Two equipment investments are estimated as follows:Which investment has the better discounted payback period if i = 14%? Year AВ-$15,000 -$18,00015,0006,50025,0006,5005,0006,50045,0006,50055,0006,5003.

Firstly we shall calculate the Present value of Cash flows. Then, we shall calculate the Cumulative…

Answered: Year A В -$15,000 -$18,000 1 5,000…

Business

Accounting

Year A В -$15,000 -$18,000 1 5,000 6,500 2 5,000 6,500 5,000 6,500 4 5,000 6,500 5 5,000 6,500 3.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Data for two alternatives are as follows: Alternatives A B Investment P35, 000 P50, 000 Annual…

A: NPV is the difference between the Present Value of Cash Inflows and Initial Investment. A project…

Q: A production company is considering the following plans for production improvement: A. B C. Initial…

A: Interest Rate = 6% Project A Initial Cost = 10,000 Equivalent Uniform Annual Benefit = 1,625 N =…

Q: A company is considering a project that has the following cash flows with a WACC of 10.00%. What is…

A: The discounted payback period calculates the time taken to recover the initial cost after…

Q: Your firm is considering this project for a firm with an 8% discount rate: Year A -400,000 -220,000…

A: GIVEN, YEAR A 0 -400000.00 1 55000.00 2 155000.00 3 75000.00 4 125000.00 PAYBACK…

Q: Find the internal rate of return for the following investment (yes I want the actual rate). Is it a…

A: Let IRR = r MARR = 10% Let CFn be the cashflow in year n.

Q: Two investments have the following pattern of expected returns:Investment AYear 1…

A: Part (a): Calculation of BTIRR of the project: Excel spreadsheet:

Q: You invest $12,650 in a project today. You expect to receive cash flows $3,200, $5,160, $4,288,…

A: Discounted payback period is calculated as number of years required for a project to recover the…

Q: A project requires a $34,000 initial investment and is expected to generate end-of-period annual…

A: Solution:- Net Present Value (NPV) means the net present value of cash inflows after adjusting…

Q: Sungsam Electronics has to choose between two investment options Each alternative involves an…

A: Initial Investment = 100,000 Cash Flows: Year Cash Flow - A Cash Flow - B 0 -100,000 -100,000…

Q: Project XYZ has a cost of $200,000 and provides the following annual cash inflows: year 1 $35,000;…

A: Net present value can be calculated by difference between present value of cash flow and initial…

Q: Calculate the NPV if the discount rate is 14% if: 1- Cost investment OMR 13,000. 2- Cash flows:…

A: Net Present Value = Present Value of Future Cash Flows - Initial Investment Cash flows are OMR…

Q: Which alternative in the table below should be selected when the MARR = 5% per year? The life of…

A: Given information : Year (A-DN) (B-A) (C-B) (D-C) 0 $ (800.00) $ (500.00) $ (1,200.00) $…

Q: An equipment with a cost of P 100 000 is expected to generate returns of P 90 000; P 60 000 and P 50…

A: Discount rate = 12% Equipment cost = P100,000 Return in year 1 = P90,000 Return in year 2 = P60,000…

Q: opportunity costing P300,0ÓÓ that is expected to yield the following cash flows over the next six…

A: Pay Back period: is the time period in which the initial cost of investments will be recovered from…

Q: Compare the alternatives shown below on the basis of their present worth, using an interest rate of…

A: Capital budgeting is a financial tool that helps to evaluate a capital investment's profitability…

Q: ssume that the amount of initial investment is $350,000 and the scheduled receipts are $250,000 in…

A: Net Present Value is the difference between the present value of cash inflows and cash outflows.

Q: You are considering investment in the following projects. Assume that your discount rate is 12% per…

A: IRR refers to the internal rate of return and it is that rate at which NPV is nil. NPV (net present…

Q: What is the simple payback period (in years) tor an investment of $565,000 the net annuol income is…

A: Investment = 565,000 Annual Income = 55,000

Q: The cash flows associated with an investment project are as follows: Year Project Y (200 000) 100…

A: Net present value means the difference between present value of cash inflow and present value of…

Q: A. Payback. The company requires all projects to payback within 3 years. Calculate the payback…

A: Payback period = Year of last negative cash flow + (Absolute value of last negative cash flow/Next…

Q: A project has the following cash flows : Year Cash Flows -$12,400 5,530 7,990 5,360 4. -1,500…

A: The capital budgeting technique is used for the purpose of evaluating different projects in order to…

Q: rate of return method. Incremental Rate of Return, % Initial Alternative Investment, $ versus DN, %…

A: Incremental rate of return also known as internal rate of return method. IRR is a discounting…

Q: Your firm has estimated the following cash flows for tw mutually exclusive capital investment…

A: Discounting payback period is calculated by discounting the cash flows of the projects. Discounting…

Q: The incremental cash flows for alternatives P and Q are shown. Determine which should be selected…

A: Internal rate of return method: Internal rate of return method is one of the capital investment…

Q: An investment project has annual cash inflows of $2800, $3700, $ 5100, and $4300, for the next 4…

A: Discount Rate = 9% Cash Flows: Year Cash Flow 0 -5,200 1 2,800 2 3,700 3 5,100 4…

Q: Consider the following investment opportunity: Capital Investment (End of Year 0) Expenses (per…

A: Because you have asked question with multiple parts, we will only solve first 3 parts as per policy…

Q: The project NPV is 14.95. The initial investment 15m. The discount rate is 4.5% per annum. What is…

A: The payback period is one of the capital budgeting techniques which is only used to estimate the…

Q: What is the NPV of the following project if the discount rate is 11%? Round to the nearest…

A: NPV refers to net present value of an investment or a project. It is used in capital budgeting.

