Quentin's Shoes manufactures urban chic footwear from recycled tires. In order to upgrade its efficiency, it is evaluating an equipment purchase which requires an expense of $463 today followed by cash returns of $190 in year one, $212 in year two, and $307 in year three. What is the net present value of these cash flows to the nearest cent if the discount rate is 3%
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Quentin's Shoes manufactures urban chic footwear from recycled tires. In order to upgrade its efficiency, it is evaluating an equipment purchase which requires an expense of $463 today followed by cash returns of $190 in year one, $212 in year two, and $307 in year three. What is the
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- Portland Savings and Loan is considering new computersoftware, which, because of installation and training cost,will have an unusual pattern of net receipts. The expected receiptsare: $20,000 in year 1, nothing in the next yea r, $30,000 in year 3,and $50,000 in year 4. At an interest rate of 6% what is the presentvalue of these receipts?BOYDZ Condiments is a spice-making firm. Recently, it developed a new process for producing spices. The process requires new machinery that would cost $1,618,338, have a life of five years, and would produce the cash flows shown in the following table. Year Cash Flow 1 $442,372 2 -254,300 3 779,920 4 998,420 5 591,480 What is the NPV if the discount rate is 16 percent? (Enter negative amounts using negative sign e.g. -45.25. Do not round discount factors. Round other intermediate calculations and final answer to 0 decimal places, e.g. 1,525.) NPV is $_______Ayayai's Lawn Service needs to purchase a new lawnmower costing $8,476 to replace an old lawnmower that cannot be repaired. The new lawnmower is expected to have a useful life of 4 years, with no salvage value at the end of that period. Click here to view the factor table. (a) If Ayayai's required rate of return is 11%, what level of annual cash savings must the lawnmower generate to be considered an acceptable investment under the net present value method? (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 0 decimal place, e.g. 58,971) Annual cash savings should be $ (b) If Ayayai's required rate of return is 14%, what level of annual cash savings must the lawnmower generate to be considered an acceptable investment under the net present value method? (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 0 decimal place, e.g. 58,971) Annual cash savings should…
- 2. The Paktika Apple Orchard has always hired part-time workers to pick its annual apple crop. Fetullah Wasim, overseer of the orchard, has just received information on an apple picking machine that is being purchased by many competing orchards. The machine is a motorized device that shakes the apple tree, causing the apples to fall onto plastic tarps that funnel the apples into crates for shipping. Fetullah has gathered the following information to decide whether an apple picking machine would be a profitable investment for the Paktika Apple Orchard: a. Currently, the orchard is paying an average of $40,000 per year to transient workers to pick the apples. b. The apple picker would cost $94,500, and it would have an estimated 12-year useful life. The orchard uses straight-line depreciation on all assets and considers salvage value in computing depreciation deductions. The estimated salvage value of the cherry picker is $4,500. C. Annual out-of-pocket costs associated with the apple…The owner of a bicycle repair shop forecasts revenues of $200,000 a year. Variable costs will be $60,000, and rental costs for the shop are $40,000 a year. Depreciation on the repair tools will be $20,000. a. Prepare an income statement for the shop based on these estimates. The tax rate is 20%. b. Calculate the operating cash flow for the repair shop using the three methods given below: Now calculate the operating cash flow. Dollars in minus dollars out. Adjusted accounting profits. Add back depreciation tax shield.A shoe manufacturer is evaluating new equipment that would custom fit athletic shoes. The new equipment costs $90,000 and will generate $35,000 in net cash flows for five years. (Negative cumulative cash flows should be indicated with a minus sign.) Determine the break-even time for this equipment using a 10% discount rate.
- You are the owner of a small boutique. You need to decide if you should upgrade your storage and display counters. The total cost is $2,000, and the depreciation rate is 8% per year. The expected increase in next year’s revenues as a result of the investment is $400. Assuming an annual interest rate of 5%, answer the following questions: (a) What is the present value of the benefits? (b) What is the present value of the costs? (c) Should you make this investment?Warm and Dry is considering adding a new line of winter footwear to its product lineup. Which of the following are relevant cash flows for this project?I. Decreased revenue from products currently being offered if this new footwear is added to the lineupII. Revenue from the new line of footwearIII. Money spent to date looking for a new product line to add to the store's offeringsIV. Cost of new counters to display the new line of footwear a) I and IV only b) II and IV only c) II and III only d) I, II, and IV only e) II, III, and IV onlyStationery Supplies is considering installing an inventory control system in itsstore in Provo, Utah. The store carries about 1,400 different inventory items andhas annual gross sales of about $80,000. The inventory control system would cost$12,500 to install and about $2,000 per year in additional supplies, time, andmaintenance. If the savings to the store from the system can be represented as afixed percentage of annual sales, what would that percentage have to be in orderfor the system to pay for itself in five years or less?