chapter 24 graded homework

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Brief Exercise 24-8

Viera Corporation is considering investing in a new facility. The estimated cost of the facility is $2,154,004. It will be used for 12 years, then sold for $710,900. The facility will generate annual cash inflows of $398,900 and will need new annual cash outflows of $150,600. The company has a required rate of return of 7%. Click here to view PV table.

Brief Exercise 24-2
Hsung Company accumulates the following data concerning a proposed capital investment: cash cost $162,050, net annual cash flows $37,500, and present value factor of cash inflows for 10 years 4.66 (rounded). (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45).)
Determine the net present value, and indicate whether the investment should be made.

Brief Exercise 24-9
Swift Oil Company is considering investing in a new oil well. It is expected that the oil well will increase annual revenues by $124,000 and will increase annual expenses by $72,000 including depreciation. The oil well will cost $422,000 and will have a $11,000 salvage value at the end of its 10-year useful life. Calculate the annual rate of return. (Round answer to 2 decimal places, e.g. 12.47.)

Problem 24-1A
U3 Company is considering three long-term capital investment proposals. Each investment has a useful life of 5 years. Relevant data on each project are as follows.

Exercise 24-10
Vilas Company is considering a capital investment of $191,700 in additional productive facilities. The new machinery is expected to have a useful life of 5 years with no salvage value. Depreciation is by the straight-line method. During the life of the investment, annual net income and net annual cash flows are expected to be $12,700 and $49,200, respectively. Vilas has a 12% cost of capital rate, which is the required rate of return on the investment.

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