Calculate the lathe internal rate of return

Assignment Help Accounting Basics
Reference no: EM133172526

Question - Garrett Boone, Blue Spruce Enterprises' vice president of operations, needs to replace an automatic lathe on the production line. The model he is considering has a sales price of $277,535 and will last for 15 years. It will have no salvage value at the end of its useful life. Garrett estimates the new lathe will reduce raw materials scrap by $34,000 per year. He also believes the lathe will reduce energy costs by $6,000 per year. If he purchases the new lathe, he will be able to sell the old lathe for $5,100.

(a) Calculate the lathe's internal rate of return.

(b) If Blue Spruce Enterprises uses a 10% hurdle rate, should Garrett purchase the lathe?

(c) Without doing any calculations, what do you know about the lathe's net present value?

Reference no: EM133172526

Questions Cloud

What is the market price of the bond investment on January : On January 1, 2009, Everlasting Company purchased serial bonds with a face value of P4,000,000. What is the market price of the bond investment on January
Advance your knowledge and personal academic agenda : You will engage your thoughts and abilities as a scholar, a practitioner, and a leader to advance your knowledge and personal academic agenda.
Categories of non-state actors : Read and discuss the following questions. You may utilize external resources such as online searches, journals, texts, and archived newspapers in answering the
Identify a potential partner strategic objectives : 1.) Why is it essential to identify a potential partner's strategic objectives?
Calculate the lathe internal rate of return : The model he is considering has a sales price of $277,535 and will last for 15 years. Calculate the lathe internal rate of return
How much money will Leo actually receive : Leo's Furniture is offering a houseful of furniture for $7,777. How much money will Leo's actually receive for the houseful of furniture
Determine the PVCCATS of the purchase : If the company's required rate of return is 12% and the CCA rate on equipment is 30%, determine the PVCCATS of the purchase. Assume a tax rate of 35%
What is the max price you should pay for ALPHA stock today : At the end of the year, you expect to receive a $2 dividend and $42 from selling the stock. What is the max price you should pay for ALPHA stock today
What is the company market share variance : Question - TV Timers, Incorporated, manufactures time control devices for TV's. What is the company market share variance

Reviews

Write a Review

Accounting Basics Questions & Answers

  Prepare a schedule translating the December 31

Prepare the required tax journal entries for each year and Prepare a schedule translating the December 31, 20X1, trial balance from Swiss francs to dollars

  Explain the term cost of sales

Explain the term cost of sales is it likely that the balance sheet of this company includes inventory? Explain operating expenses? What does the term mean

  Identify one industry that records unearned revenue

Can you identify one industry that records unearned revenue? Remember to include an explanation to support your response. I work for my City and they take deposits to start a service.

  Deviation from unity of the current gain

A current-mirror-loaded MOS differential amplifier is found to have a differential voltage gain Ad of 50 V/V and a CMRR of 60 dB. If the output resistance of the bias current source is 20 Kω and the output resistance of the current-mirror load is..

  Calculate the amount of the annual rental payment

On January 01 2011 palmer company leased equipment to woods corporation, Calculate the amount of the annual rental payment

  Recalculate current ratio for the LIFO reserve

Calculate the company's 2017 current ratio with the numbers as reported, then recalculate after adjusting for the LIFO reserve.

  How much were sales for the period

Finished goods inventory decreased by $75,000. If gross profit was $2,400,000, how much were sales for the period

  Discuss how the sophistication of the company computer

Discuss how the sophistication of the company computer system impacts the accounting output and, alternatively, how the requirements for accounting outputs impact the design of the accounting information system.

  Discuss the importance of accounting independence

Discuss the importance of accounting independence in accounting information systems. Give an example of where this concept is important (use an example other than inventory control).

  Describe the accounting process used to account

Accounting for frequent flyer points: fact or fiction - Describe the accounting process used to account for frequent flyer points prior to the adoption of IFRS

  What is the carrying value of the bonds as of December

On January 1, 2020, Junibond issued 5-year 10%, P10,000,000 for P10,246,744. What is the carrying value of the bonds as of December

  Which account is increase when you buy merchandise inventory

Which of these is true about the normal balance of an income summary? When using a periodic inventory method, which account is increased when you buy merchandise inventory?

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