be rejected. An IRR with higher than the hurdle rate implies that the project would decrase the wealth of ths shareholders

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hoa [83]

Answer:

the adjusted cash balance as on April 30,2018 is $77,800

Explanation:

The computation of the adjusted cash balance as on April 30,2018 is as follows;

= Balance as per bank statement + deposit in transit - outstanding checks

= $78,800 + $9,300 - $10,300

= $77,800

Hence, the  adjusted cash balance as on April 30,2018 is $77,800

We simply applied the above formula so that the accurate value could arrive

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2 years ago
Suppose Joe contracts with Marvin to frame out a shop at Joe's ranch for $10,000. During the framing Marvin discovers the costs
Marina CMI [18]

Answer:

unenforceable;

preexisting duty

Explanation:

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3 Types of Legal Duties

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2.  Contractual Legal Duties such as unperformed, preexisting contractual promises etc.

3.  Private Legal Duties such as the duty to follow the law.

Unenforceable Contracts

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8 0
2 years ago
What was the ratio of per capita income in each of the following countries to that in the United States in the year 2010:
svet-max [94.6K]

Answer:

For   Countries (per capita)          United States of America (per capita)

<u> Ethiopia: </u>        

$380                                               $48,468

<u>Mexico:    </u>                                      

$9,271                                             $48,468

<u>India:</u>

$1,358                                             $48,468

<u>Japan:</u>

$44,508                                          $48,468

Explanation:

Ratio per Capita also known as Gross Domestic Product per Capita (GDP Capita) is the monetary measure of the market value of all the final goods and services produced in a specific time period within the country in view. <em>It is useful for comparing national economies of different countries on the international market.</em>

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3 years ago
The Procter &amp; Gamble (P&amp;G) Company produces bar soap, disposable diapers, deodorants, laundry detergents, cookies, cake
Airida [17]

Answer:

Product Mix

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3 0
3 years ago
Read 2 more answers
Planet Corporation acquired 90 percent of Saturn Company’s voting shares of stock in 20X1. During 20X4, Planet purchased 52,000
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Answer:

Purchase of Inventory by Planet (Parent)

Inventory $1,456,000 (debit)

Cash $1,456,000 (credit)

Sale of Inventory by Planet (Parent) to Subsidiary (Saturn)

Revenue $1,258,000 (debit)

Cost of Sales $1,258,000 (credit)

Sale to third Parties by Saturn

Cash $1,813,000 (debit)

Cost of Sales $1,036,000

Sales Revenue $1,813,000 (credit)

Inventory $1,036,000

Explanation:

Purchase of Inventory by Planet (Parent)

Inventory $1,456,000 (debit)

Cash $1,456,000 (credit)

<em>Inventory : 52,000 × $28 = $1,456,000</em>

Sale of Inventory by Planet (Parent)

<em>Note : This is an Intragroup transaction and need to be eliminated </em>

Revenue $1,258,000 (debit)

Cost of Sales $1,258,000 (credit)

<em>Revenue : 37,000 × $34  = $1,258,000</em>

Sale to third Parties by Saturn

Cash $1,813,000 (debit)

Cost of Sales $1,036,000

Sales Revenue $1,813,000 (credit)

Inventory $1,036,000

<em>Sales Revenue = 37,000 × $49 = $1,813,000</em>

<em>Cost of Sales = 37,000 × $28 = $1,036,000</em>

       

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