company is evaluating a proposal for purchase of equipment which will cost $180,000. The cash inflows from the use of equipment is given below: Year Cash flow S60,000 $40,000 S70,000 $125,000 S35,000 1 3 4 Payback period for the proposal is: a. 3 years b. 2 years с. 4 years d. 3.08 years

company is evaluating a proposal for purchase of equipment which will cost $180,000. The cash inflows from the use of equipment is given below: Year Cash flow S60,000 $40,000 S70,000 $125,000 S35,000 1 3 4 Payback period for the proposal is: a. 3 years b. 2 years с. 4 years d. 3.08 years

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 18EA: Consolidated Aluminum is considering the purchase of a new machine that will cost $308,000 and...

See similar textbooks

Related questions

Q: A company is considering investing in one of two projects for a period of three years. Information…

Q: A construction company is considering procuring one of two types of heavy construction equipment (A…

A: Here in this question, Payback period, benefit cost ratio , Project to be selected and the…

Q: Determine, the number of years the machine must be used to obtain payback at MARR values of, 0%, 8%…

A: The most commonly used capital budgeting technique for evaluating capital expenditure proposals is…

Q: Vista Limited intends purchasing a new machine and has a choice between the following two machines:…

A: Initial Cost of equipment A = R220,000 Initial Cost of equipment B = R240,000 Expected life = 5…

Q: A Corporation is planning to add a new product line to its present business. The new product will…

A: The liquidity and yield theories are those that makes the investor to demand more interest or…

Q: ssuming that capital requirement for new machinery is P135,000; net of sale of present equipment –…

A: Payback period is no. of years required to recover the amount invested.

Q: URGENTLY REQUIRED HKU purchased a face mask making machine to make face mask for the students and…

A: Payback time is the time required to recover the initial cost of the investment.

Q: Perit Industries has $110,000 to invest. The company is trying to decide between two alternative…

A: Answer : Calculate Net present value of each project A and B . Discount rate is 16% Life of project…

Q: The management of Nebraska Corporation is considering the purchase of a new machine costing…

A: Average rate of return is the average cash flow that an investment is likely to provide in each year…

Q: A company is planning to purchase a new machine to expand its production. The machine is costing OMR…

A: NPV is one of the most used capital budgeting technique which helps the investors to make proposal…

Q: A company is considering a machine acquisition. The new machine will cost $ 60.000 and the shipping…

A: Investment Cash flow:- It includes inflow and outflow of cash from the sale and purchase of…

Q: The Books Company plans to invest in a duplicating machine that costs P120,000. The following are…

A: Solution: Year Cash Flow Cumulative Cash flow Salvage value Cumulative Payback 1…

Q: Cedar Ltd has details of two machines which fulfil the company’s future production plans. Only one…

A: The question is based don the concept of Project valuation

Q: Perit Industries has $155,000 to invest. The company is trying to decide between two alternative…

A: The capital is the main requirement for the company to run its operations of business. For this…

Q: DARPA is planning to purchase a new machine. The initial investment required for th $60,000. The…

A: Cash flow diagram shows the how cash is coming in and how cash is going out. It shows the movement…

Q: Nestle Ltd. Production department realized that one of their machines needs to be replaced and the…

A: Net present Value is the difference between Present Value of cash Inflows and Initial Investment.…

Q: Berry Products is considering two pieces of machinery. The first machine costs P50,000 more than the…

A: When the present value of both the machines would be the same, that discount rate would be…

Q: A company is considering two projects. Project I Project II Initial investment $200,000 $200,000…

A: The payback period can be calculated as the number of years it will take for a project to recover…

Q: Oriental Corporation has gathered the following data on a proposed investment project: Investment in…

A: The payback period is the time taken to pay back the investment. In simple words, it is the time…

Q: MNO company is evaluating a proposal for purchase of equipment which will cost S180,000. The cash…

A: Initial investment is $180,000 (Purchase cost of equipment) Year Cash inflows…

Q: Consider a machine that initially cost $6,000 and has these estimated annual expenses and market…

A: Data Given: Initial cost of Machine= $6000 MARR =9% Required:: Economic service life = ?

