An investment of P4, 000, 000 can be made in a project that is estimated to have an annual revenue of P2, 800, 000 for 5 years with salvage value of P600, 000. Annual maintenance and operation cost will be P1, 200, 000. Taxes and insurance amounts to 160, 000. If the expected rate of return is 20%, is this a profitable investment? Show by computation using PWM and FWM.
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- You are considering investing RM64000 in new equipment. You estimate that the net cash flows will be RM14000 during the first year, but will increase by RM2500 per year the next year and each year thereafter. The equipment is estimated to have a 7-year service life and a net salvage value of RM5300 at that time. Assume MARR of 9%. a.Calculate the annual capital cost CR (ownership cost) for the equipment. Format : 87348 b.Determine the equivalent annual savings. Format: 60952 c.Is this a wise investment? Y/N. Format: ACurrent Attempt in Progress Mandy is considering investing in an opportunity that would require an upfront cost of $ 520 but would pay $ 150 per year for each of the next 6 years. If Mandy chooses to invest in this opportunity, what would be the IRR? Click here to access the TVM Factor Table calculator. Carry all interim calculations to 5 decimal places and then round your final answer to 1 decimal place. The tolerance is ±0.5. Should Mandy invest in this opportunity if her personal MARR is 20%?(Need answer ASAP) A man decided to Invest in an equipment worth PHP 12,000,000.00 capital with the following data: Expected revenue - PHP 5.8M/year Cost of Operation and Maintenance - PHP2.4/year Taxes and Insurance. - 2% of the first cost/year Expected earnings is 12% minimum Life of the equipment is 5 years with expected value of PHP1.2M after 5 years a. Determine the desirable investment using ROR method and AW method b. What are the ways and means to make it desirable investment c. In what case we should use the present worth and future worth method of economy study?
- The engineer of a medium scale industry was instructed to preparetwo plans to be considered by management to improve theiroperations. Plan A calls for an initial investment of P200,000 now withan expected salvage of 20% of the first cost 20 years hence. Theoperation and maintenance disbursements are estimated to beP15,000 each year and taxes will be 2% of the first cost. Plan B callsfor an immediate investment of P140,000 and a second investment ofP160,000 eight years later. The operation maintenancedisbursements will be P9,000 a year for the initial installation andP8,000 a year for the second installation. At the end of 20 years, thesalvage value will be 20% of the investments. Taxes will be 2% of firstcost. If money is worth12%, which plan will you recommend usingpresent worth cost method. Draw Cash flow diagramAN INVESTMENT OF P270,000.00 ON SHOP WITH THE FOLLOWING DATA: UNIFORM ANNUAL REVENUE - P185,000.00 FOR 5 YEARS OPERATION AND MAINTENANCE - P85,000.00/YEAR TAXES/INSURANCE - 5% OF THE FIRST COST SALVAGE VALUE OF THE COMPUTERS AFTER 5 YEARS -10% OF INVESTMENT EXPECTED EARNINGS ON CAPITAL - 25% PROVE THAT THIS INVESTMENT IS JUSTIFIABLE OR NOT BY USING ROR METHOD, AW METHOD, PW METHOD, FW METHODAn investment of P200,000 can be made in a project that will produce a uniform annual revenue of P145,000 for 5 years and then have a salvage value of 10% of the investment. Out-of-pocket costs for operation and maintenance will be P60,000 per year. Taxes and insurance will be 4% of the first cost per year. The company expects capital to earn not less than 22% before income taxes. Is this a desirable investment? What is the payback period of the investment? Compute the rate of return. What is the net annual profit using annual worth method? What is the net present worth of net cash flow? The rate of return is [ Select ] [ Select ] 26.87% 25.65% 26.65% 24.87% The net annual profit is [ Select ] [ Select ] P9,742.93 P10,742.93 P11,742.93 P12,742.93 The net present worth of net cash flow is [ Select ] [ Select ] P27,900.25 P28,900.25 P26,900.25 P30,900.25 Is this a desirable investment? [ Select ] [ Select ] Yes No The payback period is [ Select ] Select ] 1.33 2.01 3.20 1.87
