What is the npv of the cost-cutting project

Assignment Help Financial Accounting
Reference no: EM132611905

Question 1: Kerfuffle Corporation is considering the purchase of a new computer system. The cost for the new system, including set-up and delivery costs of $20,000, will be $2 million. The new system will provide annual before-tax cost savings of $650,000 for the next five years. The increased efficiency of the new system will lower net working capital by $150,000 today. The CCA rate on the new system will be 30%. At the end of five years, the system can be salvaged for $125,000. The firm's required rate of return is 15%, and its marginal tax rate is 35%. What is the NPV of this cost-cutting project?

Select one:

Option a. -$24,412.99

Option b. -$22,882.55

Option c. $50,258.43

Option d. $62,147.09

Option e. $63,385.37

Reference no: EM132611905

Questions Cloud

Describe the strategies of walmart : Using Porter's competitive strategies, how would you describe the strategies of Walmart, Macy's, and Target
Summarize the effects of different compounding periods : Summarize the effects of different compounding periods and interest rates on future value of money. a 5-year loan made on June 1
How technology has changed the way business : Evaluate how technology has changed the way business is performed globally? Compare and contrast how technology has helped the business environment
Discuss the importance of professional judgment : Required - Discuss the importance of professional judgment and professional scepticism under the assurance framework
What is the npv of the cost-cutting project : Kerfuffle Corporation, The firm's required rate of return is 15%, and its marginal tax rate is 35%. What is the NPV of this cost-cutting project?
Discuss the four functions of management : Discuss the four functions of management with appropriate examples and state how do the four major management functions
Define the cumulative expenditure curve : Define the Cumulative Expenditure Curve with respect to New Product Development. After that by seeing the curve of high tech product
Major developments characterize current global economy : -Discuss the major developments that characterize current global economy and the challanges these impose on the organizations and industrial sectors
What is the meaning of the term acquisition cost : What is the meaning of the term acquisition cost of operating assets? Give some examples of costs that should be included in the acquisition cost

Reviews

Write a Review

Financial Accounting Questions & Answers

  Assume a customer ordered a used bicycle

1.AuctionCo.com sells used products collected from different suppliers.

  Direct materials costs

The following data relate to direct materials costs for August: Standard costs 4,600 pounds at $5.60 Actual costs 4,700 pounds at $5.50 What is the direct materials price variance.

  Compute return on common shareholders

Determine net operating income after tax (NOPAT) and net income for each alternative and compute return on common shareholders" equity for each alternative (use ending equity).

  What the term cash as used on the cash flow statement

What The term cash as used on the cash flow statement includes all of the following except?? Government of Canada treasury bills

  Foreign-source income-pays foreign taxes for the tax year

Orion, Inc., a U.S. Corporation, reports foreign-source income and pays foreign taxes for the tax year as follows. Orion’s worldwide taxable income is $600,000, and U.S. taxes before the FTC are $210,000 (assume a 35% rate). What is Orion’s U.S. tax ..

  Create the journal entry to record interest on june

BBX records interest at the effective rate and elected the option to report these bonds at their fair value. On December 31, 2011, the fair value of the bonds was $370,000 as determined by their market value on the NYSE. Create the journal entry t..

  The book value of stokes net assets-equity method is applied

Hobson acquires 40% of the outstanding voting stock of Stokes Company on January 1, 2008, for $210,000 in cash. The book value of Stokes's net assets on that date was $400,000, although one of the company's buildings with a $60,000 carrying value, wa..

  Journalize and post the november transactions

Set up the ledger based on the chart of accounts. Journalize (page 1) and post the November transactions. Prepare a trial balance as of November 30, 201X.

  Factory overhead allowed for the actual level of production

The normal capacity of Noel Company is 4,000 units per month. At this volume, budgeted fixed and variable factory overhead are $16,000 and $20,000, respectively. In May, actual production was 4,200 units and actual overhead incurred was $37,900.

  The greater providence deposit and trust embezzlement

Nino Moscardi, president of Greater Providence Deposit & Trust (GPD&T), received an anonymous note in his mail stating that a bank employee was making bogus loans. Moscardi asked the bank’s internal auditors to investigate the transactions detailed i..

  Prepare partial classified balance sheet

Cone Corporation is in the process of preparing its December 31, 2016, balance sheet. There are some questions as to the proper classification of the following items: Prepare a partial classified balance sheet to show how each of the above items shou..

  Correction entry was not done in the general ledger

On a current bank reconciliation, an amount is required to be added with the bank statement balance because in the previous closed accounting period a correction entry was not done in the general ledger.  If the cash account needs to be debited, what..

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