BuyFindarrow_forward

Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883

Solutions

Chapter
Section
BuyFindarrow_forward

Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883
Textbook Problem

Cash payback period, net present value method, and analysis

McMoms Publications Inc. is considering two new magazine products. 11w estimated netcash flows from each product are as follows:

Each product requires an investment of $400.000. A rate of 10% has been selected forthe net present value analysis.

Instructions

1. Compute the following for each product:

a. Cash payback period.

b. The net present value. Use the present value of $1 table appearing in this chapter.

To determine

(a)

Concept introduction:

Cash payback period:

The time taken for earning the amount of investment made through the net cash flows.

Net present value method:

It is a method of determining the present value of cash flows over the period by the multiplying the cash flows with the discounting factor of the required rate.

To compute:

The cash payback period for each product.

Explanation

          M.P. Inc.

                           (Amount in $)

    YearC.C.E.H.
    Cash FlowCumulativeCash FlowCumulative
      1  220,000  220,000  188,000  188,000
      2  180,000  400,000  212,000  400,000

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

Why might a company decide to use departmental overhead rates instead of a plantwide overhead rate?

Managerial Accounting: The Cornerstone of Business Decision-Making

What is a database?

Pkg Acc Infor Systems MS VISIO CD

FINANCIAL STATEMENTS AND TAXES Part I of this case, presented in Chapter 3, discussed the situation of DLeon In...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

What does the invisible hand of the marketplace do?

Principles of Microeconomics (MindTap Course List)

Identify eight forms and sources of waste.

Cornerstones of Cost Management (Cornerstones Series)