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Question;122. (Ignore income taxes in;this problem.) Lajeunesse Limos, Inc., is considering the purchase of a;limousine that would cost $195,661, would have a useful life of 9 years, and;would have no salvage value. The limousine would bring in cash inflows of;$47,000 per year in excess of its cash operating costs.;Required;Determine the internal rate of return on the investment in the new;limousine. Show your work!;14-51;Determine the internal rate;of return on the investment in the new automated molding machine. Show your;work!;124. (Ignore income taxes in;this problem.) The management of an amusement park is considering purchasing a;new ride for $40,000 that would have a useful life of 15 years and a salvage;value of $6,000. The ride would require annual operating costs of $22,000;throughout its useful life. The company's discount rate is 12%. Management is;unsure about how much additional ticket revenue the new ride would;generate-particularly since customers pay a flat fee when they enter the park;that entitles them to unlimited rides. Hopefully, the presence of the ride;would attract new customers.;Required;How much additional revenue would the ride have to generate per;year to make it an attractive investment?;14-52;Required;a. Ignoring any salvage value, how large would the additional cash;flow per year from the intangible benefits have to be to make the investment in;the automated equipment financially attractive?;b. Ignoring any cash flows from intangible benefits, how large would;the salvage value of the automated equipment have to be to make the investment;in the automated equipment financially attractive?;126. (Ignore income taxes in this problem.) The management of;Kniffin Corporation is investigating the purchase of a new satellite routing;system with a useful life of 9 years. The company uses a discount rate of 9% in;its capital budgeting. The net present value of the investment, excluding its;intangible benefits, is -$717,002.;Required;How large would the additional cash flow per year from the;intangible benefits have to be to make the investment in the automated;equipment financially attractive?;14-53;How;large would the salvage value of the telecommunications equipment have to be to;make the investment in the telecommunications equipment financially attractive?;128. (Ignore income taxes in this problem.) Mcniel Corporation is;considering the following three investment projects;Required;Rank the investment projects using the project profitability;index. Show your work!;14-54;The only cash outflows are the initial investments in the;projects. Required;Rank the investment projects using the project profitability;index. Show your work;14-55;Required;a.;Compute the payback period;on the new equipment.;b.;Compute the simple rate of;return on the new equipment.;131. (Ignore income taxes in;this problem.) Sloman Company is considering purchasing a machine that would;cost $436,800 and have a useful life of 5 years. The machine would reduce cash operating;costs by $132,364 per year. The machine would have no salvage value.;Required;a.;Compute the payback period;for the machine.;b.;Compute the simple rate of;return for the machine.;14-56;a. Compute the payback period for the machine.;b.;Compute the simple rate of;return for the machine.;133. (Ignore income taxes in;this problem.) Whitmarsh Corporation is considering a project that would;require an initial investment of $334,000 and would last for 9 years. The;incremental annual revenues and expenses for each of the 9 years would be as;follows;At the end of the project, the scrap value of the project's assets;would be $10,000.;Required;Determine the payback period of the project. Show your work!;14-57;Required;Determine the payback period of the project. Show your work!;135. (Ignore income taxes in;this problem.) Varnes Corporation is contemplating purchasing equipment that;would increase sales revenues by $217,000 per year and cash operating expenses;by $109,000 per year. The equipment would cost $324,000 and have a 6 year life;with no salvage value. The annual depreciation would be $54,000.;Required;Determine the simple rate of return on the investment to the;nearest tenth of a percent. Show your work!;14-58;Determine the simple rate of;return on the investment to the nearest tenth of a percent. Show your work!;137. (Ignore income taxes in;this problem.) Seastrand Corporation is investigating automating a process by;purchasing a new machine for $322,000 that would have a 7 year useful life and;no salvage value. By automating the process, the company would save $117,000;per year in cash operating costs. The company's current equipment would be sold;for scrap now, yielding $17,000. The annual depreciation on the new machine;would be $46,000.;Required;Determine the simple rate of return on the investment to the;nearest tenth of a percent. Show your work!;14-59;Required;Determine the simple rate of;return on the investment to the nearest tenth of a percent. Show your work!

 

Paper#50042 | Written in 18-Jul-2015

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