Information for two alternative projects involving machinery Investments follows. Project 1 requires an initial Investment of $245,000. Project 2 requires an Initial Investment of $175,000. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery Selling, general, and administrative expenses Income (a) Compute each project's annual net cash flow. (b) Compute payback period for each Investment. Required A Required B Compute each project's annual net cash flow. Complete this question by entering your answers in the tabs below. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Net cash flow $ S Income Project 1 144,000 76,000 31,000 19.000 18,000 Project 1 $ 144,000 S 76,000 31,000 19,000 $ 18,000 Cash Flow 0 S S Required B > Project 2 $ 124,000 43,000 29,000 31,000 $ 21,000 Project 2 Cash Flow Income 124,000 43,000 29,000 31,000 21,000 S 0

Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter19: Capital Investment
Section: Chapter Questions
Problem 17E: Postman Company is considering two independent projects. One project involves a new product line,...
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Information for two alternative projects involving machinery Investments follows. Project 1 requires an initial Investment of $245,000.
Project 2 requires an Initial Investment of $175,000.
Annual Amounts
Sales of new product
Expenses
Materials, labor, and overhead (except depreciation)
Depreciation-Machinery
Selling, general, and administrative expenses
Income
(a) Compute each project's annual net cash flow.
(b) Compute payback period for each Investment.
Required A Required B
Complete this question by entering your answers in the tabs below.
Compute each project's annual net cash flow.
Annual Amounts
Sales of new product
Expenses
Materials, labor, and overhead (except depreciation)
Depreciation-Machinery
Selling, general, and administrative expenses
Income
Net cash flow
$
S
Income
Project 1
144,000
76,000
31,000
19.000
18,000
Project 1
$ 144,000
S
76,000
31,000
19,000
$ 18,000
Cash Flow
0
S
S
Required B >
Project 2
$ 124,000
43,000
29,000
31,000
$ 21,000
Project 2
Cash Flow
Income
124,000
43,000
29,000
31,000
21,000
S
0
Transcribed Image Text:Information for two alternative projects involving machinery Investments follows. Project 1 requires an initial Investment of $245,000. Project 2 requires an Initial Investment of $175,000. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income (a) Compute each project's annual net cash flow. (b) Compute payback period for each Investment. Required A Required B Complete this question by entering your answers in the tabs below. Compute each project's annual net cash flow. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Net cash flow $ S Income Project 1 144,000 76,000 31,000 19.000 18,000 Project 1 $ 144,000 S 76,000 31,000 19,000 $ 18,000 Cash Flow 0 S S Required B > Project 2 $ 124,000 43,000 29,000 31,000 $ 21,000 Project 2 Cash Flow Income 124,000 43,000 29,000 31,000 21,000 S 0
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