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QUESTION 24 Basso Company is considering the purchase of a new equipment for $320,000. The equipment...
A company is considering the purchase of a new piece of equipment for $90,000. Predicted annual...
A company is considering the purchase of a new piece of equipment for $90,000. Predicted annual cash inflows from this investment are $36,000 (year 1), $30,000 (year2), $18,000 (year 3), $12,000 (year 4) and $6,000 (year 5). The payback period is:
#2 Cowell Corporation is considering an investment in new equipment costing $160,000. The equipment will be...
#2
Cowell Corporation is considering an investment in new equipment costing $160,000. The equipment will be depreciated on a straight-line basis over a five-year life and is expected to generate net cash inflows of $40,000 the first year, $35,000 the second year, and $82,000 every year thereafter until the fifth year. What is the payback period for this investment? The equipment has no residual value. O A. 2.51 years O B. 3.25 years OC. 3.04 years O D. 4.04 years...
1) A company is considering the purchase of new equipment for $90,000. The projected annual net...
1) A company is considering the purchase of new equipment for $90,000. The projected annual net cash flows are $35,500. The machine has a useful life of 3 years and no salvage value. Management of the company requires a 8% return on investment. The present value of an annuity of $1 for various periods follows: Period Present value of an annuity of $1 at 8% 1 0.9259 2 1.7833 3 2.5771 What is the net present value of...
Exercise 173 Yappy Company is considering a capital investment of $320,000 in additional equipment. The new...
Exercise 173
Yappy Company is considering a capital investment of $320,000 in additional equipment. The new equipment is expected to have a useful life of 8 years with no salvage value. Depreciation is computed by the straight-line method. During the life of the investment, annual net income and cash inflows are expected to be $22,000 and $62,000, respectively. Yappy requires a 10% return on all new investments. Compute each of the following: Indicate whether the investment should be accepted or...
Chapter 26 Question 1: (1 point) Calculate the average rate of return for an equipment that...
Chapter 26 Question 1: (1 point) Calculate the average rate of return for an equipment that has a cost of $320,000, an estimated residual value of $20,000, and is estimated to result in total income of $170,000 over 5 years. Chapter 26 Question 2: (1 point) Calculate the cash payback period for an equipment that has a cost of $200,000. The net cash flows for years 1 through 5 are, $90,000, $60,000, $40,000, $20,000, and $15,000 respectively. Chapter 26 Question...
First Choice Carpets is considering purchasing new weaving equipment costing $730,000. The company's management has estimated...
First Choice Carpets is considering purchasing new weaving equipment costing $730,000. The company's management has estimated that the equipment will generate cash inflows as follows: Year 1 $204,000 2 204,000 3 266,000 4 266,000 5 150,000 Considering the residual value is zero, calculate the payback period. (Round your answer to two decimal places.) A. 4.61 years B. 3.42 years C. 3.70 years D. 3.21 years
determine the payback period method lysis ment is phone tower, they use cu value method, the...
determine the payback period method
lysis ment is phone tower, they use cu value method, the payback period methuu, By using these methods, they can ensure a wise allocation UI TEJE time minimize the risks involved in the investment decision. LO3 Suppose that Neighborhood Communications is considering building a new cell phone tower and has gathered the following information: Purchase price $600,000 Residual value $100,000 Desired payback period 3 years 15% Minimum rate of return The cash flow estimates are...
Exercise 24-1 Payback period computation; uneven cash flows LO P1 Beyer Company is considering the purchase...
Exercise 24-1 Payback period computation; uneven cash flows LO P1 Beyer Company is considering the purchase of an asset for $400,000. It is expected to produce the following net cash flows. The cash flows occur evenly within each year. Year 1 $80,000 Year 2 $80,000 Year 3 $70,000 Net cash flows Year 4 $200,000 Year 3 $15,000 Total $445,000 Compute the payback period for this investment (Cumulative net cash outflows must be entered with a minus sign. Round your Payback...
4. Tam Company is negotiating for the purchase of equipment that would cost $100,000, with the...
4. Tam Company is negotiating for the purchase of equipment that would cost $100,000, with the expectation that $20,000 per year could be saved in cash operating costs. The equipment's estimated useful life is 10 years, with no salvage value. Tam's required rate of return is 12%. The payback period of this investment is: A) 4 years B) 1 year C) 10 years D) 5 years 5. Evans Company is considering rebuilding and selling used alternators for automobiles. The company...
Belmont Corp. is considering the purchase of a new piece of equipment. The cost savings from...
Belmont Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net income after tax of $200,000. The equipment will have an initial cost of $1,000,000 and have an 8-year life. If there is no salvage value of the equipment, what is the payback period? 8 years 5 years 1.6 years 3.08 years
#2
Cowell Corporation is considering an investment in new equipment costing $160,000. The equipment will be depreciated on a straight-line basis over a five-year life and is expected to generate net cash inflows of $40,000 the first year, $35,000 the second year, and $82,000 every year thereafter until the fifth year. What is the payback period for this investment? The equipment has no residual value. O A. 2.51 years O B. 3.25 years OC. 3.04 years O D. 4.04 years...
Exercise 173
Yappy Company is considering a capital investment of $320,000 in additional equipment. The new equipment is expected to have a useful life of 8 years with no salvage value. Depreciation is computed by the straight-line method. During the life of the investment, annual net income and cash inflows are expected to be $22,000 and $62,000, respectively. Yappy requires a 10% return on all new investments. Compute each of the following: Indicate whether the investment should be accepted or...
determine the payback period method
lysis ment is phone tower, they use cu value method, the payback period methuu, By using these methods, they can ensure a wise allocation UI TEJE time minimize the risks involved in the investment decision. LO3 Suppose that Neighborhood Communications is considering building a new cell phone tower and has gathered the following information: Purchase price $600,000 Residual value $100,000 Desired payback period 3 years 15% Minimum rate of return The cash flow estimates are...
Exercise 24-1 Payback period computation; uneven cash flows LO P1 Beyer Company is considering the purchase of an asset for $400,000. It is expected to produce the following net cash flows. The cash flows occur evenly within each year. Year 1 $80,000 Year 2 $80,000 Year 3 $70,000 Net cash flows Year 4 $200,000 Year 3 $15,000 Total $445,000 Compute the payback period for this investment (Cumulative net cash outflows must be entered with a minus sign. Round your Payback...
4. Tam Company is negotiating for the purchase of equipment that would cost $100,000, with the expectation that $20,000 per year could be saved in cash operating costs. The equipment's estimated useful life is 10 years, with no salvage value. Tam's required rate of return is 12%. The payback period of this investment is: A) 4 years B) 1 year C) 10 years D) 5 years 5. Evans Company is considering rebuilding and selling used alternators for automobiles. The company...
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