Concord Growth Farms, a farming cooperative, is considering purchasing a tractor for $568,580. The machine has a 10-year life and an estimated salvage value of $54,000. Delivery costs and set-up charges will be $13,900 and $440, respectively. Concord Growth uses straight-line depreciation and has a required rate of return of 9%. Concord Growth estimates that the tractor will be used five times a week with the average charge to the individual farmers of $440. Fuel is $60 for each use of the tractor. The present value of an annuity of 1 for 10 years at 9% is 6.41766. Click here to view PV tables. For the new tractor, compute the: (a) (b) Your answer is correct. Cash payback period. (Round answer to 1 decimal places, e.g. 15.2.) Cash payback period 5.9 years eTextbook and Media Attempts: 1 of 2 used * Your answer is incorrect. Net present value. (Round factor values to 5 decimal places, e.g. 15.11212. Round Intermediate calculations and final answer to O decimal places, e.g. 5,275.) Net present value $ eTextbook and Media 50320

Concord Growth Farms, a farming cooperative, is considering purchasing a tractor for $568,580. The machine has a 10-year life and an estimated salvage value of $54,000. Delivery costs and set-up charges will be $13,900 and $440, respectively. Concord Growth uses straight-line depreciation and has a required rate of return of 9%. Concord Growth estimates that the tractor will be used five times a week with the average charge to the individual farmers of $440. Fuel is $60 for each use of the tractor. The present value of an annuity of 1 for 10 years at 9% is 6.41766. Click here to view PV tables. For the new tractor, compute the: (a) (b) Your answer is correct. Cash payback period. (Round answer to 1 decimal places, e.g. 15.2.) Cash payback period 5.9 years eTextbook and Media Attempts: 1 of 2 used * Your answer is incorrect. Net present value. (Round factor values to 5 decimal places, e.g. 15.11212. Round Intermediate calculations and final answer to O decimal places, e.g. 5,275.) Net present value $ eTextbook and Media 50320

Fundamentals Of Financial Management, Concise Edition (mindtap Course List)

10th Edition

ISBN:9781337902571

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter12: Cash Flow Estimation And Risk Analysis

Section: Chapter Questions

Problem 10P: Dauten is offered a replacement machine which has a cost of 8,000, an estimated useful life of 6...

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The Scampini Supplies Company recently purchased a new delivery truck. The new truck cost $22,500, and it is expected to generate net after-tax operating cash flows, including depreciation, of $6,250 per year. The truck has a 5-year expected life. The expected salvage values after tax adjustments for the truck are given here. The company’s cost of capital is 10%. Should the firm operate the truck until the end of its 5-year physical life? If not, then what is its optimal economic life? Would the introduction of salvage values, in addition to operating cash flows, ever reduce the expected NPV and/or IRR of a project?
Dauten is offered a replacement machine which has a cost of 8,000, an estimated useful life of 6 years, and an estimated salvage value of 800. The replacement machine is eligible for 100% bonus depreciation at the time of purchase- The replacement machine would permit an output expansion, so sales would rise by 1,000 per year; even so, the new machines much greater efficiency would cause operating expenses to decline by 1,500 per year The new machine would require that inventories be increased by 2,000, but accounts payable would simultaneously increase by 500. Dautens marginal federal-plus-state tax rate is 25%, and its WACC is 11%. Should it replace the old machine?
Grouper Growth Farms, a farming cooperative, is considering purchasing a tractor for $559,050. The machine has a 10-year life and an estimated salvage value of $43,000. Delivery costs and set-up charges will be $12,800 and $410, respectively. Grouper Growth uses straight-line depreciation and has a required rate of return of 9%. Grouper Growth estimates that the tractor will be used five times a week with the average charge to the individual farmers of $410. Fuel is $55 for each use of the tractor. The present value of an annuity of 1 for 10 years at 9% is 6.41766. Click here to view PV tables. For the new tractor, compute the: (a) Your answer has been saved. See score details after the due date. Cash payback period. (Round answer to 1 decimal places, e.g. 15.2.) Cash payback period (b) Net present value Net present value. (Round factor values to 5 decimal places, e.g. 15.11212. Round Intermediate calculations and final answer to O decimal places, e.g. 5,275.) Save for Later 6.2 $…
Grouper Growth Farms, a farming cooperative, is considering purchasing a tractor for $559,050. The machine has a 10-year life and an estimated salvage value of $43,000. Delivery costs and set-up charges will be $12,800 and $410, respectively. Grouper Growth uses straight-line depreciation and has a required rate of return of 9%. Grouper Growth estimates that the tractor will be used five times a week with the average charge to the individual farmers of $410. Fuel is $55 for each use of the tractor. The present value of an annuity of 1 for 10 years at 9% is 6.41766. Click here to view PV tables. For the new tractor, compute the: (a) Your answer has been saved. See score details after the due date. Cash payback period. (Round answer to 1 decimal places, e.g. 15.2.) Cash payback period (b) 6.2 Your answer has been saved. See score details after the due date. Net present value $ Net present value. (Round factor values to 5 decimal places, e.g. 15.11212. Round Intermediate calculations and…
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