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Veseljchak [2.6K]
3 years ago
9

An airline is considering a project of replacement and upgrading of machinery that would improve efficiency. The new machinery c

osts $400 today and is expected to last for 5 years with no salvage value. Straight line depreciation will be used. Project inflows connected with the new machinery will begin in one year and are expected to be $200 each year for 5 consecutive years and project outflows will also begin in one year and are expected to be $90 each year for 5 consecutive years. The corporate tax rate is 32% and the required rate of return is 9%. Calculate the project's net present value.
Business
1 answer:
Brrunno [24]3 years ago
3 0

$-9.48

Explanation:

Net present value is the present value of after-tax cash flows from an investment less the amount invested.  

NPV can be calculated using a financial calculator  

Cash flow = (revenue - cost - depreciation) (1 - tax rate) + depreciation

Straight line depreciation expense = (Cost of asset - Salvage value) / useful life

(400 - 0) / 5 = 80

(200 - 90- 80) x (1 - 0.32)  + 80 = $100.40

Cash flow in year 0 = $-400

Cash flow each year from year 1 to 5 = $100.40

I = 9%

NPV = $-9.48

To find the NPV using a financial calculator:

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 NPV button, input the value for I, press enter and the arrow facing a downward direction.  

3. Press compute  

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Dolce Co. estimates its sales at 180,000 units in the first quarter and that sales will increase by 18,000 units each quarter ov
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Answer:

The answer is b) $5,319,000.

Explanation:

We have cash collection in third quarter will include:

+ 40% of sales in third quarter which is made in cash;

+ 70% of the remaining 60% of credit sales in third quarter which is collected within the quarter;

+ The remaining 30% of 60% credit sales in second quarter which is collected in third quarter.

We also have:

Sales in second quarter (units) = 180,000 + 18,000 = 198,000 units => Sales revenue = 198,000 x 25 = $4,950,000 => Cash collection in third quarter = 30% x (60%x 4,950,000) = $891,000;

Sales in third quarter (units) = 198,000 + 18,000 = 216,000 units => Sales revenue = 216,000 x 25 = 5,400,000 => Cash collection in third quarter = 0.4 x 5,400,000 + 0.7 x (0.6 x 5,400,000) = $4,428,000

=> Total cash collection in third quarter = 891,000 + 4,428,000 = $5,319,000  

5 0
2 years ago
Read 2 more answers
A produce distributor uses 774 packing crates a month, which it purchases at a cost of $12 each. The manager has assigned an ann
ki77a [65]

Answer:

$444.42

Explanation:

For computing the saving amount, first need to calculate the economic order quantity, total cost etc

The economic order quantity is

= \sqrt{\frac{2\times \text{Annual demand}\times \text{Ordering cost}}{\text{Carrying cost}}}

where,

Annual demand is

= 774 packaging crates × 12 months

= 9,932 crates

And, the carrying cost is

= $12 × 34%

= $4.08

= \sqrt{\frac{2\times \text{9,288}\times \text{\$29}}{\text{\$4.08}}}

= 363.37 crates

Now the total cost is

= Annual ordering cost + Annual carrying cost

= Annual demand ÷ Economic order quantity × ordering cost per order + Economic order quantity ÷ 2 × carrying cost per unit

= 9,288 ÷ 363 × $29 + 363 ÷ 2 × $4.08

= $742.02 + $740.52

= $1,482.54

Now the total cost in case of 774 packing crates is

= Annual ordering cost + Annual carrying cost

= Annual demand ÷ Economic order quantity × ordering cost per order + Economic order quantity ÷ 2 × carrying cost per unit

= 9,288 ÷ 774 × $29 + 774 ÷ 2 × $4.08

= $348 + $1,578.96

= $1,926.96

So, the annual saving cost is

= $1,926.96 - $1,482.54

= $444.42

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3 years ago
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<h3>What ultimately transpires to a monopolistic rival?</h3>

Long-term economic gains or losses in monopolistic competition will be removed by entry or leave, leaving firms with no economic gains. There will be some excess capacity in a monopolistically competitive business; this could be seen as the price paid for the variety of products that this market structure brings about.

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