Refer to the example given in the accounting rate of return (ARR) section of the text (pages
Question:
Refer to the example given in the accounting rate of return (ARR) section of the text (pages 492–3), a summary of which is given below.
Required:
a Calculate the net present value (NPV) of the proposal to buy the new machine, given a cost of capital for the business of 5 per cent. Should the machine be purchased considering both its calculated ARR (5.96%) and NPV?
Initial purchase of the machine: $200 000 – Estimated useful life 5 years Cash flows during the life of the project (including $35,000) residual value in year 5:
Year 1: $50 000 Year 2: $35 000 Year 3: $45 000 Year 4: $50 000 Year 5: $55 000 b Will the internal rate of return of the project be higher or lower than 5 per cent?
Step by Step Answer:
Accounting Information For Business Decisions Accounting
ISBN: 9780170446242
4th Edition
Authors: Billie Cunningham, Loren A. Nikolai, John Bazley, Marie Kavanagh
Students also viewed these Business questions
-
Study the information given below and answer the following questions: (25 Marks) 1.1 Calculate the Payback Period of both machines (answers expressed in years, months and days). (5 marks) 1.2 Which...
-
Ann Carter, Chief Financial Officer of Consolidated Electric Company (Con El), must make a recommendation to Con Els board of directors regarding the firms dividend policy. Con El owns two...
-
Origami Company is a price-taker and uses target pricing. Please refer to the following information: How much is the target full cost in total for the year? A) $1,440,000 B) $10,500,000 C)...
-
1. Suppose that a stoichiometric mixture of isooctane (C8H18) and air is burned in an engine and then the fuel is changed to 10% (by liquid volume) ethanol and 90% by liquid volume isooctane. If the...
-
A certain projectile is launched with an initial speed v0. At its highest point its speed is 1/2v0. What was the launch angle of the projectile? A. 30 B. 45 C. 60 D. 75
-
The 6-cm-diameter 20°C water jet in Fig P3.64 strikes a plate containing a hole of 4-cm diameter. Part of the jet passes through the hole, and part is deflected. Determine the horizontal force...
-
In February 2014, defendant Ibrahim M. Shihadeh, d/b/a Creative Designs Kitchen and Baths, agreed to purchase 25% of his anticipated natural gas needs at a fixed price for the 201415 and 201516...
-
Howard Industries Inc., operating at full capacity, sold 64,000 units at a price of $ 45 per unit during 2014. Its income statement for 2014 is as follows: The division of costs between variable and...
-
11. Sinking Fund A company borrows $5000 on which it will pay interest at the end of each year at the annual rate of 11%. In addition, a sinking fund is set up so that the $5000 can be repaid at the...
-
The Anderson Group has identified the following capital expenditure proposals as acceptable. Only $150 000 is available for investment. Required: Determine the combination of proposals to be...
-
From the following table, calculate the variances and discuss each one in relation to the following questions: i Is the variance positive or negative in terms of business performance? ii What are the...
-
Harwell Company manufactures automobile tires. On July 15, 2013, the company sold 1,000 tires to the Nixon Car Company for $50 each. The terms of the sale were 2/10, n/30. Harwell uses the gross...
-
In each row, pick the compound with the bigger lattice energy. Note: lattice energy is always greater than zero. Which compound has the bigger lattice energy? Cs Br CsI BaF O NaCl O O MgF, O Na, S O
-
With A any vector A. Vr = A. (a) Verify this result in cartesian coordinates. b) Verify this result using spherical polar coordinates. (Equation (2.44) provides V.)
-
1. If you dissolve 10.00 g of K3N (s) in 9.00 L of water (density = 0.998 g/mL, K = 0.51 C/mol), what is the normal boiling point of the solution? 2. Urea, (NH)CO, is a non-electrolyte solute, is...
-
Use two-, three-, and four-point Gauss-Legendre integration formulas to evaluate the following integral. (2x + ) dx Use the analytical solution of the integral to determine the true percent relative...
-
5 Consider the reaction A + 2B C whose rate at 25C was measured using three different sets of initial concentrations as listed in the following table: [A] | [] (M) (M) 0.40 0.010 1.9x10 2 0.40 0.020...
-
Starting with the graph of y = in x, find the equation of the graph that results from (a) Shifting 3 units upward (b) Shifting 3 units to the left (c) Reflecting about the x-axis (d) Reflecting about...
-
Find the center of mass of a thin triangular plate bounded by the y-axis and the lines y = x and y = 2 - x if (x, y) = 6x + 3y + 3.
-
Table provides a vendor comparison for a system that is under consideration for purchase. Based on the data provided, which system should be selected under each of the following scenarios? a. Lowest...
-
Table provides a vendor comparison for a system that is under consideration for purchase. Based on the data provided, which system should be selected under each of the following scenarios? a. Lowest...
-
Propose ways that the following intangible and/ or indirect costs and benefits might be measured. Justify why they are indirect and/ or intangible. a. Improved competitive advantage. b. Decreased...
-
In the room where Offred lives in Margaret Atwood's The Handmaid's Tale, the chandelier has been removed, there is shatterproof glass in the window, and there is no glass covering the watercolor...
-
In your discussion post, address the following: What are the most effective methods for communication? What communication styles have you used in your personal and professional life that have been...
-
The Cheesecake Factory spends approximately $ 2 , 0 0 0 per employee on training. This is expensive However, these training costs are small when one considers.
Study smarter with the SolutionInn App