A project will cost $100,000 and will last 5 years with no salvage value: Revenues Sales $70,000 Operating Expenses: Rent Expense $30,000 Depreciation Expense 10,000 Miscellaneous Expense 8,000 Total Expenses 48,000 Net Income $22,000 Instructions a. Calculate the expected annual rate of return on this project showing calculations to support your answer. b. Calculate the cash payback on this project showing calculations to support your answer.
A project will cost $100,000 and will last 5 years with no salvage value: Revenues Sales $70,000 Operating Expenses: Rent Expense $30,000 Depreciation Expense 10,000 Miscellaneous Expense 8,000 Total Expenses 48,000 Net Income $22,000 Instructions a. Calculate the expected annual rate of return on this project showing calculations to support your answer. b. Calculate the cash payback on this project showing calculations to support your answer.
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter12: Capital Budgeting: Decision Criteria
Section: Chapter Questions
Problem 10P: Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,000 per year...
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![A project will cost $100,000 and will last 5 years with no salvage
value:
Revenues
Sales
$70,000
Operating Expenses:
Rent Expense
$30,000
Depreciation Expense
10,000
Miscellaneous Expense
8,000
Total Expenses
48,000
Net Income
$22,000
Instructions
a. Calculate the expected annual rate of return on this project
showing calculations to support your answer.
b. Calculate the cash payback on this project showing calculations to
support your answer.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3f4e4d84-f48a-4a3a-9c88-716e7042392b%2F0fc2c596-ef5d-4023-84cc-fc7113c50abb%2F90qo8pq_processed.jpeg&w=3840&q=75)
Transcribed Image Text:A project will cost $100,000 and will last 5 years with no salvage
value:
Revenues
Sales
$70,000
Operating Expenses:
Rent Expense
$30,000
Depreciation Expense
10,000
Miscellaneous Expense
8,000
Total Expenses
48,000
Net Income
$22,000
Instructions
a. Calculate the expected annual rate of return on this project
showing calculations to support your answer.
b. Calculate the cash payback on this project showing calculations to
support your answer.
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