The Lake Construction Company is considering an investment of R150,000 for earth moving machine. is expected...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The Lake Construction Company is considering an investment of R150,000 for earth moving machine. is expected to generate annual cash inflow of R80.000 for 6 years. Annual maintenance cost of the machine amount to R12.500. The scrap value of the machine at the end of the useful is R10,500. The opportunity cost of capital is 12%. No depreciation was considered. The company uses the straight-line method. Company tax is 25%. Required: Determine the Profitability index (PI) for the project. The Lake Construction Company is considering an investment of R150,000 for earth moving machine. is expected to generate annual cash inflow of R80.000 for 6 years. Annual maintenance cost of the machine amount to R12.500. The scrap value of the machine at the end of the useful is R10,500. The opportunity cost of capital is 12%. No depreciation was considered. The company uses the straight-line method. Company tax is 25%. Required: Determine the Profitability index (PI) for the project.
Expert Answer:
Answer rating: 100% (QA)
Calculation of cash flow for the years Year 1 Cash Inflow R80000 Maintenance Cost R12500 After Taxa... View the full answer
Related Book For
Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1337614689
9th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Posted Date:
Students also viewed these accounting questions
-
How do you plan to finance a short-term and a long-term project? Explain what success looks like in both situations.
-
A sleep study administered to U.S. adults showed that the amount of sleep (in hours) they get in a 24-hour period is normally distributed with a mean of 6.5 hours and a standard deviation of 1.25...
-
Consider the vector field v= (x+y) +(yx)} Evaluate the line integral I = fv.d along each of the paths in the xy-plane shown in the figure at right, and defined by the following: i. ii. iii. iv. the...
-
A 32- resistor and a 20- resistor are connected in parallel, and the combination is connected across a 240-V dc line. (a) What is the resistance of the parallel combination? (b) What is the total...
-
A proton with a kinetic energy of 4.6 10-16 J moves perpendicular to a magnetic field of 0.36 T. What is the radius of its circular path?
-
Assume that your company is implementing a strategy that requires that the portfolio value P is neutral to changes in the slope of the yield curve. The appropriate action is to identify an interest...
-
In the event that a series converges uniformly, one can consider the derivative of the series to arrive at the summation of other infinite series. a. Differentiate the series representation for...
-
Myers & Associates reports the following information on its December 31, 2009, balance sheet: Trading securities (at cost) . . . . . . . . . . . . . . . . . . . . . . . . . $225,850 Less: Market...
-
Given the following information, what is the price per troy ounce that will be used for today's marking-to-market for the September silver contract? Silver - 5,000 troy oz.; $ per troy oz. ...
-
Situation Russell International, a publicly traded company, reacquired 500,000 shares of its common stock during July 2008 at a cost of $25 per share. The current market price of the stock was $20...
-
What are some of the strategies that you currently use to make consumer buying decisions? Do you think your strategies are helping or hindering your financial plan? Why? Are the improvements that you...
-
Describe four key advantages of Virtualization. Explain why type 1 hypervisor should be used in a server environment, such as data center.
-
Tad drops his bowling ball out the car window 1.0 m above the ground while traveling down the road at 18 m/s. How far, horizontally, from the initial dropping point will the ball hit the ground? If...
-
Clopack Company manufactures one product that goes through one processing department called Mixing. All raw materials are introduced at the start of work in the Mixing Department. The company uses...
-
Suppose that an airplane flying 60 m/s, at a height of 300m, dropped a sack of flour. How far from the point of release would the sack have traveled when it struck the ground? In many locations, old...
-
es The following selected transactions relate to liabilities of United Insulation Corporation. United's fiscal year ends on December 31. 2024 January 13 Negotiated a revolving credit agreement with...
-
CITI ( as of early 2 0 2 2 ) pays a dividend of $ 3 . 3 0 per year. A current price is $ 1 9 4 . 9 8 . An analyst makes the following estimates: the current required return on equity for CITI is 9...
-
Find the APR in each of the following cases: NUMBER OF TIMES COMPOUNDED Semiannually Monthly Weekly Infinite EAR APR 10.4% 8.9 11.6 15.4
-
Integrative Case 10.1 involves projecting financial statements for Walmart for Years +1 through +5. The following data for Walmart include the actual amounts for 2015 and the projected amounts for...
-
Apply Porters five forces to the air courier industry. Industry participants include such firms as FedEx, UPS, and DHL.
-
Under U.S. GAAP, the statement of cash flows classifies cash expenditures for interest expense as an operating activity but classifies cash expenditures to redeem debt as a financing activity....
-
The bidask spread (I) In Table 3.14, consider the bid and ask spot quotations in dollars per pound (\($/),\) i.e. in American terms: a. Compute the bid and quotations in European terms, i.e. in...
-
The bidask spread (II) Consider the spot quotations in pounds per dollar (/\($)\) and dollars per pound (\($/)\) in Table 3.15: a. Compute the bid quotations in American and European terms. b....
-
Interest rate parity Consider Figure 3.29, which indicates (approximately) the difference between interest rates in the United States and the UK, Rus Ruk on a one-year T-bill (i.e. a two-year bill...
Study smarter with the SolutionInn App