Q: Company A is contemplating on purchasing an equipment for $100,000. Its expected useful life is 8…

A: MARR = 15% Year Cash Flow Present Value of Cash Flow = Cash Flow / (1+MARR)^Year 0 -100,000…

Q: ABC Company is making a decision whether to invest in a new released equipment for their…

A: The difference between the current value of cash inflows and outflow over a period of time is known…

Q: Home Express Moving Company is considering purchasing new equipment that costs $728.000. s…

A: Present Value: The present value (PV) of a future amount of money or stream of cash flows is the…

Q: Beyer Company is considering the purchase of an asset for $205,000. It is expected to produce the…

A: Net present value is the difference between the present value of cash inflows and present value of…

Q: Beyer Company is considering the purchase of an asset for $210,000. It is expected to produce the…

A: Payback period is the period within which the company recovers its investment amount in a project.

Q: The following details are provided by Doppler Systems: Project A Project B Project C Project D…

A: The Payback period, NPV and profitability index, all are capital budgeting methods. Payback period -…

Q: Kiwanda limited is considering the purchase of a new machine. Two alternatives machines, A and B,…

A: Using excel for calculation and IRR FUNCTION

Q: s in Klang Valley and he is considering to expand his iform and furniture. The following is the…

A: In simple words, the net present value refers to the difference between the discounted value of…

Q: lagement of XYZ Beverage Company is considering to purchase a new equipment to increase the…

Q: equipment has a useful life of five years and a residual value of $75,000. Depreciati using the…

A: Accounting rate of return can be computed using the following formula : ARR=Average net…

Q: A company is considering the purchase of equipment for $270,000. Projected annual cash inflow from…

A: Payback period: It can be defined as the time that is usually taken by an investment before it…

Q: An equipment costing ₱600,000, with a residual value of ₱30,000 at its useful life of five years, is…

A: Year Cash flow 0 -600000 1 350000 2 250000 3 150000 4 100000 5 80000 Discount rate…

Q: Vista Limited intends purchasing a new machine and has a choice between the following two machines:…

A: At IRR, NPV =0 i.e. At IRR, Present value of cash inflows =Initial cash outflows

Q: For the cash flows shown, determine the incremental cash flow between machines B and A for (a) year…

A: Life of A is 3 years and life of B is 4 years. Hence, in year 3, A will be replaced with the first…

Q: Rihanna Company is considering purchasing new equipment for $333,700. It is expected that the…

A: Payback period: Payback period is the time in which an investment reaches its break-even point. In…

Q: Harper Corporation has the following information about the purchase of a new piece of equipment:…

A: Gross profit is $50,000 per year Cost of equipment is $130,000 Salvage value at the end of the 8 th…

Q: ITS URGENT. HKU purchased a face mask making machine to make face mask for the students and staffs…

A: Payback period is the number of years required to cover the cost of the investment

Q: Purchase and installation of new equipment $12,000 Sale price of replaced equipment $ 6,000 Book…

A: Calculation = 12000 - ( 6000 - 1000*.4) + ( 2000 - 1000) = 12000 - ( 6000 - 400) + 1000 = 12000 -…

Q: A company is investigating two production options of the manufactured switches that have the…

A: For Present worth analysis, net present value is calculated. NPV is present value of inflows less…

Q: Currie Company has an opportunity to purchase a forklift to use in its heavy equipment rental…

Q: Bunnings Ltd is considering to invest in one of the two following projects to buy a new equipment.…

A: Given information: Required rate of return is 8% Maximum payback criterion is 2 years

Q: Azimuth Company was considering the purchase of equipment. Details on the equipment are as follows:…

Q: This question is based on the following information: Sphinx Company is planning to invest in a…

A: Introduction: The payback period is the time it takes for an asset's net cash flows to return its…

Q: MNO company is evaluating a proposal for purchase of equipment which will cost $180,000. The cash…

A: Payback periods means the time taken by the equipment to completes the cost of the it. It is the…

Q: The management of XYZ Beverage Company is considering to purchase a new equipment to increase the…

A: Payback period: It can be defined as the time that is taken by an investment before it starts…

Q: RLC Manufacturing is planning to purchase a cutting equipment. Information are as follows:…

A: PV is the current worth of cash flows that are expected to occur in the future.

