Lincoln Research, a nonprofit organization, estimates that it can save $33,000 a year in cash operating...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Lincoln Research, a nonprofit organization, estimates that it can save $33,000 a year in cash operating costs for the next 8 years if it buys a special-purpose eye-testing machine at a cost of $140,000. No terminal disposal value is expected. Lincoln Research's required rate of return is 10%. Assume all cash flows occur at year-end except for initial investment amounts. Lincoln Research uses straight-line depreciation. Present Value of $1 table Present Value of Annuity of $1 table Future Value of $1 table Future Value of Annuity of $1 table Read the requirements. I Requirement 1. Calculate the following for the special-purpose eye-testing machine: a. Net present value (NPV) (Use factors to three decimal places, X.XXX, and use a minus sign or parentheses for a negative net present value. Enter the net present value of the investment rounded to the nearest whole dollar.) The net present value is $ 36,055 b. Payback period (Round your answer to two decimal places.) 4.24 The number of years for the payback period is c. Internal rate of return (Round the rate to two decimal places, X.XX%. Do not enter the % symbol into the input field.) The internal rate of return (IRR) is 16.77 %. d. Accrual accounting rate of return based on net initial investment (Round interim calculations to the nearest whole dollar. Round the rate to two decimal places, X.XX%. Do not enter the % symbol into the input field.) Based on net initial investment, the accrual accounting rate of return (AARR) is %. Lincoln Research, a nonprofit organization, estimates that it can save $33,000 a year in cash operating costs for the next 8 years if it buys a special-purpose eye-testing machine at a cost of $140,000. No terminal disposal value is expected. Lincoln Research's required rate of return is 10%. Assume all cash flows occur at year-end except for initial investment amounts. Lincoln Research uses straight-line depreciation. Present Value of $1 table Present Value of Annuity of $1 table Future Value of $1 table Future Value of Annuity of $1 table Read the requirements. I Requirement 1. Calculate the following for the special-purpose eye-testing machine: a. Net present value (NPV) (Use factors to three decimal places, X.XXX, and use a minus sign or parentheses for a negative net present value. Enter the net present value of the investment rounded to the nearest whole dollar.) The net present value is $ 36,055 b. Payback period (Round your answer to two decimal places.) 4.24 The number of years for the payback period is c. Internal rate of return (Round the rate to two decimal places, X.XX%. Do not enter the % symbol into the input field.) The internal rate of return (IRR) is 16.77 %. d. Accrual accounting rate of return based on net initial investment (Round interim calculations to the nearest whole dollar. Round the rate to two decimal places, X.XX%. Do not enter the % symbol into the input field.) Based on net initial investment, the accrual accounting rate of return (AARR) is %.
Expert Answer:
Related Book For
Horngrens Cost Accounting A Managerial Emphasis
ISBN: 9780135628478
17th Edition
Authors: Srikant M. Datar, Madhav V. Rajan
Posted Date:
Students also viewed these accounting questions
-
Techno Labs, a nonprofit organization, estimates that it can save $ 25,000 a year in cash operating costs for the next 8 years if it buys a special- purpose eye- testing machine at a cost of $...
-
2. City Hospital, a taxpaying entity, estimates that it can save $28,000 a year in cash operating costs for the next 10 years if it buys a special-purpose eye-testing machine at a cost of $110,000....
-
City Hospital, a nonprofit organization, estimates that it can save $ 28,000 a year in cash operating costs for the next 10 years if it buys a special-purpose eye-testing machine at a cost of $...
-
An employee of Gus's Restaurant sustains a work-related injury. The owner of the restaurant is liable for the injury, however, the employee is not covered under the state's workers' compensation...
-
Find V o in the figure using Thevenin?s theorem 4 kn Vo 2 kn 3 mA 12 kn 4 kn 2 kn 1 mA 6 v(+
-
Each of the following reactions has been reported in the chemical literature and gives a predominance of a single product in synthetically acceptable yield. Write the structure of the product. Only...
-
What are the differences between a firms physical assets and its intellectual assets? Why is it important for entrepreneurs to understand these differences?
-
Sherwills statement of consolidated income is as follows: Net sales ..................... $658 Other income .................... 8 666 Costs and expenses: Cost of products sold ................. 418...
-
For a particular Java assembler interface, it is known that the operand stack size has the following probability distribution function: 0 1 2 3 4 . 2 5 . 2 0 . 1 8 . 1 7 . 2 0 What is the Expected...
-
Wilhelm Müller, CFA, has organized the following selected data on four food companies (TTM stands for trailing 12 months): On the basis of the data given, answer the following...
-
Strawberry Fields purchased a tractor at a cost of $40,000 and sold it two years later for $25,700. Strawberry Fields recorded depreciation using the straight-line method, a five-year service life,...
-
Edinburgh Diving School is investing in a new boat to expand its operations.The boat costs 200,000 today.The investment in this project is expected to generate net cash flows of 40,000 in perpetuity,...
-
How is the Australian cereal market segmented? In other words, what groupings of customers are there? You will need to ask yourself who are the key customers for each of the segments?
-
these two seem like two questions but it's just one big question. Guidance Corp is preparing its Master Budget for 20XX. You need to prepare Guidance's Direct Materials Budget and Schedule of Cash...
-
How was the Apple stock price impacted by the news or event? Be sure to connect your conclusion to this week's concept of profitability.
-
Assume that the City of Coyote has produced its financial statements for December 31, 2024, and the year then ended. The city's general fund was only used to monitor education and parks. Its capital...
-
Evaluate the following iterated integral L ( + ydy) de /x (For this question, you are not allowed to use polar coordinate transfor- mation as it has not been covered yet.)
-
a. Determine the domain and range of the following functions.b. Graph each function using a graphing utility. Be sure to experiment with the window and orientation to give the best perspective of the...
-
Explain why ABC is equally important for both manufacturing and service companies.
-
Pharmassist, Inc., a distributor of special pharmaceutical products, operates at capacity and has three main market segments: a. General supermarket chains b. Drugstore chains c. Mom-and-pop...
-
Unearth, Inc., refines petrol and sells it through its own Unearth gas stations. On the basis of market research, Unearth determines that 60% of the overall petrol market consists of service-oriented...
-
What is the managers role in ethics?
-
Why, in your own words, would an otherwise ethical person make an unethical decision?
-
Define the term corporate social responsibility.
Study smarter with the SolutionInn App