User Account

All Pages

Determine the expected annual net cash flows

Assignment Help Accounting Basics
Reference no: EM132690458

Problem - Net present value method - Courier Express, Inc., is considering the purchase of an additional delivery vehicle for $48,000 on January 1, 2012. The truck is expected to have a five-year life with an expected residual value of $12,000 at the end of five years. The expected additional revenues from the added delivery capacity are anticipated to be $62,000 per year for each of the next five years. A driver will cost $45,000 in 2012, with an expected annual salary increase of $2,000 for each year thereafter. The insurance for the truck is estimated to cost $3,000 per year.

Required -

a. Determine the expected annual net cash flows from the delivery truck investment for 2012-2016.

b. Calculate the net present value of the investment, assuming that the minimum desired rate of return is 12%. Use the present value of $1 table appearing in Exhibit 1 of this chapter.

c. Is the additional truck a good investment based on your analysis?

Reference no: EM132690458

Questions Cloud

What is specific oppressive condition that exists in country : What is the specific oppressive condition that exists in that country? Which groups of people in that country are most affected by this oppressive condition?
Determine the equal annual net cash flows : Luxmark Hotels is considering the construction of a new hotel for $210 million. Determine the equal annual net cash flows from operating the hotel
Assignment on organizational culture : As a senior management consultant, you've been asked to make recommendations on how to change the organizational culture of Carfrae Filters.
Identify performance dimensions that are important : identify performance dimensions that are important to successful job performance - For each attribute identify behaviours that determine exceptional, average
Determine the expected annual net cash flows : The insurance for the truck is estimated to cost $3,000 per year. Determine the expected annual net cash flows from the delivery truck investment for 2012-2016
Available solutions associated with the problems : Identify two ethical problems in imperfect markets and discuss some of available solutions associated with the problems.
Contrast modernization theory and dependency theory : Contrast modernization theory and dependency theory. Which do you think is more useful for explaining global inequality? Explain, using examples.
Describe the role and the assessment you will be discussing : Describe the role and the assessment you will be discussing. How does the assessment you have chosen advise the effectiveness of the role you selected.
Provide an overview of services offered : Identify life events that might motivate an individual to seek wellness services. Develop a mission statement for the clinic. Provide an overview of services

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