What is the investments net present value

Assignment Help Accounting Basics
Reference no: EM13120939

Robert Huft retires in 6 years. He would have to purchase equipment costing $590,000 to equip the outlet. Other outlets in the fast food chain have an annual net cash inflow of about $140,000. Mr. Anders would close the outlet in 6 years. He estimates that the equipment could be sold at that time for about 10% of its original cost. Mr. Huft's required rate of return is 8%

Required:

1. What is the investment's net present value?
2. Is this an acceptable investment?
3. What is the most he should invest?

Reference no: EM13120939

Questions Cloud

Planned detection risk-inherent risk-control risk : What do following risk categories mean - planned detection risk, inherent risk, control risk, acceptable audit risk? Examples? How do we as auditors deal with them?
Mathematical expression for probability density function : The weight of a .5 cubic yard bag of landscape mulch in uniformly distributed over the interval from 38.5 to 41.5 pounds. Give a mathematical expression for the probability density function.
What is the probability of getting three primes : Assume that 10% of the population is left-handed. If three people are chosen at random, what is the probability that at least one will be left-handed?
What is the investments net present value : Robert Huft retires in 6 years. He would have to purchase equipment costing $590,000 to equip the outlet. Other outlets in the fast food chain have an annual net cash inflow of about $140,000. Mr. Anders would close the outlet in 6 years. He estim..
Understanding the clients business : It is necessary for the auditor to understand the client's business. Why is that the case? How does classifying the client into a safe or risky client affect the audit?
What is the probability of getting an a on the paper : What is the probability of getting an A on the paper? What is the probability of getting an A on the exam?
Determine exact probability of creating a mini license : List the sample space. Determine the exact probability of creating a mini license plate with an E. Give solution exactly in reduced fraction form.
Domain and lagrange multipliers : State the largest possible domain for the definition of the function. f(x,y) = cube-root(y^2-x)

Reviews

Write a Review

 

Accounting Basics Questions & Answers

  Scenario of internal control case

Identify some additional control procedures that the company might implement to reduce the monthly loss from theft of office supplies by employees.

  Computing amount of contribution margin

What is the amount of contribution margin that will be obtained per machine hour on each product? Which product would you recommend that the company work on next week - the orders for product F, product G, or product H? Show computations.

  Determining quick ratio

Water works Inc has a current ratio of 1.33, current liabilities of 540,000 and inventory of 400,000. What is water works quick ratio

  Reported net asset balance of categories

What should be the reported net asset balance of the following categories during 2011: permanent restricted, temporarily restricted, unrestricted.

  Effects on break even points

Would each of the following increase, decrease, or have an indeterminant effect on a firm's breakeven point (unit sales)?

  What would be the impact on the net income

Falcon Co. produces a single product. Its normal selling price is 30.00 per unit. The variable cost are 19.00 per unit. Fixed costs are 25,000 for a normal production run of 5,000 units per month.

  What are internal controls

Explain some common internal controls that a company might have in place. What are they designed to protect? What are the reporting requirements regarding internal controls in the Sarbanes-Oxley Act?

  Acquisition of the dandy dime

When one media company buys another, goodwill is often the most costly asset acquired. World media paid $700,000 to acquire-Journalize World Media's acquisition of The Dandy Dime.

  Social structure and income levels

Identify the social structure and income levels of the social classes in the United States. In your own words describe why a compensation specialist needs to understand this structure.

  Exclusive of the effect of other adjustments

Accounts receivable arising from sales to customers amounted to $40,000 and $35,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $110,000. Exclusive of the effect of other adjustments, t..

  Net cash from operating activities

Why may net cash flow from operating activities on the cash flow statement be different from the amount of net income reported on the income statement?

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