Blog

Alt’s is contemplating the purchase of a new $188,000 computer-based order entry system. The system will be depreciated straight-line to zero over the system’s five-year life. The system will be worthless at the end of five years. The company will save $56,400 before taxes per year in order processing costs and will reduce its net working capital by $20,000 immediately. The net working capital will return to its original level when the project ends. The tax rate is 21 percent. What is the internal rate of return for this project?

A project has a unit price of $33.98, a variable cost per unit of $11.27, fixed costs of $446,000, and depreciation expense of $47,000. Ignore taxes. What is the accounting break-even quantity?

Blinding Light Co. has a project available with the following cash flows: Year Cash Flow 0 -$11,100 1 $6,500 2 $5,900 3 $5,500 4 $5,000 5 $5,500 What is the project’s IRR?

Mountain Frost is considering a new project with an initial cost of $275,000. The equipment will be depreciated on a straight-line basis to a zero book value over the four-year life of the project. The projected net income for each year is $24,200,$24,900, $29,600, and $19,300, respectively. What is the average accounting return?

A company purchased an asset for $3,400,000 that will be used in a 3-year project. The asset is in the 3-year MACRS class. The depreciation percentage each year is 33.33 percent, 44.45 percent, and 14.81 percent, respectively. What is the book value of the equipment at the end of the project?

A project has a unit price of $38.56, a variable cost per unit of $13.12, fixed costs of $404,000, and depreciation expense of $39,000. Ignore taxes. What is the accounting break-even quantity?

Which of the following countries exists a political system in which a single family rules from generation to generation.

A project has a unit price of $40.16, a variable cost per unit of $7.37, fixed costs of $434,000, and depreciation expense of $42,000. Ignore taxes. What is the accounting break-even quantity?

Mountain Frost is considering a new project with an initial cost of $255,000. The equipment will be depreciated on a straight-line basis to a zero book value over the four-year life of the project. The projected net income for each year is $21,200,$24,700, $25,600, and $16,100, respectively. What is the average accounting return?

Our firm is investing in its production capacity. The expansion will require a $975,000 investment in new property, plant, and equipment. The expansion will increase sales, which will necessitate an investment of $10,000 and $45,000 in new inventory and accounts receivable, respectively. Expanded sales will require more materials from our suppliers, which will increase our accounts payable by $30,000. What is the investment’s initial cost?