1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
astraxan [27]
3 years ago
11

Most Company has an opportunity to invest in one of two new projects. Project Y requires a $310,000 investment for new machinery

with a five-year life and no salvage value. Project Z requires a $310,000 investment for new machinery with a four-year life and no salvage value. The two projects yield the following predicted annual results. The company uses straight-line depreciation, and cash flows occur evenly throughout each year. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)
Project Y Project Z
Sales $370,000 $296,000
Expenses :
Direct materials 51,800 37,000
Direct labor 74,000 44,400
Overhead including depreciation 133,200 133,200
Selling and administrative expenses 26,000 26,000
Total expenses 285,000 240,600
Pretax income 85,000 55,400
Income taxes (34%) 28,900 18,836
Net income $56,100 $36,564

Required:
Determine each project's net present value using 7% as the discount rate. Assume that cash flows occur at each year-end. (Round your intermediate calculations.)
Business
1 answer:
erastova [34]3 years ago
4 0

Answer:

Project Y = $174,233.32

Project Z = $76,358.86

Explanation:

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

Cash flow = net income + depreciation

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

Project Y =

Depreciation =  $310,000 / 5 = 62,000

62,000 + $56,100 = $118,100

Project Z

Depreciation =  $310,000 / 4 = $77,500

$77,500 +  $36,564 = $114,064

NPV can be calculated using a financial calculator

Project Y

cash flow in year 0 = $-310,000

Cash flow each year from year 1 to 5 =  $118,100

I = 7%

NPV =

Project Z

cash flow in year 0 = $-310,000

Cash flow each year from year 1 to 4 =  $114,064

I = 7%

NPV = $76,358.86

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  

118100

114064

You might be interested in
According to the model developed in Chapter 3, when government spending increases and taxes increase by an equal amount:
Mariana [72]

Answer:

Correct answer is (B) consumption and investment both decrease.

Explanation:

when government spending increases and taxes increase by an equal amount there will be decrease in both consumption and investment.

7 0
3 years ago
Shelli's Ski Super has sales of $670, net fixed assets of $210, total assets of $305, and current assets of $25. What is the tot
Troyanec [42]

Answer:

2.20

Explanation:

The formula to compute the total assets turnover ratio is shown below:

Total asset turnover = (Sales revenue ÷ Total assets)

                                   = ($670 ÷ $305)

                                  = 2.20

We simply divide the sales revenue by the total assets, so that the total asset turnover ratio can be computed

All other information which is given is not relevant. Hence, ignored it

5 0
3 years ago
Which of the following marketing variables is concerned with design, quality,
Daniel [21]

Answer:

A. Product APEX

Explanation:

This is the correct answer.

3 0
3 years ago
You are evaluating an investment that will provide the following cash flows at the end of each of the following years: year 1, $
stealth61 [152]

Answer:

$37,680.95

Explanation:

The maximum i would be willing to pay is the present value of the cash flows

Present value is the sum of discounted cash flows

Present value can be calculated using a financial calculator

Cash flow in year 1 = $12,500

Cash flow in year 2 = $10,000

Cash flow in year 3 = $7,500

Cash flow in year 4 = $5,000

Cash flow in year 5 = $2,500

Cash flow in year 6 = 0

Cash flow in year 7   $12,500

I = 9%

PV = $37,680.95

To find the PV 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  

3 0
3 years ago
A limited partnership
LenKa [72]
Is that the question or what i need info.XD
4 0
3 years ago
Other questions:
  • Katie wants to order a new shirt online. What should she do once she gets to the store's website?
    15·1 answer
  • A(n) ____________ goal can be vulnerable to encouraging employee temptation toward dishonesty and to behave unethically if that
    10·1 answer
  • Earth is now adding another billion people roughly every __________ years.
    12·1 answer
  • Which of the following best describes the unit price of an 8-ounce bag of walnuts? It is the number of ounces that can be bought
    9·2 answers
  • Which of the following statements is true of conversion​ costs? A. The conversion cost needed for a completed unit and the conve
    13·1 answer
  • Big Beef, Inc. raises calves to sell. Big Beef breeds its cows in April, and the cows calve in February of the following year. I
    11·1 answer
  • Any Indian here<br>Hiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii <br>Good morning ​
    8·2 answers
  • Assume that there are four consumers A, B, C, and D, and the prices that each of them is willing to pay for a glass of lemonade
    6·1 answer
  • In business writing, the main idea of a written work should be located
    9·2 answers
  • a 12oupon bond, semiannual payments, is callable in 3 years. the call price is $1,120; if the bond is selling today for $1,110,
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!