An anticipated purchase of equipment for $520,000, with a useful life of 8 years and no residual value, is expected to yield the following annual netincomes and net cash flows:Year12345678Net Income$60,00050,00050,00040,00040,00040,00040,00040,000What is the cash payback period?Oa.a. 6 yearsOb. 3 yearsOc. 5 yearsOd. 4 yearsNet Cash Flow$120,000110,000110,000100,00080,00080,00060,00060,000

The payback period is the time period taken by business to cover the initial or original cash…

An anticipated purchase of equipment for $520,000, with a useful life of 8 years and no residual value, is expected to yield the following annual net incomes and net cash flows: Year 1 2 3 4 5 150 6 7 8 Net Income $60,000 50,000 50,000 40,000 40,000 40,000 40,000 40,000 What is the cash payback period? Oa. 6 years Ob. 3 years Net Cash Flow $120,000 110,000 110,000 100,000 80,000 80,000 60,000 60,000

An anticipated purchase of equipment for $520,000, with a useful life of 8 years and no residual value, is expected to yield the following annual net incomes and net cash flows: Year 1 2 3 4 5 150 6 7 8 Net Income $60,000 50,000 50,000 40,000 40,000 40,000 40,000 40,000 What is the cash payback period? Oa. 6 years Ob. 3 years Net Cash Flow $120,000 110,000 110,000 100,000 80,000 80,000 60,000 60,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Calculate the Equivalent X(4) for a project with the following cash flows: First Cost (F.C) = JD 13000, Annual Income for the last 6 years= JD 2400 Operating Cost (O.C.) = JD 30 Income, at the end of the 4th year = JD 5000, Salvage Value (S.V.) = 1800. If n= 9 years and i=7% per year. ( show the CFD and calculations)
The cash flows for two alternatives are shown. The correct equation for computing the AW of Alternative B at 10% per year interest is: A B First Cost, $ |-25,000 |-17000 Annual cost, $ per year -3000 |-3200 Salvage Value, $ |1100 2100 Life, years 3 5 O AW(B)=-17,000(A/P, 10%, 5) -3200 (A/P, 10%, 5)+2100(A/F, 10%, 5) AW(B)=-17,000 (A/P, 10%, 5)-3200-2100(A/F, 10%, 5) AW(B)=-17,000 (A/P, 10%, 15)-3200+2100(A/F, 10%, 15) O AW(B)=-17,000 (A/P, 10%, 5)-3200+2100(A/F, 10%, 5)
Stellan Manufacturing is considering the following two investment proposals: Proposal X Proposal Y $510,000 4 years Investment Useful life Estimated annual net cash inflows received at the end of each year Residual value Depreciation method Annual discount rate 1 2455 N. Compute the present value of the future cash inflows from Proposal Y. Present value of an ordinary annuity of $1: 8% 9% 10% 2 3 6 0.926 1.783 2.577 3.312 3.993 4.623 OA. $255,000 OB. $295,800 OC. $317,520 OD. $272,085 0.917 1.759 2.531 3.240 3.809 4.486 $732,000 5 years 0.909 1.736 2.487 3.170 3.791 4.355 $164,000 $68,000 Straight-line Straight-line 10% $98,000 $0 ... 9%
The cash flow estimates of a project are shown in the table below, and the MARR is 6% per year. Of the following three relations, the correct one to calculate the annual worth of this project is: Cash Flow First cost, S Annual cost, S per year Revenue, S per year Salvage value, S Life, years -200 -50 120 25 10 Relation 1: AW=-200(A/P,6%,10)+70+25(A/F,6%,10) Relation 2: AW=[-200-50(P/A,6%,10)+120(P/A,6%,10)+25(P/F,6%,10)|(A/P,6%,10) Relation 3: AW=-200(F/P,6%,10)+25+(-50+120)(A/P,6%,10) O Relation 1 and 3 OARelation 1 and 2 O Only Relation 1 O Only Relation 3
Q5) For the cash flows shown, determine which service alternative should be selected? Assume that the interest rate = 10% per year A B Initial cost, $ 300,000 600,000 Annual cost, $/year 30,000 Annual cost started at 22,000 year 4, $/year Extra cost every 6 40,000 years, S Cost started at year 4 10,000 to 8 Salvage value, $ 30,000 110,000 Life, Years 8 8 1- Capitalized cost (CC) of Alternative A: A) -493,766 B)-473,766 C)-482,010 D) -461,421 E)-453,730 2- Capitalizes cost (CC) of alternative B: A)-851,844 B)-920,056 C) -875,631 D) -951,844 E)-984,008 3- Which alternative will be selected on the basis of their capitalized cost analyses? Justify your answer.
For the cash flows shown, use an annual worth comparison and an interest rate of 8% per year and detemine which service alternative should be selected. B Initial cost, $ 300000 680000 Annual cost, S/year S0000 30000 Annual cost started at year 4, S/year 15000 Extra cost every 6 years, $ 40000 Salvage value, $ 50000 150000 Life, Years 8. AW of alternative A is: AW of alternative B is: Which alternative will be selected?
The following cash-flow streams need to be analyzed: END OF YEAR CASH-FLOW STREAM $1 $2 $3 $4 5 W 100 200 200 300 1,$300 X 600 – – – – Y – – – – 11,200 Z $200 – $500 – 0,300 a. Calculate the future (terminal) value of each stream at the end of year 5 with a compound annual interest rate of 10 percent. b. Compute the present value of each stream if the discount rate is 14 percent.
Compute the annual-equivalence amount for the following cash flow series at i = 12% $1.600 S1.600 $800 SH00 S800 $500 $500 $1.000 You invest in a piece of equipment costing $50,000. The equipment will be used for two years, and it will be worth $20,000 at the end of three years. The machine will be used for 4,000 hours during the first year, 6,000 hours during the second year, and 5,000 hours during the third year. The expected savings associated with the use of the piece of equipment will be $28,000 during the first year, $40,000 during the second year, and $35,000 during the third year. Your interest rate is 12%. (a) What is the capital recovery cost? (b) What is the annual equivalent worth? (c) What is net savings generated per machine-hour?
The Post Company is considering investing in two alternative projects: Investment Useful life (years) Estimated annual net cash inflows for useful life Residual value Depreciation method Required rate of return What is the accounting rate of return for Project 1? OA. 52.5% B. 20% OC. 30% OD. 7.5% Project 1 $200,000 4 $60,000 $20,000 Straight-line 15% Project 2 $260,000 8 $45,000 $16,000 Straight-line 10%
What is the present value of the following cash flow stream at a rate of 9.0%? Years: 0 1 2 3 CFs: $650 $2,450 $3,175 $4,400 Group of answer choices $7,749.11 $8,967.65 $8,317.65 $10,866.57
Juniper Corporation is considering two alternative investment proposals with the following data: Proposal X $850,000 10 years $100,000 $39,000 Straight-line Investment Useful life Estimated annual net cash inflows for 10 years Residual value Depreciation method Required rate of return How long is the payback period for Proposal Y? A. 8.5 years B. 6.59 years C. 21.79 years O D. 11.82 years 13% Proposal Y $461,000 10 years $70,000 $- Straight-line 12%
Given the following information, calculate the net present value: Initial outlay is $50,000; required rate of return is 10%; current prime rate is 12%; and cash inflows at the end of the next 4 years are $60,000, $30,000, $40,000, and $50,000. a. $87,734 b. $93,542 c. equal to 0 d. less than 0