- AN INVESTMENT OF P270,000.00 ON COMPUTER SHOP WILL HAVE THE FOLLOWING DATA: UNIFORM ANNUAL REVENUE-P185,000.00 FOR 5 YEARS OPERATION AND MAINTENANCE-P85,000.00/YEAR TAXES/INSURANCE-5% OF THE FIRST COST SALVAGE VALUE OF THE COMPUTERS AFTER 5 YEARS-10% OF INVESTMENT EXPECTED EARNINGS ON CAPITAL- 25% PROVE THAT THIS INVESTMENT IS JUSTIFIABLE OR NOT BY USING FUTURE WORTH METHOD PLEASE GIVE FULL AND DETAILED SOLUTIONIn net present worth analysis over a period, if the net present worth value is equal to zero, the initial investment ______ a. has not produced profits b. has no certainty of gians c. has been fully account by the operation d. has a tendency to produce more losses e. has been applied with correct interest A company invests on selling computer units worth Php 32,000.00. The probability of maintaining this price throughout the year is 65% while that of less or more than 10% the expected are 15% and 20%, (a) what is the probability that the selling price for that year is more than the expected price? a. 0.8 b. 0.85 c. 0.25 d. 0.2 e. 1 f. 0.15 g. 0.65A small manufacturing firm is considering the purchase of a new machine to modernize one of its current production lines. Two types of machines are available on the market. The lives of machine A and machine B are 4 years and 6 years, respectively, but eh firm does not expect to need the service of either machine for more than 5 years. The machines have the following expected receipts and disbursements. k= variable Item Machine A (USD) Machine B(USD) First cost 325k 425k Service life 4 years 6 years Estimated Salvage Value 30k 50k Annual Opertaing & Maintenance Costs 40k 26k Oil Filter Change every other year 5k NONE Enginer Overhaul 10k every 3 years 14k every 4 years The firm always has another option: To lease a machine at 150k a year, fully maintained by the leasing company. After four years of use, the salvage value for machine B will remain at 50k. How many decision alternatives…
- The following table presents sales forecasts for Golden Gelt Giftware. The unit price is $30. The unit cost of the giftware is $28. Year 1 2 3 NPV $ 4 Thereafter Unit Sales 21,300 27,900 14,000 4,500 0 It is expected that net working capital will amount to 30% of sales in the following year. For example, the store will need an initial (year O) investment in working capital of 0.3 x 21,300 × $30 = $191,700. Plant and equipment necessary to establish the giftware business will require an additional investment of $189,000. This investment will be depreciated in an asset class with a CCA rate of 25%. We will assume that the firm has other assets in this asset class. After 4 years, the equipment will have an economic and book value of zero. The firm's tax rate is 35%. The discount rate is 18%. What is the net present value of the project? (Round your answer to the nearest whole dollar amount.)AN INVESTMENT OF P270,000.00 ON COMPUTER SHOP WILL HAVE THE FOLLOWING DATA: UNIFORM ANNUAL REVENUE-P185,000.00 FOR 5 YEARS OPERATION AND MAINTENANCE-P85,000.00/YEAR TAXES/INSURANCE-5% OF THE FIRST COST SALVAGE VALUE OF THE COMPUTERS AFTER 5 YEARS-10% OF INVESTMENT EXPECTED EARNINGS ON CAPITAL- 25% PROVE THAT THIS INVESTMENT IS JUSTIFIABLE OR NOT BY USING PRESENT WORTH METHOD PLEASE GIVE FULL AND DETAILED SOLUTIONA business industry has a new product whose sales are expected to be 1.2, 3.5, 7, 5, 3 million units per year over the next 5 years. Production, distribution, and overhead costs are stable at $120 per unit. The price will be $200 per unit for the first two years, and then $180, $160 and $140 for the next three years. The remaining R&D and production costs are $300 million. If the interest rate is 15%, determine whether this business will profit using present worth method. What is the present worth? *