(9) Following is information pertaining to an investment made in an equipment by Dune Incorporation. Using the given information calculate the payback period of the investment.Round the answer to 2 decimal places.Initial Investment$225,000Useful life15 years$12,500Salvage valueAnnual income from investment $17,300Cost of capital12%11.11 years8.14 years13.01 years12 years

Annual depreciation = (Cost - Salvage value) / Useful lifeAnnual cash inflows = Annual net income +…

Following is information pertaining to an investment made in an equipment by Dune Incorporation. Using the given information calculate the payback period of the investmer Round the answer to 2 decimal places. Initial Investment Useful life $225,000 15 years $12,500 Salvage value Annual income from investment $17,300 Cost of capital 12%

Following is information pertaining to an investment made in an equipment by Dune Incorporation. Using the given information calculate the payback period of the investmer Round the answer to 2 decimal places. Initial Investment Useful life $225,000 15 years $12,500 Salvage value Annual income from investment $17,300 Cost of capital 12%

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 16E

See similar textbooks

Similar questions

Harvard Manufacturing Company is considering the following investment proposal: Initial investment: Depreciable assets (straight-line) $48,000 Working capital 4,000 Operations (per year for 4 years): Cash receipts $30,000 Cash expenditures 17,000 Disinvestment: Salvage value of equipment $2,000 Recovery of working capital 4,000 The investment's accounting rate of return (rounded to two decimal points) on the original investment is: Select one: A. 3.85 percent B. 5.88 percent C. 10.71 percent D. 8.33 percent
The following data are accumulated by GreenApple Motors Inc. evaluating two competing capital investment proposals: Testing Equipment Diagnostic Software Amount of investment $44,000 $80,000 Useful life 4 years 7 years Estimated residual value $0 $0 Estimated total income over the useful life $4,840 $28,000 Determine the expected average rate of return for each proposal. If required, round to one decimal place. Testing Equipment % Diagnostic Software %
The following information Company: available for a potential investment for Rose Initial investment P80,000 Net annual cash inflow 20,000 Net present value 36,224 Salvage value 10,000 Useful life 10 yrs. The potential investment's profitability index is A. 2.50 B. 2.85 C. 4.00 D. 1.45
The following data are accumulated by Lone Peak Inc. in evaluating two competing capital investment proposals: 3D Printer Truck Amount of investment $40,000 $50,000 Useful life 7 years 10 years Estimated residual value $ 3,000 $ 6,000 Estimated total income over the useful life $24,080 $36,400
The following data pertain to an investment currently being considered by Kalamazoo Corporation: Investment in the project: $14,000 Net annual cash inflows: 2,800 Working capital: 5,000 Salvage value: 1,000 Life of the project: 10 years The working capital would be released for use elsewhere when the project is completed. What is the net present value of the project, using a discount rate of 8% $2,566 ($251) $251 $5,251
The following data pertain to Sunlight Corp., whose management is planning to purchase an automated tanning equipment. Economic life of equipment – 8 years. Disposal value after 8 years – nil. Estimated net annual cash inflows for each of the 8 years – P81,000. Time-adjusted internal rate of return – 14% Cost of capital of Sunlight Corp – 16% The table of present values of P1 received annually for 8 years has these factors: at 14% = 4.639, at 16% = 4.344 Depreciation is approximately P46,970 annually. Find the required increase in annual cash inflows in order to have the time-adjusted rate of return approximately equal the cost of capital.
The Short-Line Railroad is considering a $175,000 investment in either of two companies. The cash flows are as follows: Year Electric Company Water Works 1 $ 80,000 $ 35,000 5 25,000 60,000 3 70,000 80,000 4 to 10 30,000 40,000 Compute the payback period for both companies. Note: Round your answers to 1 decimal place. Electric Company : Years Water Works: Years
Harper Corporation has the following information about the purchase of a new piece of equipment: Cash revenues less cash expenses $50,000 per year Cost of equipment $130,000 Salvage value at the end of the 8th year $22,000 Increase in working capital requirements $35,000 Tax rate 25 percent Life 8 years The cost of capital is 13 percent. Required: Calculate the following assuming straight-line depreciation: Calculate the accrual accounting rate of return on original investment for…
Atotal of 10,000 was invested in two business ventures. A and B. At the end of the first year, A and B yielded retums of 6% and 5.75% respectively in the original investment. How was the original amount allocated if the total amount earned was $588.75?
CC Company invested in a project which required an investment of P10,000 with a salvage value of P1,000 at the end of its 3 year life. The annual net income after income taxes are as follows: Year 1 P3,000 2 4,800 3 7,200 What is the payback period? Group of answer choices 1.897 yrs 1.513 yrs 1.487 yrs 1.385 yrs
Dickinson, a large oil and gas drilling andoperating corporation, has invested over the past6 years in the installation and operation of aFOUNDATION Fieldbus H1 (FF H1) systemdeveloped by Pepperl+Fuchs of Germany. Aproject engineer has collected information onannual net cash flow increases (ΔNCF) generatedby the FF H1 system and the annual investmentsmade by Dickinson in the system. At aninterest rate of 10% per year, determine the PI ofthis endeavor. Has it proven to be economicallyworthwhile? (Note: Problem 9.54 explores thefieldbus implementation further using aspreadsheet.) Year 0 1 2 3 4 5 6 ΔNCF, $10,000 per year 0 5 7 9 11 13 20 Investment, $10,000 15 8 10 0 0 5 10
The company ABC AS is considering investing in a 3D printer. The acquisition takes place on 31.12 year 0 The investment will have the assumptions described in the table on the left. Show the investment's annual cash flow in a table of the number of life years. Purchase of 3D 2 000 000 Freight in connection with the investment 75 000 Adjustments in connection with the investment 30 000 Increased income per year 275 000 Fixed payable costs per year 60 000 Distribution value at the end of the year 5 200 000 Lifetime (number of years) 5