Reference no: EM132770486
Bob Jensen Inc. purchased a $650,000 machine to manufacture specialty taps for electrical equipment. Jensen expects to sell all it can manufacture in the next 10 years. To encourage capital investments, the government has exempted taxes on profits from new investments. This legislation is to be in effect for the foreseeable future. The machine is expected to have a 10-year useful life with no salvage value. Jensen uses straight-line depreciation. The net cash inflow is expected to be $150,000 each year for 10 years. Jensen uses a $% discount rate in evaluating capital investments. Assume, for simplicity, that MACRS depreciation rules do not apply.
Required:
Using Excel (including built-in functions for NPV, IRR, and MIRR), compute the following for the above-referenced investment:
Problem 1. The payback period, under the assumption that cash inflows occur evenly throughout the year. (Do not round intermediate calculations. Round your final answer to 1 decimal place.)
Problem 2. The accounting (book) rate of return based on (a) initial investment, and (b) average investment. (Round your final answers to 1 decimal place.)
Problem 3. The net present value (NPV) of the proposed investment under the assumption that cash inflows occur at year-end. (Do not round intermediate calculations. Round your final answer to nearest whole dollar amount.)
Problem 4. The present value payback period, in years, of the proposed investment under the assumption that cash inflows occur evenly throughout the year. (Note: because of this assumption, the present value calculations will be approximate, not exact.) To calculate present value amounts, use the appropriate factors from Appendix C, Table 1. (Do not round intermediate calculations. Round your final answer to 1 decimal place.)
Problem 5. The internal rate of return (IRR). (Do not round intermediate calculations. Round your final answer to 1 decimal place.)
Problem 6. The modified internal rate of return (MIRR). (Do not round intermediate calculations. Round your final answer to 1 decimal place.)(In conjunction with this requirement, you might want to consult either of the following two references: MIRR Function and/or IRR in Excel.)
|
What would be a vicarious fear for you
: What would be a vicarious fear for you, and where would you think it would come from? Do we really have "free will" and a choice on whether to commit a criminal
|
|
Find How would Wilbur and Orville each value stock
: Find How would Wilbur and Orville each value this stock? Wilbur and Orville are brothers. They're both serious investors, but they have different approaches
|
|
Prepare the journal entries to record the sale and payments
: Prepare the journal entries to record the sale and subsequent payments assuming Maxiant Corporation uses the net method of accounting for receivables.
|
|
What are ideas for reducing healthcare costs in america
: Based upon your learning here and your own experiences with the healthcare industry, what are your own ideas for reducing healthcare costs in America?
|
|
Compute accounting book rate of return
: Compute accounting (book) rate of return based on (a) initial investment, and (b) average investment. (Round your final answers to 1 decimal place.)
|
|
CM220 College Composition Assignment
: CM220 College Composition Assignment Help and Solution - Purdue University Global, USA - Assessment Writing Service
|
|
How would you describe the elasticity of demand
: Demand function specifies other factors that management will often consider, including the design and packaging of products, the amount and distribution.
|
|
What is the cost of materials purchased
: Utility cost (OH) is 62,500; Indirect materials used is 5,000 and indirect labor cost is 2,000. What is the cost of materials purchased during 2014?
|
|
Describe in detail the main issues of the case
: Provide a summary of the company, and the facts and issues of the case. Describe in detail the main issues of the case. Answer and explain the following three.
|