The Millers runs a not-for-profit charity organization that is not subjected to income tax. They are...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The Millers runs a not-for-profit charity organization that is not subjected to income tax. They are considering the capital investment proposal but has the following factors to consider: • Initial investment is $88,000 • An acceptable rate of return of 8% • Annual net cash flows of $19,000 for 6 years • • No salvage values A present value factor of X (the result of $1.00 received annually at the end of each year for six years at 8% interest compounded annually. Is the NPV method of this proposal positive or negative? Show your computation and explain how you arrive at your conclusion. 5 points The Millers runs a not-for-profit charity organization that is not subjected to income tax. They are considering the capital investment proposal but has the following factors to consider: • Initial investment is $88,000 • An acceptable rate of return of 8% • Annual net cash flows of $19,000 for 6 years • • No salvage values A present value factor of X (the result of $1.00 received annually at the end of each year for six years at 8% interest compounded annually. Is the NPV method of this proposal positive or negative? Show your computation and explain how you arrive at your conclusion. 5 points
Expert Answer:
Answer rating: 100% (QA)
Calculation of net present value of proposal would be as follows NPV CF x Fx PVAIF1n Initial inv... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
Students also viewed these management leadership questions
-
The following additional information is available for the Dr. Ivan and Irene Incisor family from Chapters 1-5. Ivan's grandfather died and left a portfolio of municipal bonds. In 2012, they pay Ivan...
-
Companies use capital investment analysis to evaluate long-term investments. Capital investment evaluation methods that use present values are (1) Net present value method (NPV) and (2) Internal rate...
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
Modify the symbol-table API to handle values with duplicate keys by having get() return an iterable for the values having a given key. Implement BST and Index as dictated by this API. Discuss the...
-
Read the facts of the case in Problem 2-51 to become familiar with the fraud involving Koss Corporation. From the Company's October 7, 2009, proxy statement (Def 14A filing with the SEC), we know the...
-
A holiday decoration consists of two shiny glass spheres with masses 0.0240 kg and 0.0360 kg suspended, as shown in Fig. 11.47, from a uniform rod with mass 0.120 kg and length 1.00 m. The rod is...
-
A four cylinder, four stroke cycle petrol engine develops \(40 \mathrm{~kW}\) at \(2500 \mathrm{rpm}\). The mean effective pressure is \(0.8 \mathrm{MPa}\) and mechanical efficiency is \(80 \%\)....
-
Sayaka Tar and Gravel Ltd. operates a road construction business. In its first year of operations, the company obtained a contract to construct a road for the municipality of Cochrane West, and it is...
-
Explain one way compensation professionals can strengthen the pay-for-performance link? What the strengths of this way? And what are the drawbacks?
-
Wayland Custom Woodworking is a firm that manufactures custom cabinets and woodwork for business and residential customers. Students will have the opportunity to establish payroll records and to...
-
One painless way to save is to enroll in your company's 401(k) plan if one is offered. The money is automatically deducted from your paycheck. There's a good chance you won't even miss it! Also, you...
-
2. There are two kinds of people, who are those with college degrees and those without college degrees. Assume that they are all white-collar workers. The wage status is described in Table 1. Table...
-
What are the 10 leadership styles? construct open-ended questions for an executive, the questions should be best suited for each of the 10 leadership styles, for a total of 30 questions. Describe why...
-
In the estimation of international trade's casual effect on country's income, InYa+BT+yWi+i, = where Y; denotes income per person, T; denotes international trade, W; denotes within-country trade and...
-
On January 1, 2024, Coronado issued 10-year, $220,000 face value, 6% bonds at par. Each $1,000 bond is convertible into 30 shares of Coronado $2 par value common stock. The company has had 10,000...
-
Touchstone 1.2: Write a Research Question, Thesis, and Outline ASSIGNMENT: Following the Topic Selection Guidelines below, choose an argumentative topic to research. This will be your topic...
-
Suppose you are a shareholder of Amazon, you want to evaluate the partnership of AMAZON & iRobot and its impacts to Amazon. Apply your finance knowledge to explain and justify an investment,...
-
Complete the equations for the following equilibria and calculate Keq where the Keq expression includes [HO]. Be sure to enter Keq in proper scientific notation. (a) ammonia (acting as a base) reacts...
-
Frederick (Freddy) Freeweights (age 42) owns and operates a health club called ''Treadmills West.'' The business is located at 4321 Arnold Street, Alpine, CA 91901. Freddy had the following income...
-
Leslie is a single taxpayer who is under age 65 and in good health. For 2012, she has a salary of $23,000 and itemized deductions of $1,000. Leslie is entitled to one exemption on her tax return. a....
-
Indicate whether each of the items listed below would be included (I) in or excluded (E) from gross income for the 2012 tax year. ________a. Welfare payments ________b. Commissions ________c. Hobby...
-
Liquid argon has a dielectric constant of 1. 5 . What is the speed of an electromagnetic wave pulse through this medium?
-
What would be the length of a half-wave antenna for a radio station that emits its signal at \(90.5 \mathrm{MHz}\) ?
-
Full-body scanners at airports are sometimes referred to as millimeter-wave scanners and sometimes as terahertz scanners. Does this make sense?
Study smarter with the SolutionInn App