Concept explainers
(a)
To identify:
Incremental earnings from purchase of machine X.
Introduction:
Incremental earnings are the result of extra efforts or resources put in, during a specified period by a company, usually depicted as growth rate percentage, it reflects the additional income from previous period.
(b)
To identify:
Introduction:
Free Cash Flow refers to the cash available with the firm, which can be invested in assets. It is important to calculate before taking investment decision.
(c)
To identify:
Introduction:
Net Present Value refers the difference between present value of cash flows and present value of
(d)
To identify:
Net present value in the worst case and in best case.
Introduction:
Net Present Value refers the difference between present value of cash flows and present value of cash outflows.
(e)
To identify:
Break-even sales and cost of goods sold from expansion.
Introduction:
Break-even refers to the point at which firm did not gain or loss any amount that is it just cover its variable cost.
(f)
To identify:
The additional level of sales per year that would justify the purchasing of larger machine.
Introduction:
Free Cash Flow refers to the cash available with the firm, which can be invested in assets. It is important to calculate before taking investment decision.
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