Q: 9-17 Compute the (a) net present value, (b) internal Pate of return (IRR), (c) modified internal…

A: Discounted payback period means after how much time the present value of cash inflow is equals to…

Q: Your firm has estimated the following cash flows for two mutually exclusive capital investment…

A: The internal rate of return (IRR) of a project is defined as the discount rate which produces a zero…

Q: A company is considering two projects. The discount rate is 10 percent, and the projects' cash flows…

A: Net present value (NPV) is the difference between the present value of cash inflows and cash…

Q: Raysut cement has taken up a new project with an initial investment of 125000 OMR.The expected…

A: Capital project appraisal involves the evaluation of profitability and liquidity position based on…

Q: Alternative G has a first cost of $250,000 and annual costs of $73,000. Alternative H has a first…

A: The present value is the value of the sum received at time 0. It is the current value of the sum…

Q: An investment project costs X. It is expected to have an annual net cash flow of 0.125X for 20…

A: The payback period refers to the time required by an investment to cover its initial investment.…

Q: The project's payback is 1.5 years, and it has a weighted average cost of capital of 10 percent.…

A: From the payback period, initial cost can be calculated. MIRR is the annual growth rate of future…

Q: Calculate the net present value (NPV), the return on investment (ROI) and the payback period using a…

A: Net present value , return on investment and payback period , all are tools to calculate whether we…

Q: Calculate the net present value (NPV), the return on investment (ROI) and the payback period using a…

A: Payback period is the amount of time the firm takes to recover all the cost of the project. It does…

Q: At what discount rate does the following project have a positive NPV of exactly $1,000? Time 0…

A: Given: NPV = $1,000 Initial investment = -$10,000 Year 1- 7 cash flows = $2,500

Q: Your goal is to be able to withdraw $4,800 for each of the next seven years beginning one year from…

A: Amount need to be invested today = Annual amount withdrawal x Present value factor (12%, 7 years)

Q: Project 1 involves an outlay of $2.5m and gets an annual net income of $1m for 5 years. Project 2…

A: Here, Note: Formula used of ARR is Average Net Income/ Average Investment.

Q: an initial investment of £10,000 has a return of £12,000 after five years. Assuming an annual…

A: NPV is the net present value that can be found out from the present value of cash flow and initial…

Q: The project’s payback is 1.5 years, and it has a weighted average cost of capital of 10 percent.…

A: WACC = 10% Year Cash Flow 0 1 400 2…

Question

Two equipment investments are estimated as follows:Which investment has the better discounted payback period if i = 14%?

Year A
В
-$15,000 -$18,000
1
5,000
6,500
2
5,000
6,500
5,000
6,500
4
5,000
6,500
5
5,000
6,500
3.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

See image. Choices: a. P780,000 b. P720,000 c. P1,440,000 d. P560,000
*Inventories is 110,000 a. 240,000b. 870,000c. 300,000d. 480.000
See image. CHOICES:a. P905,000 b. P895,000 c. P915,000 d. P900,000
How much revenue is recognized in 20x2? a. 4,000,000 b. 8,000,000 c. 6,000,000 d. 0
The following information pertains to Yoyo Projects for the three months ended 31 May 2020:ActualBudgetedMarchRAprilRMayRRevenue (20% for cash and 80% on credit)360 000380 000400 000Purchases (10% for cash 90% on credit)240 000280 000320 000Salaries and wages paid40 00060 00060 000Cash expenses24 00028 00032 000Depreciation2 0002 0002 000Additional Information:a) It is expected that debtors will settle their accounts as follows:• 20 % in the month of invoice• 70% in the month after the month of invoice, and• 5% in the second month after the month of invoice• The remaining 5% is usually written off as bad debts.b) Trade creditors are paid in the month after purchase at a discount of 5%.c) 50% of the salaries and wages are weekly wages. Since wages are paid weekly, usually 10% of the wages are paid in the month following the month in which they were incurred.d) Expenses are paid as they arise.e) The favourable bank balance on 1 April 2020 was R 21 000.RequiredPrepare the Cash Budget of…
Oreo reported the following for the period:Sales P1,000,000Cost of Sales P300,000Operating expenses P100,000Determine the OSD assuming that Oreo is a corporation
Income 31955 , assets 213000, assets at end year, 259000. What return on assets
What amount was recognized as actuarial gain on PBO during the year? 100 000 200 000 240 000 0 What is the benefit expense for 2019? 500 000 795 000 295 000 195 000
how did you get these numbers ? Year 2022: Weighted-Average accumulated expenditure Date Amount Capitalization period Weighted Average Accumulated Expenditures 1-Jan-22 $8,100,000 9/9 $8,100,000 31-Jan-22 $450,000 8/9 $400,000 30-Apr-22 $783,000 5/9 $435,000 31-Aug-22 $1,080,000 1/9 $120,000 Total $10,413,000 $9,055,000
Provide complete solutionsa. ₱48,000 b. ₱100,000 c. ₱136,000 d. ₱160,000
Margaux Corporation A. 800,000B. 1,000,000C. 560,000D. 920,000
6. What amount should be reported as total current assets at December 31, 2021? 17,000,000 17,500,000 15,000,000 16,500,000