Calculate the accounting rate of return

Assignment Help Finance Basics
Reference no: EM131623896

1) Project A has an NPV of 200000. The project is financed by borrowing at 7%pa. The cost of capital for Project A is 0.09. This rate is expressed as a decimal, e.g. so that .12 is equal to 12%. The project has 7 year life. Calculate the Annual Equivalent (AE). Your textbook calls this EAV, Equivalent Annual Value. Calculate to the nearest dollar.

2) Calculate the NPV of a project that has an outlay of $300,000 and has annual net cash flows of $50000 per year over 6 years. The project has a salvage value (disposal value) of 10% of its original value. The required rate of return for projects of similar risk is 0.11.

3) Given the following information calculate the Accounting Rate of Return (ARR gross).

Outlay = 100000

Annual Cash Flow = 70000 per year over four years

Life = 4 years

Rate = 0.13, as a decimal

Assume no taxes.

Please provide the manual solutions.

Reference no: EM131623896

Questions Cloud

Define federal reserve in stabilizing the current economy : Evaluate the role and the effectiveness of the Federal Reserve in stabilizing the current economy
Discuss about the professional investment management : Briefly define and differentiate among the following investments. Which offer fixed returns? Which are derivative securities?
Increase for this item between the two time periods : The average cost of those same motor vehicles is now $24,000. What was the rate of increase for this item between the two time periods?
Prepare journal entries for each transaction : The trial balance of My Motor, Inc. on March 1, 20XX, lists the entity's assets, Prepare journal entries for each transaction
Calculate the accounting rate of return : Given the following information calculate the Accounting Rate of Return (ARR gross).
Would you like to own an all-electric car : Would you like to own an all-electric car? Do you think there is a viable market for such a product? Provide a research report based on your findings.
Discuss what are the counterpoints in an essay : What possible positions/arguments are there, What position resonates with you, Which position do you believe is correct, What are your main points
Explain why you remembered any of them : How many do you think there are? Explain why you remembered any of them. Next time you are on that route, note how many billboards there actually are.
Develop a customer service training implementation plan : Develop a customer service training implementation plan and determine the method of training (i.e., presentation, discussion, case study, discovery.

Reviews

Write a Review

Finance Basics Questions & Answers

  An immediate retirement annuity

An insurance agent is trying to sell you an immediate retirement annuity, which for a single payment paid today, will provide you with $10800 at the end of each year for 15 years.You currently earn 7% on a low risk investment.Ignoring taxes, the most..

  How will you organize your main and supporting points

Prepare to write a review of a restaurant or a dining facility on campus.

  What standards must big city meet regarding the water

Who can be held liable for the cost of cleaning up the site and why? What standards must Big City meet regarding the Water?

  How much money are you borrowing

In keeping with his reputation, he requires that the first payment be paid today. He also charges you 2 percent interest per month. How much money are you borrowing?

  Discount service stations to several neighboring states

INTERMEDIATE The Ewing Distribution Company is planning a $100 million expansion of its chain of discount service stations to several neighboring states. This expansion will be financed, in part, with debt issued with a coupon interest rate of 15 ..

  Prepare a report analyzingone stock

Prepare a report analyzingone stock

  Determine the net pretax benefit to the firm

Assuming that High-Rise can earn 6 percent on short-term investments and that the cost of sending an employee to New York to present the check for payment is $350, determine the following: The net (pretax) benefit to the firm of using this special ha..

  Financial information for apple computer

Financial Information for Apple Computer can be found on Yahoo.com/finance (Symbol: AAPL). You will find information under financials for the balance sheet and income statement for three years.

  Explain why in implementing a yield spread strategy it is

explain why in implementing a yield spread strategy it is necessary to keep the dollar duration

  Describe the various actions

You reflect on these choices as well as other actions that could be taken. Describe the various actions that you might take and their implications.

  Rank these stocks from the most risky to the least risky

You are considering three stocks-A, B, and C-for possible inclusion in your investment portfolio. Stock A has a beta of 0.80, stock B has a beta of 1.40, and stock C has a beta of 0.30. Rank these stocks from the most risky to the least risky.

  What is the implicit cost of the trade credit

Sybex Corp. sells its goods with terms of 3/8 EOM, net 30. What is the implicit cost of the trade credit?

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