Calculate the accounting income for the total over four year

Assignment Help Financial Management
Reference no: EM132331607

Question

Lucas Company is considering investing in a new machine. The machine costs $10,000 and has an economic life of four years. The machine will generate cash flows of $3,000 (cash revenues less cash expenses) each year. All cash flows, except for the initial investment, are realized at the end of the year.

The investment in the machine will be made at the beginning of the first year. Lucas is not subject to any taxes and, for financial accounting purposes, will depreciate the machine using straight-line depreciation over four years. Lucas uses a 10 percent cost of capital when evaluating investments. Use Exhibit A.9.

Required:

a. Calculate the accounting income for the total over four years.

b. Compute the NPV of the cash flows over four years. (Round PV factor to 3 decimal places. Negative amount should be indicated by a minus sign.)

a. Accounting Income?

b. Net Present Value?

Reference no: EM132331607

Questions Cloud

How the disease you chose affects the various body systems : You are required to write a critical analysis of the disease of your choice. explain how the disease you chose affects the various body systems where relevant.
Discuss the findings from the data set : Present findings and recommendations developed whilst completing the analysis of the data. The presentation should include a visual component
Compute the present value of the tax shield resulting : Rush Corporation plans to acquire production equipment for $612,500 that will be depreciated for tax purposes as follows: year 1, $122,500;
Spell checker that stores a set of words : A spell checker that stores a set of words, W, in a hash table and implements a function, spellCheck(s), which performs a spell check on the string s with respe
Calculate the accounting income for the total over four year : Lucas Company is considering investing in a new machine. The machine costs $10,000 and has an economic life of four years.
The oklahoma vs oklahoma state to score points : The Oklahoma vs Oklahoma State to score points and the problem is threatening to derail their playoff hopes. The Oklahoma vs Oklahoma State will try to unlock
Discuss the role that pension funds play in company : Discuss the role that pension funds play in company pension plans. What benefits accrue to companies who elect to use pension funds?
Mention the seven layers of the osi stack : a. Mention the seven layers of the OSI stack, and describe the basic function of each layer.
What are the tax consequences for the partnership : The partnership agreement provides that Alex is to be paid an annual salary of $50,000. The balance is to be distributed equally between Alex and Pam.

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd