Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. bianchi company is considering a project that woul

Bianchi Company is considering a project that would have a ten-year life and would require...

70.2K

Verified Solution

Question

Accounting

Bianchi Company is considering a project that would have a ten-year life and would require a $3,330,000 investment in equipment. At the end of ten years, the project would terminate, and the equipment would have no salvage value. The project would provide net operating income each year as follows:

Sales $ 2,800,000
Variable expenses 1,750,000
Contribution margin 1,050,000
Fixed expenses:
Fixed out-of-pocket cash expenses $ 310,000
Depreciation 333,000 643,000
Net operating income $ 407,000

All of the above items, except for depreciation, represent cash flows. The company's required rate of return is 15%.

Required:

a. Compute the project's net present value. b. Compute the project's internal rate of return. c. Compute the project's payback period. d. Compute the project's simple rate of return.

e. Should Bianchi invest in the project?

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Biology
1.2K views

Assuming DNA polymerization by each polymerase in the DNA Pol III holoenzyme proceeds at a rate...

Physics
1.2K views

A person with axial hypermetropia has a lens-retina distance of 1.9 cm and the maximum optical...

General Management
1.2K views

Marketing strategy for the introduction of E-bicycles

Algebra
1.2K views

Question 2 18 points The equation for compound interest is A P 1 7 where...

Accounting
1.2K views

G Question 19 1 points SAVE ANSWER John has set up a business that sells...

Accounting
1.2K views

nment Exercise 23-18 Indicate which of the four perspectives in the balanced scorecard is most...

Accounting
1.2K views

Action Items Read the article below: Information Systems and Internal Control. Write: Develop a...

Accounting
1.2K views

Just pretend you are starting a new business and need to create a budget. Write...

Accounting
1.2K views

Which of the following statements is NOT true? a. Professional judgment is very important in...

Accounting
1.2K views

On July 1, 2016, the first day of its 2017 fiscal year, the City of...

Accounting
1.2K views

Marty's Landscaping, Inc. Danger of Business Failure George J. Davis, a management consultant,...

Accounting
1.2K views

Help ASAP!!!! The project life is 7 years and the MARR is 10%. The initial...