User Account

All Pages

To what dollar amount can annual after tax cash flow fall

Assignment Help Accounting Basics
Reference no: EM131585115

Question - Rooney, Inc. is considering the purchase of a new machine costing $750,000. The machine's useful life is expected to be 9 years with no salvage value. The straight-line depreciation method will be used. The net increase in annual after tax cash flow is expected to be $157,000. Rooney estimates its cost of capital to be 12%. (The present value of a $1 annuity for 9 years at 12% is 5.328, and the present value of $1 to be received in 9 years is 0.361.)

a) The net present value of the investment in the machine under consideration is:

b) Upper level managers at Rooney, Inc. are concerned that employee estimates of future cash flows from the new machine may be overly optimistic. To what dollar amount can the annual after tax cash flow fall before the investment in the new machine should be rejected?

Reference no: EM131585115

Questions Cloud

Identify company that might be worth much more : Identify a company (NOT COCA-COLA) that might be worth much more if it were broken into pieces and valued (using EVA) separately.
Design a critical ratio for a computer installation project : Design and plot a critical ratio for a computer installation project that had planned constant, linear progress from 0 to an earned value of 200 over a 100-day.
Determine whether or not her salary is money well spent : What calculations would you make to determine whether or not her salary is money well spent
What are the purposes of accounting codes : What are the purposes of accounting codes? How are they used? Are 'accounting codes' only used in accounting? (be sure to support with research and example)
To what dollar amount can annual after tax cash flow fall : To what dollar amount can the annual after tax cash flow fall before the investment in the new machine should be rejected
What is the target cost for the new widget : If Summit Products requires a 10% return on sales to undertake production, what is the target cost for the new widget
What will be the expected minimum price : JEN Corp. is expected to pay a dividend of $6.00 per year indefinitely. what will be the expected minimum price in light of the dividend payment logistics
What is time cash flow resulting from proposed acquisition : What is the Time 0 (initial) cash flow resulting from the proposed acquisition?
What is the present value of the cash flows : The state lottery's million-dollar payout provides for $1 million to be paid in 25 installments of $40,000 per payment. what is present value of the cash flows?

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd