Calculate the present value ratio of the investment

Assignment Help Cost Accounting
Reference no: EM13504819

Comprehensive problem-quantitative and qualitative analysis The following data have been collected by capital budgeting analysts at Sunset Beach, Inc., concerning an investment in an expansion of the company's product line. Analysts estimate that an investment of $150,000 will be required to initiate the project at the beginning of 2013. The estimated cash returns from the new product line are summarized in the following table; assume that the returns will be received in a lump sum at the end of each year:

Required:

a. Calculate the net present value of the proposed investment. Ignore income taxes and round all answers to the nearest $1.

b. Calculate the present value ratio of the investment.

c. What will the internal rate of return on this investment be relative to the cost of capital? Explain your answer.

d. Calculate the payback period of the investment.

e. Based on the quantitative analysis, would you recommend that the product line expansion project be undertaken? Explain your answer.

f. Identify some qualitative factors that you would want to have considered with respect to this project before management proceeds with the investment.

Reference no: EM13504819

Questions Cloud

Explain the resonance forms of 4-methoxybenzaldehyde : Draw all of the resonance forms of 4-methoxybenzaldehyde which contribute to the reducwd electrophilicity of the aldehyde carbon relative to benzaldehyde.
How to calculate the ph of the solution : A solution is made by combining 15.0 mL of 18.0 M acetic acid with 5.50 g of sodium acetate and diluting to a total volume of 1.50 L. Calculate the pH of the solution.
Identify the amount of cash used for capital expenditures : Identify the amount of cash used for capital expenditures from the Investing Activities section. How much cash was provided from the sale of capital assets?
How the ending june balances in the ledger : On June 1 John Stevens opened a real estate office in Hamilton called Stevens Realty. The following transactions were completed for the month of June.
Calculate the present value ratio of the investment : Calculate the net present value of the proposed investment. Ignore income taxes and round all answers to the nearest $1 and calculate the present value ratio of the investment
What is the temperature of the helium : A research balloon bound for the stratosphere is filled at sea level with 800 m3 of helium whose initial temperature is 285 K. What is the temperature of the helium
Explain the carbocation is stabilized by resonance : I understand that benzyl bromide does react in an Sn1 reaction because the carbocation is stabilized by resonance..but what does the product look like
Calculate the net present value in us : Calculate the net present value in US$ of an investment in the fitness center and health spa, assuming that the 2,500-square-foot unit is purchased and then resold at the end of 10 years.
Determine how large is the persons image : A person 1.6 m tall stands 4.9 m from a reflecting globe in a garden. How large is the person's image

Reviews

Write a Review

Cost Accounting Questions & Answers

  Determine what is the ending inventory balance

Deana, Inc. purchased merchandise for $500,000, received credit for purchase returns of $25,000, took purchase discounts of $10,000, and paid transportation in of $20,000. Refer to Deana, Inc. If Deana, Inc. had $20,000 in beginning inventory.

  How could the company have reduced the costs

In a recent year, an oil refinery in Texas City, Texas, on the Houston Ship Channel exploded. The explosion killed 14 people and sent a plume of smoke hundreds of feet into the air. The blast started as a fire in the section of the plant that incr..

  Limitation of break-even analysis

Plot the date of your answer to above inthe form contribution sales graph known as profit volume graph. and to comment on the result shown and state the break- even point.

  Did this company mention a transfer pricing methodology

Did this company mention a transfer pricing methodology in its disclosures? If yes, have they negotiated an advanced pricing agreement with the IRS with respect to transfer pricing?

  Not-for-profit hospital financial statement analysis

Discuss the relative importance of different classifications of assets to total assets. What additional information would you expect to find in the notes to the financial statements about major classification of assets?

  Stigler''s theory

Stigler's 'private interest theory' proposes that regulatory bodies (including accounting standard setters) are made up of individuals who are self-interested, and these individuals will introduce regulation that best serves their own self-interest.

  Determine the amount of the ending inventory

Eloise Camera Shop uses the lower-of-cost-or-market basis for its inventory and Farman Appliance Mart began operations on May 1. It uses a perpetual inventory system.

  Part a of this assignment requires an analysis of certain

part a of this assignment requires an analysis of certain aspects of brown ltdafter studying brown ltd answer the

  What are the approaches to accounting for inventory

What are the two approaches to accounting for inventory that were covered in the course and which inventory method is the bookshop using and which method is the fruit and vegetable stall using?

  Prepare easy fictitious financial statements

Evaluate the detail information - Prepare easy fictitious financial statements and write notes for the fictitious annual report.

  Kilograms produced and sold

Kilograms produced and sold

  Qwilson companys activity for the first six of the current

qwilson companys activity for the first six of the current year is as followsmonthmachine hourselectrical

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