Solution Required for ---Exercise 23-10

Calibrachoa Corp. uses the straight-line method of depreciation. (a) Determine the internal rate of return for each project. Round the internal rate of return factor to three Problems: Set A estment wery is expected to have a useful life of five years with no residual value. Depreciation is by the straight-line return 19 Mimulus Inc, is considering a capital investment of $300,000 in additional productive facilities. The new Calcul mod. During the life of the investment, annual profit and cash inflows are expected to be $30,000 and $90,000, and ne ve Mimulus has a 15% cost of capital rate, which is the minimum acceptable rate of return on the (LO 3 und to two decimals.) Calculate: (1) the annual rate of return, and (2) the cash payback period on the proposed capital expenditure. the discounted cash flow technique, calculate the net present value. 5-10 Calibrachoa Corp. is considering three capital expenditure projects. Relevant data for the projects are as Annual income is constant over the life of the project. Each project is expected to have zero residual value. ting Project Investment 22 $240,000 23 270,000 24 288,000 19,000 18,400 Annual Income $13,300 Deter retur (LO Life of Project 6 years 9 years 8 years Instructions decimals. b) If Calibrachoa Corps minimum required rate of return is 10%, which projects are acceptable? Problems: Set A 223-1A JP Sports Inc, manufactures footballs for the Canadian Football League. For the first six months of Pr 2017, the company reported the following operating results while operating at 90% of plant capacity: fo Amount $5,500,000 4,600,000 460,000 Per Unit $50 40 Sales Cost of goods sold Selling and administrative expenses Profit 4 $ 440,000 $6 Fixed costs for the period were cost of goods sold $1,200,000 and selling and administrative expenses $165,000. In July, normally a slack manufacturing month, JP Sports receives a special order for 10,000 footballs at $39 each from the Italian Football Association. Acceptance of the order would increase variable selling and adminis- trative expenses by $0.50 per unit because of shipping costs but would not increase fixed costs and expenses