Dippin doughnuts has computed the net present value for capital expenditure at two locations. Relevant data related
Question:
Dippin’ doughnuts has computed the net present value for capital expenditure at two locations. Relevant data related to the computation are as follows:
(a) Determine the present value index each proposal.
(b) Which location does your analysis support?
Cedar Rapids Mason City $455,900 485,000 $ (29,100) Total present value of net cash flow Amount to be invested Net present value $565,760 544,000 $ 21,760
Step by Step Answer:
a b The analysis supports investing in Cedar Rap...View the full answer
Financial and Managerial Accounting
ISBN: 978-0538480895
11th Edition
Authors: Jonathan E. Duchac, James M. Reeve, Carl S. Warren
Related Video
NPV stands for \"Net Present Value,\" which is a financial concept used to determine the value of an investment or project. It measures the difference between the present value of cash inflows and the present value of cash outflows over a given period of time, using a specific discount rate. To calculate the NPV of an investment, you need to first estimate the cash inflows and outflows associated with the investment, and then discount them back to their present values using a discount rate. The discount rate represents the cost of capital or the expected rate of return required by investors. The formula for calculating NPV is: NPV = sum of (cash inflows / (1 + discount rate)^t) - sum of (cash outflows / (1 + discount rate)^t) Where: Cash inflows: the expected cash received from the investment Cash outflows: the expected cash paid out for the investment Discount rate: the required rate of return or the cost of capital t: the time period in which the cash flow occurs If the NPV is positive, it means that the investment is expected to generate a return higher than the required rate of return or the cost of capital, and it may be considered a good investment. If the NPV is negative, it means that the investment is not expected to generate a return higher than the required rate of return or the cost of capital, and it may be considered a bad investment.
Students also viewed these Accounting questions
-
Tasty Doughnuts has computed the net present value for capital expenditure at two locations. Relevant data related to the computation are as follows: a. Determine the present value index for each...
-
Double K Doughnuts has computed the net present value for capital expenditure at two locations. Relevant data related to the computation are as follows: a. Determine the present value index for each...
-
Drive By Doughnuts has computed the net present value for capital expenditure locations A and B, using the net present value method. Relevant data related to the computation are as follows: Determine...
-
There are major responsibilities of system administrator as listed below: o Start-up and shut down the system o Performance tuning o Managing user accounts o System security o Backup and recovery o...
-
Copperfield Developments is a partnership owned by Alvaro Rodriguez and Elisabetta Carrieri. On December 31, 2016, the partners' capital balances are Rodriguez $67,140 and Carrieri $78,140. During...
-
Context of the book "The Road to Wigan Pier " by George Orwell. Write 300-400 words about the context of the book: What was happening at the time that the book was written?Does this influence the...
-
How and why does the architecture of the information system differ from software architecture?
-
Nosemer Company produces engine parts for large motors. The company uses a standard cost system for production costing and control. The standard cost sheet for one of its higher volume products (a...
-
The unadjusted trial balance for Indigo Corp. is shown below. Indigo Corporation Trial Balance October 31, 2025 Debit Credit Cash $15,410 Supplies 2,770 Prepaid Insurance 750 Equipment 4,650 Notes...
-
Apollo is uncertain of how he feels about Olga. He thinks she makes him happy, but he is not sure. Below is the joint distribution for whether Olga is around, X 1{Olga around}, and whether Apollo is...
-
Tupelo Industries Inc., is privately held diversified company with five separate divisions organized as investment centers. A condensed income statement for the Specially Products Divisions for the...
-
All-star, Inc., is considering an investment in one of two machines. The sewing machine will increase productivity from sewing 150 baseballs per hour to sewing 260 per hour. The contribution margin...
-
The following are the inventories for the years 2019, 2020, and 2021 for Parry Company:. Required: 1. Assume the inventory that existed at the end of each year was sold in the subsequent year....
-
Describe e-discovery and give an example of when and how it might be sought.
-
Compressing a certain spring to \(50 \%\) of its relaxed length requires \(28 \mathrm{~J}\) of work. How much work would be required to compress the same spring by only half as much, to \(75 \%\) of...
-
Describe the nature of interrogatories and identify their strengths and weaknesses.
-
Identify the important interests that must be balanced in relocation disputes.
-
A proton (inertia \(1.67 \times 10^{-27} \mathrm{~kg}\) ) and an electron (inertia \(9.11 \times 10^{-31} \mathrm{~kg}\) ) are being separately subjected to an electric force of \(3.2 \times 10^{-14}...
-
Explain trade creation and trade diversion.
-
The May 2014 revenue and cost information for Houston Outfitters, Inc. follow: Sales Revenue (at standard).............. $ 540,000 Cost of Goods Sold (at standard) ..........341,000 Direct Materials...
-
If some unknown cause of red shiftsuch as light becoming tired from traveling long distances through empty spaceis discovered, what effect would there be on cosmology?
-
Hairology Companys perpetual inventory records indicate that $120,500 of merchandise should be on hand on April 30, 2010. The physical inventory indicates that $115,850 of merchandise is actually on...
-
During the current year, merchandise is sold for $795,000. The cost of the merchandise sold is $477,000. a. What is the amount of the gross profit? b. Compute the gross profit percentage (gross...
-
For (a) through (d), identify the items designated by X and Y. a. Purchases (X + Y) = Net purchases. b. Net purchases + X = Cost of merchandise purchased. c. Merchandise inventory (beginning) + Cost...
-
In this module, we discussed reporting and analyzing performance data. Take a look at your local school district, city, or county government website. Discuss the following: 1. Post a link and give a...
-
With reference to a project of your own, draw a project team charter and include the relevant details for the project you had selected.
-
In this Week 7 discussion, you will post at least two paragraphs to discuss global sourcing and procurement. In your discussion post, you will address the challenges in implementing a global sourcing...
Study smarter with the SolutionInn App