A special purpose machine is to be acquired by paying a P15,000 initial cash payment plus...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
A special purpose machine is to be acquired by paying a P15,000 initial cash payment plus a debt assumption of P135,000. The machine will generate additional net annual cash inflow of P40,000 for the firm throughout the 10 years of useful life of the asset. At the end of its life, a salvage value of 10% of its initial cost will be realized. Assuming that the MARR is 20% per annum, Is the project justified using the IRR method? A. IRR = 0.1572; Since IRR < MARR, project is not justified. B. IRR = 0.1984; Since IRR MARR, project is not justified. C. IRR = 0.2379; Since IRR > MARR, project is justified. D. IRR = 0.2762; Since IRR > MARR, project is justified. Is the project justified using the ERRR method? A. ERRR = 0.2653; Since ERRR > MARR, project is justified. B. ERRR = 0.2320; Since ERRR > MARR, project is justified. C. ERRR = 0.1987; Since ERRR < MARR, project is not justified. D. ERRR = 0.1653; Since ERRR < MARR, project is not justified. Is the project justified using the ERR method? A. ERR = 0.1813; Since ERR < MARR, project is not justified. B. ERR = 0.1974; Since ERR < MARR, project is not justified. C. ERR = 0.2152; Since ERR > MARR, project is justified. D. ERR = 0.2278; Since ERR > MARR, project is justified. A special purpose machine is to be acquired by paying a P15,000 initial cash payment plus a debt assumption of P135,000. The machine will generate additional net annual cash inflow of P40,000 for the firm throughout the 10 years of useful life of the asset. At the end of its life, a salvage value of 10% of its initial cost will be realized. Assuming that the MARR is 20% per annum, Is the project justified using the IRR method? A. IRR = 0.1572; Since IRR < MARR, project is not justified. B. IRR = 0.1984; Since IRR MARR, project is not justified. C. IRR = 0.2379; Since IRR > MARR, project is justified. D. IRR = 0.2762; Since IRR > MARR, project is justified. Is the project justified using the ERRR method? A. ERRR = 0.2653; Since ERRR > MARR, project is justified. B. ERRR = 0.2320; Since ERRR > MARR, project is justified. C. ERRR = 0.1987; Since ERRR < MARR, project is not justified. D. ERRR = 0.1653; Since ERRR < MARR, project is not justified. Is the project justified using the ERR method? A. ERR = 0.1813; Since ERR < MARR, project is not justified. B. ERR = 0.1974; Since ERR < MARR, project is not justified. C. ERR = 0.2152; Since ERR > MARR, project is justified. D. ERR = 0.2278; Since ERR > MARR, project is justified.
Expert Answer:
Answer rating: 100% (QA)
The detailed answer for the above question is provided below Is the project justified using the ... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0176509736
10th Canadian Edition, Volume 1
Authors: Donald Kieso, Jerry Weygandt, Terry Warfield, Nicola Young,
Posted Date:
Students also viewed these accounting questions
-
A single-station assembly machine is to be considered as an alternative to the dial-indexing machine in Problem 17.4. Use the data given in the table for that problem to determine (a) Production...
-
A fully automatic chucker and bar machine is to be purchased for $45,000. The money will be borrowed with the stipulation that it be repaid with six equal end-of-year payments at 12% compounded...
-
A special-purpose machine is to be purchased at a cost of $15,000. Table P14.10 shows the expected annual operating and maintenance cost and the salvage value s for each year of the machine's...
-
Explain why, in your opinion, allowing a physician to prescribe lethal medication under aid-in-dying laws is or is not euthanasia.
-
You have recently learned that the company where you work is being sold for $ 300,000. The companys income statement indicates current profits of $ 11,000, which have yet to be paid out as dividends....
-
Two masses, mA = 32.0kg and mB = 38.0 kg, are connected by a rope that hangs over a pulley (as in Fig. 8-54). The pulley is a uniform cylinder of radius R = 0.311 m and mass 3.1 kg. Initially mA is...
-
What would be the effect of removing the myelin sheath from the axon of a neuron?
-
Presented below is the adjusted trial balance of Abbey Corporation at December 31, 2012. Additional information:1. Net loss for the year was $2,500.2. No dividends were declared during...
-
What governance mechanisms and policy instruments are effective in promoting sustainability transitions at local, regional, and global scales, considering the diverse interests and priorities of...
-
Allowed values for the quantum numbers of electrons are as follows: n = 1, 2, 3, . . . l = 0, 1, 2, 3, . . . , n -1 ml = 0, 1, 2, 3, . . . , l ms = 12 The relationships between n and the shell...
-
What is the scope of industrial economics? Also discuss its importance. What role industrial economics plays in economic development of a country? (a) At what price and output level the market will...
-
Qinetiq plc. makes full body scanners for airport security systems. The Transportation Security Administration(TSA) is considering ordering 100 such machines at a total cost of$20 million. To ramp up...
-
Suppose - 2x-20x-51 f(x) 2x + 20x +49 for all x values near -5, except possibly at -5. Evaluate lim f(x). X-5
-
Wave Exteriors Inc. has an unlevered cost of equity is 12% and a pre-tax cost of debt of 6%. Both the book and the market value of debt is $500,000. Earnings before interest and taxes (EBIT) are...
-
1.) Frump Real Estate Inc expects to earn $100 MM per year in perpetuity if it does not undertake any new projects. The firm has an opportunity to invest $15 MM today and $5MM in one year in real...
-
Holyrood Co. just paid a dividend of $6.45 per share. The company will increase its dividend by 30% next year and will then reduce its dividend growth rate by 5 percentage points per year until it...
-
Crypto Inc. considers a major worldwide expansion project. It currently has 35 million outstanding shares trading at $20 per share. Crypto equity has an estimated beta of 2.0 The risk-free rate is...
-
Frontland Advertising creates, plans, and handles advertising campaigns in a three-state area. Recently, Frontland had to replace an inexperienced office worker in charge of bookkeeping because of...
-
Landstalker Enterprises sold $750,000 of accounts receivable to Leander Factors, Inc. on a without recourse basis under IFRS, as the risks and rewards have been transferred to Leander. The...
-
For each of the scenarios noted in BE6-4 above, when would revenue be recognized under the earnings approach? In BE6-4 (a) A manufacturer makes and sells farm equipment. The customer picks up the...
-
Boston Clothing Limited was a private company that experienced cash flow difficulties and hired new management to turn the company around. The company then went public and the shares sold at $15 per...
-
Determine the work required to transport \(10 \mathrm{~kg}\) of material from Earth to the ISS, the International Space Station, in orbit \(420 \mathrm{~km}\) above the Earth's surface.
-
An artificial satellite of mass \(m=3.4\) ton is in a circular orbit at the altitude \(h_{1}=5000 \mathrm{~km}\). Due to various causes, it gradually loses energy and reaches an altitude \(h_{2}=600...
-
A dwarf planet moves around the Sun on an elliptical orbit with semi-major axis \(a\), semi-minor axis \(b\) and period of revolution \(T\). Determine the speed when its direction is perpendicular to...
Study smarter with the SolutionInn App