Homework Answers
Answer 4 d 5 years It is equal to the number of years taken to recover initial cost of investment.
Answer 6 b 2.75 years
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4. Tam Company is negotiating for the purchase of equipment that would cost $100,000, with the...
B2B Co. is considering the purchase of equipment that would allow the company to add a...
B2B Co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is expected to cost $120,000 with a 12-year life and no salvage value. It will be depreciated on a straight-ine basis. The company expects to sell 48,000 units of the equipment's product each year. The expected annual income related to this equipment follows. 75,000 Sales Costs Materials, labor, and overhead (except depreciation on new equipment) Depreciation on...
B2B Co. is considering the purchase of equipment that would allow the company to add a...
B2B Co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is expected to cost $456,000 with a 12-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 182,400 units of the equipment's product each year. The expected annual income related to this equipment follows. $ 285,000 Sales Costs Materials, labor, and overhead (except depreciation on new equipment) Depreciation...
B2B Co. is considering the purchase of equipment that would allow the company to add a...
B2B Co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equi pment is expected to cost $192,000 with a 12-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 76,800 units of the equipment's product each year. The expected annual income related to this equipment follows. $120,000 Sales Costs Materials, labor, and overhead (except depreciation on new equipment) Depreciation...
Wright Corp. is considering the purchase of a new piece of equipment, which would have an...
Wright Corp. is considering the purchase of a new piece of equipment, which would have an initial cost of $1,000,000 and a 5-year life. There is no salvage value for the equipment. The increase in cash flow each year of the equipment's life would be as follows: Year 1 $ 375,000 Year 2 $ 350,000 Year 3 $ 285,000 Year 4 $ 230,000 Year 5 $ 185,000 What is the payback period? 3.00 years 2.96 years 2.39 years 3.51 years
Santana Rey is considering the purchase of equipment for Business Solutions that would allow the company to add a new p...
Santana Rey is considering the purchase of equipment for Business Solutions that would allow the company to add a new product to its computer furniture line. The equipment is expected to cost $220,000 and to have a five-year life and no salvage value. It will be depreciated on a straight-line basis. Business Solutions expects to sell 100 units of the equipment's product each year. The expected annual income related to this equipment follows. $ 377,000 Sales Costs Materials, labor, and...
Question #4 Your company has a piece of equipment that is getting old. The company that sold the ...
The depreciation method used is straight line.
Question #4 Your company has a piece of equipment that is getting old. The company that sold the equipment to you has offered to replace the equipment with something better. The salesman has provided the following information: New Equipment Cost Expected increased cash flow Salvage value of old equipment Salvage value of new equipment Life expectancy Required rate of return Required payback period $1,500,000 $200,000 per year $20,000 $100,000 10 years 10% 8...
verage Rate of Return Lakeland Company is considering the purchase of equipment for $140,000. The equipment...
verage Rate of Return Lakeland Company is considering the purchase of equipment for $140,000. The equipment will expand the Company's production and increase revenue by $35,000 per year. Annual cash operating expenses will increase by $10,000. The equipment's useful life is 10 years with no salvage value. Lakeland uses straight-line depreciation. The income tax rate is 35%. What is the average rate of return on the investment? Do not use negative signs with your answers. Increase in revenue Answer Increase...
The Ayayai Company is planning to purchase $524,500 of equipment with an estimated seven-year life and...
The Ayayai Company is planning to purchase $524,500 of equipment with an estimated seven-year life and no estimated salvage value. The company has projected the following annual cash flows for the investment. Year Projected Cash Flows $201,000 151,000 101,000 78,000 78,000 41,000 41,000 Total $691,000 (a) Calculate the payback period for the proposed equipment purchase. Assume that all cash flows occur evenly throughout the year. 101,000 78,000 78,000 41,000 41,000 Total $691,000 (a) Calculate the payback period for the proposed...
Santana Rey is considering the purchase of equipment for Business Solutions that would allow the company...
Santana Rey is considering the purchase of equipment for Business Solutions that would allow the company to add a new product to its computer furniture line. The equipment is expected to cost $250,000 and to have a five-year life and no salvage value. It will be depreciated on a straight-line basis. Business Solutions expects to sell 100 units of the equipment's product each year. The expected annual income related to this equipment follows. $ 375,000 Sales Costs Materials, labor, and...
2. The management of Nixon Corporation is investigating purchasing equipment that would cost $536,000 and have...
2.
The management of Nixon Corporation is investigating purchasing equipment that would cost $536,000 and have a 7 year life with no salvage value. The equipment would allow an expansion of capacity that would increase sales revenues by $373,000 per year and cash operating expenses by $215,500 per year. (Ignore income taxes.) Required: Determine the simple rate of return on the investment. (Round your answer to 1 decimal place.) Simple rate of return The management of Truelove Corporation is considering...
B2B Co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is expected to cost $120,000 with a 12-year life and no salvage value. It will be depreciated on a straight-ine basis. The company expects to sell 48,000 units of the equipment's product each year. The expected annual income related to this equipment follows. 75,000 Sales Costs Materials, labor, and overhead (except depreciation on new equipment) Depreciation on...
B2B Co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is expected to cost $456,000 with a 12-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 182,400 units of the equipment's product each year. The expected annual income related to this equipment follows. $ 285,000 Sales Costs Materials, labor, and overhead (except depreciation on new equipment) Depreciation...
B2B Co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equi pment is expected to cost $192,000 with a 12-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 76,800 units of the equipment's product each year. The expected annual income related to this equipment follows. $120,000 Sales Costs Materials, labor, and overhead (except depreciation on new equipment) Depreciation...
Santana Rey is considering the purchase of equipment for Business Solutions that would allow the company to add a new product to its computer furniture line. The equipment is expected to cost $220,000 and to have a five-year life and no salvage value. It will be depreciated on a straight-line basis. Business Solutions expects to sell 100 units of the equipment's product each year. The expected annual income related to this equipment follows. $ 377,000 Sales Costs Materials, labor, and...
The depreciation method used is straight line.
Question #4 Your company has a piece of equipment that is getting old. The company that sold the equipment to you has offered to replace the equipment with something better. The salesman has provided the following information: New Equipment Cost Expected increased cash flow Salvage value of old equipment Salvage value of new equipment Life expectancy Required rate of return Required payback period $1,500,000 $200,000 per year $20,000 $100,000 10 years 10% 8...
The Ayayai Company is planning to purchase $524,500 of equipment with an estimated seven-year life and no estimated salvage value. The company has projected the following annual cash flows for the investment. Year Projected Cash Flows $201,000 151,000 101,000 78,000 78,000 41,000 41,000 Total $691,000 (a) Calculate the payback period for the proposed equipment purchase. Assume that all cash flows occur evenly throughout the year. 101,000 78,000 78,000 41,000 41,000 Total $691,000 (a) Calculate the payback period for the proposed...
Santana Rey is considering the purchase of equipment for Business Solutions that would allow the company to add a new product to its computer furniture line. The equipment is expected to cost $250,000 and to have a five-year life and no salvage value. It will be depreciated on a straight-line basis. Business Solutions expects to sell 100 units of the equipment's product each year. The expected annual income related to this equipment follows. $ 375,000 Sales Costs Materials, labor, and...
2.
The management of Nixon Corporation is investigating purchasing equipment that would cost $536,000 and have a 7 year life with no salvage value. The equipment would allow an expansion of capacity that would increase sales revenues by $373,000 per year and cash operating expenses by $215,500 per year. (Ignore income taxes.) Required: Determine the simple rate of return on the investment. (Round your answer to 1 decimal place.) Simple rate of return The management of Truelove Corporation is considering...
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