Compute the annual cash inflow over the project life

Assignment Help Managerial Accounting
Reference no: EM133160263

Question - Arvin Glass Co. is considering an expansion of an existing product line. The additional plant and equipment, which will cost P8,000,000, will be depreciated on a straight-line basis over its 20-year economic life. Sales are expected to equal P12,000,000 per year, and manufacturing and other operating costs are expected to equal P9,000,000 per year. These sales will require additional net working capital of P1,000,000. The plant and equipment are expected to have a salvage value of P2,000,000. The tax rate is 40%. The require rate of return is 10%.

Required -

a. Compute the net cost of investment.

b. Compute the annual cash inflow over the project's life.

c. Compute the cash inflow upon project termination.

d. Compute the NPV of the proposed expansion.

Reference no: EM133160263

Questions Cloud

Present value in accounting measurement : what is the objective of using present value in accounting measurement?
What is the npv of the project : The zero-coupon 1-year T-bill has a yield to maturity of 1%. The zero-coupon 5-year T-note has a yield to maturity of 2.5%. What is the NPV of the project
Improve current business and professional practice : Describe, in detail, how organizational culture can shape, inform, and improve current business and professional practice related to this topic.
Failure of organizational interventions : What contributes to the success or failure of organizational interventions? What elements should OD practitioners consider when selecting an intervention?
Compute the annual cash inflow over the project life : The plant and equipment are expected to have a salvage value of P2,000,000. Compute the annual cash inflow over the project life
How should hytec reward its employees based on performance : Briefly, How should Hytec reward its employees based on performance?
Prepare the journal entry to record year two depreciation : Turquoise Associates bought a machine at the beginning of the year at a cost of $17,500. Prepare the journal entry to record Year two depreciation
By how much would hvhs reduce its investment in inventory : By how much would HVHS reduce its investment in inventory if it could improve its inventory days to meet the industry average
How much will you have after years : You save 550 per month for retirement in an account that earns 6% interest per year, compounded monthly, how much will you have after 36 years

Reviews

Write a Review

Managerial Accounting Questions & Answers

  Manage budgets and financial plans

Explain the budgeting process and its importance to a business, identifying the components of different budgets, forecast estimates for inclusion in the budgets.

  Prepare a retained earnings statement

Prepare a retained earnings statement for the year and Prepare a stockholders' equity section of given case.

  Prepare a master budget for the three-month period

Prepare a master budget for the three-month period.

  Construct the companys direct labor budget

Construct the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced.

  Evaluate the predetermined overhead rate

Evaluate the Predetermined Overhead Rate

  Determine the company''s bid

Determine the company's bid if activity-based costing is used and the bid is based upon full manufacturing cost plus 30 percent.

  Compute the pool rates for the different activities

Complete the schedule to compute the pool rates for the different activities.

  Prepare Company financial statements

Prepare Company financial statements

  Prepare an analysis of terracycles

This individual assignment is based on the TerraCycle Inc.

  Discuss the ethical issues

Discuss the ethical issues

  Political resources in emerging markets

Calculate the GDP in Income Approach  and Expenditure Approach

  Management accounting - ehsan electronics company

A new plant accountant suggested that the company may be able to assign support costs to products more accurately by using an activity based costing system that relies on a separate rate for each manufacturing activity that causes support costs.

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