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Crane Corporation is reviewing an investment proposal. The initial cost is $103,400. Estimates of the book value of the investme

navik [9.2K]

a) The cash payback period for Crane Corporation's investment proposal is 3 years.

b) The annual rate of return for the investment is as follows:

Year 1 = 10% ($10,700/$104,500 x 100)

Year 2 = 19% ($13,100/$69,300 x 100)

Year 3 = 33% ($14,000/$42,100 x 100)

Year 4 = 82.5% ($17,400/$21,100 x 100)

Year 5 = 232% ($17,900/$7,700 x 100)

c) The net present value of the investment by Crane Corporation is $30,643.

<h3>Data and Calculations:</h3>

Target rate of return = 11%

Year Initial Cost and Book Value Annual Cash Annual Net

Flows Income

0 $104,500

1 69,300 $45,900 $10,700

2 42,100 40,300 13,100

3 21,100 35,000 14,000

4 7,700 30,800 17,400

5 0 25,600 17,900

The cash payback period is <u>3 years</u> ($104,500 - $45,900 - $40,300 - $35,000).

<h3>Net Present Value:</h3>

Year Annual Cash Flows PV Factor Present Value

0 -$104,500 1 -$104,500

1 $45,900 0.901 $41,356

2 $40,300 0.812 32,724

3 $35,000 0.731 25,585

4 $30,800 0.659 20,297

5 $25,600 0.593 15,181

Net Present value = $30.643

Learn more about the payback period and NPV at brainly.com/question/16999673

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6 0

1 year ago

A corporation has issued 30,000 shares of $50 par common stock and holds 5,000 of these shares as treasury stock. If the corpora

Andrews [41]

Answer:

The amount of $25,000 will be recorded as the Cash Dividends

Explanation:

The amount which is to be recorded as the cash dividend is computed as:

Cash Dividend = Number of Shares × Rate per share

where

Number of shares is computed as:

Number of shares = Issued Shares - Treasury Stock

= 30,000 - 5,000

= 25,000

NOTE: No dividend is paid on treasury stocks, so the the shares of the treasury stocks are subtracted.

Rate per share is $1

SO, Putting the values above:

Cash Dividend = 25,000 × $1

= $25,000

3 0

3 years ago

Take it and go don't wast my time

BartSMP [9]

Answer:

thanks man

Explanation:

7 0

2 years ago

Read 2 more answers

A mining company owns two mines, each of which produces three grades (high, medium, and low) of ore. The company has a contract

sashaice [31]

Answer:

They should operate Mine 1 for 1 hour and Mine 2 for 3 hours to meet the contractual obligations and minimize cost.

Explanation:

The formulation of the linear programming is:

Objective function:

$C=200M_1+160M_2$

Restrictions:

- High-grade ore: $6M_1+2M_2\geq12$

- Medium-grade ore: $2M_1+2M_2\geq8$

- Low-grade ore: $4M_1+12M_2\geq24$

- No negative hours: $M_1,M_2\geq0$

We start graphing the restrictions in a M1-M2 plane.

In the figure attached, we have the feasible region, where all the restrictions are validated, and the four points of intersection of 2 restrictions.

In one of this four points lies the minimum cost.

Graphically, we can graph the cost function over this feasible region, with different cost levels. When the line cost intersects one of the four points with the lowest level of cost, this is the optimum combination.

(NOTE: it is best to start with a low guessing of the cost and going up until it reaches one point in the feasible region).

The solution is for the point (M1=1, M2=3), with a cost of C=$680.

The cost function graph is attached.

7 0

3 years ago

The market for tomatoes is in equilibrium at the price of $10, and quantity of 50 tomatoes. If consumer surplus is $400 and tota

Darya [45]

Answer:

$250

This because out of the total surplus, the surplus left after being received by the consumer goes to the producer.

Explanation:

Data provided in the question:

Price of tomato = $10

Equilibrium quantity = 50 tomatoes

Consumer surplus = $400

Total surplus = $650

Now,

The producer surplus = Total surplus - Consumer surplus

= $650 - $400

= $250

This because out of the total surplus, the surplus left after being received by the consumer goes to the producer.

3 0

3 years ago