Fego Limited is considering the purchase of Machine X, details of which are provided below: Year R Initial investment Net cash inflows: 0 (1 500 000) 1 480 000 2 600 000 3 380 000 4 272 000 5 360 000 The cost of capital is 12%. Depreciation is calculated using the straight-line method. No scrap value is expected for the machine. Ignore taxes.
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Calculate the following from the information given Fego Ltd:
1. Payback Period (expressed in years, months and days).
2. Accounting
3.
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- XMohan & Co. is considering the purchase of machine. Two machines X and Y each Costing Rs.50, 000 are available. Earnings after taxes before depreciation are expected to be as under: Year 1 2 3 4 5 Machine 'X' 15000 20000 25000 15000 10000 (Rs.) Machine 'Y' (Rs.) 5000 15000 20000 30000 20000 Estimate the two alternatives according to: (a) Payback method, and (b) NPV method a discount rate of 10% is to be used.Pearl Limited is considering upgrading its plant to expand it client base. The financial details of the investment proposal are as follows: Cost of plant R4 700 000 Import duty R 900 000 Installation cost R 450 000 Net cash flows Year 1-8 R1 700 000 per annum (excluding residual value) Residual/scrap value R1 300 000 The company uses straight-line depreciation. The cost of capital for projects of similar risk is 18%. Ignore taxation. Required: 2.1 C alculate the investment’s Accounting Rate of Return (ARR). 2.2 Briefly explain if the ARR is acceptable or not based on a target rate of return of 25%. 2.3 Assume a payback period of 3 years. Determine theIn the System, if you sell an asset that belongs to a particular class that faces a depreciation recapture penalty, which of the following could never happen simultaneously A Capital Gains Tax B Purchase Price< Salvage Value C Salvage Value >UCC D Loss on disposal Determine the discounted payback period of a project that requires an investment of $7, 500 today, an investment of $3, 500 next year, and then generates cash flows of $9,000 in every subsequent year. Assume a discount rate of 12.0% A 2.54 years B 1.46 years C 1.22 years D 1.54 years E 1.61 years
- Acme Ltd, a scrap metal dealer, is considering the acquisition of a 'Roadrunner' metal compactor at the cost of $25,000. The compactor is estimated to have zero value at the end of its five-year life. It will return the following annual net cash flows. Year 1 2 3 4 5 O $4,977 O - $4,977 O $6,652 Net cash flow ($) O -$6,652 6000 10,000 12,000 Depreciation is $5000 per annum and the company tax rate is 40 per cent. Compute the project's NPV. If the project's after-tax required rate of return is 8 per cent per annum, should the project be adopted? 15,000 7000What is the answer in the following question and it's cash flow diagram? a.) The purchased price of the equipment is P12,000 and its estimated maintenance costs are P500 for the first year, P1,500 for the second year, and P2,500 for the third year. After three years of use the equipment is replaced, it has no salvage value. Compute the present equivalent cost of the equipment using 10% interest. (capitalized cost)Based on the image , Calculate the ARR for XYZ Corporation. Assume depreciation is calculated on the straight-linemethod and that the project has a scrap value of R5000.
- Bluestone Ltd has provided the following figures for two investment projects, only one of which may be chosen. Project A Project B £ £ Initial outlay 190,000 170,000 Profit for year 1 55,000 15,000 2 40,000 25,000 3 25,000 45,000 4 10,000 65,000 Estimated resale value at end of year 4 50,000 20,000 Profit is calculated after deducting straight line depreciation. The business has a cost of capital of 10%. a) Calculate the payback period, net present value and accounting rate of return for each project, and provide brief recommendations as to what project needs to be chosen based on the following: The Payback Period. The Accounting Rate of Return/Return on Capital Employed. The Net Present Value.(Do not provide solution in imge format. and also do not provide plagarised content otherwise i dislike.) ABC, Inc. is considering a new project requiring a $210,000 initial investment in equipment having a useful life of 3 years with zero expected salvage value. The investment will produce $160,000 in annual revenues and $120,000 in annual costs. Assume a tax rate of 30% and straight-line depreciation. What is the operating cash flow per year? O $19,000 O $49,000 O $77,000 O $61,000 O $98,000The Alabi corp is considering a project which requires an expenditure of $100,000 at t=0 intially, it will have additional revenue sales of $150k per year for the next to years (t=1 & t=2) with expenses of $30k per year for operating costs and general expenses attributed with the project but does not include depreciation of the intial expenditure of the $100k. The depreciation is straight line with zero salvage . Alabi weighted average cost of capital is 9.13% and taxed at 30%. What is the net present value for the project?
- is planning to acquire a new machine at a total cost of P360,000. The estimated life of the machine is 6 years with no salvage value. The straight-line method of depreciation will be used. NUBD estimates that the annual cash flow from operations, before income taxes, from using this machine amounts to P90,000. Assume that NUBD’s cost of capital is 8% and the income tax rate is 40%. (Use 3 decimal places for the PV factors)What would be the net present value?Vandezande Inc. is considering the acquisition of a new machine that costs $370,000 and has a useful life of 5 years with no salvage value. The cash flows that would be produced by the machine are (Ignore income taxes): Net Cash Flows Year 1 $ 128,000 Year 2 $ 105,000 Year 3 $ 126,000 Year 4 $ 123,000 Year 5 $ 122,000 Assume cash flows occur uniformly throughout a year except for the initial investment. The payback period of this investment is closest to:Wozo Ltd is to spend $60,000 on a machine which will have an economic life of ten years and no residual value. Depreciation is to be charged using the straight line method. Estimated operating cash flows are:Year 1: - 2 000Year 2: +13 000Year 3: +20 000Year 4-6: +25 000 per annumYear 7-20 +30 000 per annumRequired:Calculate the payback period and the Accounting Rate of Return (ARR); (using the initial investment base not the average investment base) (show all you calculations)