When calculating the annual rate of return, the average investment is equal to initial investment divided by life of project. (initial investment plus $0) divided by 2. (initial investment plus salvage value) divided by 2. initial investment divided by 2.
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- Required information Problem 24-2A (Algo) Payback period, accounting rate of return, net present value, and net cash flow calculation LO P1, P2, P3 [The following information applies to the questions displayed below.] Project Y requires a $306,000 investment for new machinery with a six-year life and no salvage value. The project yields the following annual results. Cash flows occur evenly within each year. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Project Y $ 370,000 165,760 51,000 26,000 $ 127,240This refers to the sum of project’s first cost and the present worth of all costs for replacement, operation and maintenance for a long time or forever. a. Rate of return on additional investment b. Annual cost c. Capitalized cost d. Present worth cost1. Accounting Rate of Return on average investment of Project A (expressed to twodecimal places). 1.2 Net Present Value of both projects. 1.3 Internal Rate of Return of Project B (expressed to two decimal places) usinginterpolation
- Use the information provided to answer the questions.5.1 Use the information provided below to calculate the following. Where applicable, use the presentvalue tables provided in APPENDICES 1 and 2 that appear after QUESTION 5.5.1.1 Calculate the Payback Period of Project A (expressed in years, months and days). 5.1.2Calculate the Accounting Rate of Return (on average investment) of Project B (expressed to twodecimal places). 5.1.3 Calculate the Net Present Value of each project (with amounts rounded off to the nearest Rand). 5.1.4 Use your answers from question 5.1.3 to recommend the project that should be chosen. Motivateyour choice.What refers to the interest rate at which the present work of the cash flow on a project is zero of the interest earned by an investment? Select one: a. Return of investment b. Yield c. Rate of return d. Economic return1. Determine the Net present value of the investment. (use 3 decimal places for the PV factor) 2. Determine the Proposal's internal rate of return 3. Determine the Payback period (3 decimal places)
- The Net Present Value considers which of the following inputs: The internal rate of return The accounting rate of return The initial amount investment The annual accounting profit throughout the project’s operating life.Calculate the Payback Period of Project A (expressed in years, months and days) Calculate the Accounting Rate of Return on average investment of Project A (expressedto two decimal places). Calculate the Benefit Cost Ratio of both projects (expressed to two decimal places). Which project should be chosen? Why? Calculate the Internal Rate of Return of Project B (expressed to two decimal places). Youranswer must include two net present value calculations (using consecutiverates/percentages) and interpolation.Which of the following statements is true? The internal rate of return is the rate of return of an investment project over its useful life. When the net cash inflow is the same every year for a project after the initial investment, the internal rate of return of a project can be determined by dividing the initial investment required in the project by the annual net cash inflow. This computation yields a factor that can be looked up in a table of present values of annuities to find the internal rate of return. Multiple Choice Only statement I is true. Only statement II is true. Both statements are true.
- Calculate the total required rate of return - in nominal terms – for the investment. Calculate the total required rate of return - in real terms – for the investment.Use the information provided to answer the questions.Use the information provided below to calculate the following. Where applicable, use the presentvalue tables provided in APPENDICES 1 and 2 1. Calculate the Payback Period of Project A (expressed in years, months and days).2. Calculate the Accounting Rate of Return (on average investment) of Project B (expressed to twodecimal places).The length of time required to cover the initial outlay of the investment in a project is referred to as the A. payback period. B. internal rate of return. C. net present value period. D. discounted payback period.