Q: repare a schedule that shows the applicable cash flows and other relevant items for this decision…

A: Payback Period: It is the period in which the cost of the investment/project is recovered. The…

Q: The following data are accumulated by Lingle Company in evaluating the purchase of $180,000 of…

A: Calculate net present value : given purchase price of equipment = $180,000 the required rate of…

Question

MNO company is evaluating a proposal for purchase of equipment which will cost
$180,000. The cash inflows from the use of equipment is given below:
Year
Cash flow
S60,000
$40,000
S70,000
S125,000
S35,000
1
3.
4.
Payback period for the proposal is:
3 years
b. 2 years
c. 4 years
d. 3.08 years
a.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Consolidated Aluminum is considering the purchase of a new machine that will cost $308,000 and provide the following cash flows over the next five years: $88,000, 92,000, $91,000, $72,000, and $71,000. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return in Excel, see Appendix C.
Garnette Corp is considering the purchase of a new machine that will cost $342,000 and provide the following cash flows over the next five years: $99,000, $88,000, $92,000. $87,000, and $72,000. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return in Excel. see Appendix C.
Project A costs $5,000 and will generate annual after-tax net cash inflows of $1,800 for five years. What is the NPV using 8% as the discount rate?
MNO company is evaluating a proposal for purchase of equipment which will cost $180,000. The cash inflows from the use of equipment is given below: Year Cash flow $60,000 $40,000 S70,000 $125,000 $35,000 1 3 4 Payback period for the proposal is: а. 3 years b. 2 years c. 4 years d. 3.08 years
Assignment equipment, the useful life of which is four years. The net cash flows for the two projects are provided in the table below: Net Cash Flow (GH¢) Project Year 1 Year 2 Year 3 Year 4 1 2,550 2,450 1,700 1,400 1,240 1,550 2,100 3,800 end of its life. i. Find the payback period for each project. Establish the net present value for each project using discount rate of 20%. Establish the net present value for each project using discount rate of 25%. Determine the internal rate of return for each project. iii. iv. Using the payback criterion and the internal rate of return criterion advice the proprietor on the project he should undertake, giving reasons for your choice of project. V. 70
MNO company is evaluating a proposal for purchase of equipment which will cost $180,000. The cash inflows from the use of equipment is given below: Year Cash flow $60,000 $40,000 $70,000 $125,000 $35,000 4. Payback period for the proposal is: a. 3 years b. 2 years c. 4 years d. 3.08 years DELL 123 45
A project has estimated annual net cash flows of $63,800. It is estimated to cost $740,080. Determine the cash payback period. Round the answer to one decimal place.____________ years
A concrete vibrating equipment will be purchased for a cost of $107,425. After a useful life of 5 years it is assumed the equipment will be sold for $33,450. Assume interest of 7.5% for borrowing money, 4.3% for risk, and 2.2% as the equivalent interest rate fortaxes, insurance, and storage, Calculate the annual ownership cost and the cost per hour assuming the equipment will be used 1920 hr. /yr.
A company can purchase a piece of equipment for $4,230. The equipment has a three-year life and will produce cash inflows of $1,350 in each of the first and second years and $3,110 in the third year. What is the project's simple payback period (in number of years) assuming that the cash inflows are received uniformly over each respective year? Options 2.31 2.37 2.43 2.49 2.55
company investment on a machine costing of P40,000 and has a life of 5 years. Yearly cash inflows are as follows: Year 1-P18,000; Year 2-P12,000; Year 3-P10,000; Year 4-P9,000; and Year 5-P6,000. Calculate Net present value at 10% and PI. Will the company accept or reject the project? Complete the table below. 2. A Year Cash flows PV Factor @10% PV 2. 4 Total PV Less-investment Net Present Value PI=
A project has an initial cost of $7,900 and cash inflows of $2,100, $3,140, $3,800, and $4,500 a year over the next four years, respectively. What is the payback period? Select one: A. 2.28 years B. 3.36 years C. 3.28 years D. 3.70 years E. 2.70 years
A project has estimated annual net cash flows of $53,400. It is estimated to cost $598,080. Determine the cash payback period. Round the answer to one decimal place.fill in the blank 1 years