User Account

All Pages

Calculate the net present value of the proposed equipment

Assignment Help Accounting Basics
Reference no: EM132531154

Question - Riverbed Industries is considering the purchase of new equipment costing $744,000 to replace existing equipment that will be sold for $111,600. The new equipment is expected to have a $124,000 salvage value at the end of its 2-year life. During the period of its use, the equipment will allow the company to produce and sell an additional 18,600 units annually at a sales price of $12 per unit. Those units will have a variable cost of $7 per unit. The company will also incur an additional $55,800 in annual fixed costs.

Required -

(a) Calculate the net present value of the proposed equipment purchase. Assume that Riverbed uses a 7% discount rate.

(b) Do you recommend that Riverbed Industries invest in the new equipment?

Reference no: EM132531154

Questions Cloud

What is the annual interest expense for the borrower : Assume that the payments are made annually. What is the annual interest expense for the borrower (this is also the annual interest income for the lender)
Economic policies of the australian government : Identify and explain the fundamental principles of microeconomics in the operation of the market system and distinguish the fundamental principles
What would be the maturity value at First Credit : Best Bank also charges an interest rate of 16% but at exact interest. What would be the maturity value at First Credit
How will you differentiate and position job in job market : How would you use these methods to market the job to potential candidates? How will you differentiate and position the job in the job market?
Calculate the net present value of the proposed equipment : Calculate the net present value of the proposed equipment purchase. Assume that Riverbed uses a 7% discount rate
Describe tasks and performance indicators : An evaluation of the current employee status. Describe tasks and performance indicators that contribute to the overall performance on the job.
How much is the annual authorization expense : Adelphi Company expects to use the patent for 7 years after which time it will be worthless. How much is the annual authorization expense for 2019
Compute the ending cash balance : Cash T-account for the above transaction, and compute the ending Cash balance (code each entry with one of the transaction codes
Define benefits and motivations mentioned in the article : Base on the artilce "Hiring the very Best" by Tracy Mullin (2005) Based on the article, consider the approaches to organizational design. Analyze the effects.

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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