A3 Exercise 24-2 (Algo) Payback period, equal cash flows, and depreciation adjustment LO P1Quary Company is considering an investment in machinery with the following information.Initial investment$ 290,000Useful lifeSalvage valueExpected sales per year9 years$ 20,00014,500 unitsMaterials, labor, and overhead (except depreciation)Depreciation-MachinerySelling, general, and administrative expensesSelling price per unit$ 65,25030,0007,250$ 10(•) Compute the investment's annual income and annual net cash flow.(b) Compute the investment's payback period.Complete this question by entering your answers in the tabs below.Required ARequired BCompute the investment's annual income and annual net cash flow.Annual AmountsExpensesIncomeNet cash flowIncomeCash Flow$0$< Required ARequired B >0

(a) Annual Income:Total Sales Revenue: Selling price per unit * Units = $10 * 14,500 = $145,000Cost…

Answered: Exercise 24-2 (Algo) Payback period,…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Exercise 24-2 (Algo) Payback period, equal cash flows, and depreciation adjustment LO P1 Quary Company is considering an investment in machinery with the following information. Initial investment Useful life Salvage value Expected sales per year Required A Required B (a) Compute the investment's annual income and annual net cash flow. (b) Compute the investment's payback period. $ 380,000 Complete this question by entering your answers in the tabs below. Annual Amounts 9 years $ 20,000 19,000 units Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Selling price per unit Compute the investment's annual income and annual net cash flow. Income Net cash flow Required A $ Income 0 $ Cash Flow Required B > 0 $ 85,500 40,000 9,500 $ 10
ime Value of Money and CVP Analysis Assignment i Quary Company is considering an investment in machinery with the following information. The company's required rate of return 14%. (PV of $1, FV of $1, PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Initial investment Useful life Salvage value Expected sales per year $ 258,000 Required A Required B 9 years $ 25,800 12,000 units Years 1-9 Year 9 salvage Totals Complete this question by entering your answers in the tabs below. a. Compute the investment's net present value. b. Using the answer from part a, is the investment's internal rate of return higher or lower than 14%? Hint: It is not necessary to compute the IRR to answer this question. Materials, labor, and overhead (except depreciation) Depreciation Machinery Compute the investment's net present value. Note: Negative net present values should be indicated with a minus sign. Round your present value factor to 4 decimals. Round your answers to the…
ems i Your firm is considering purchasing a machine with the following annual, end-of-year, book investment accounts. Gross investment Less: Accumulated depreciation Net investment Year 0 Year 1 Year 2 Year 3 Year 4 $ 65,000 $ 65,000 $65.000 $ 65,000 $65,000 0 16,250 32,500 48,750 65,000 AAR $ 65,000 $48.750 $ 32.500 $ 16,250 $ 0 The machine generates, on average. $4.900 per year in additional net income. What is the average accounting return for this machine? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g.. 32.16.) Saved
Exercise 24-4 (Algo) Payback period, unequal cash flows, and depreciation adjustment LO P1 A machine can be purchased for $130,000 and used for five years, yielding the following income. This income computation includes annual depreciation expense of $26,000. Income Year 1 $8,800 Year 2 $21,800 Year 3 $57,000 Year 4 $32,900 Year 5 $87,200 Compute the machine's payback period. (Round payback period answer to 2 decimal places.) × Answer is complete but not entirely correct. Year Net Income Depreciation Net Cash Flow Cumulative Net Cash Flow Initial invest $ (130,000) $ (130,000) Year 1 $ 8,800 $ 26,000 34,800 34,800 x Year 2 21,800 26,000 47,800 82,600 × Year 3 57,000 26,000 83,000 130,000 ☑ Year 4 32,900 26,000 Year 5 87,200 26,000 Payback period = 2.57 years
Quary Company is considering an investment in machinery with the following information. Initial investment Useful life Salvage value Expected sales per year (a) Compute the investment's annual income and annual net cash flow. (b) Compute the investment's payback period. Required A Required B Complete this question by entering your answers in the tabs below. $ 335,000 9 years $ 20,000 16,750 units Annual Amounts Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Selling price per unit Compute the investment's annual income and annual net cash flow. Expenses Income Net cash flow $ 75,375 35,000 8,375 $ 10
Homework, Chapter 26 Net Present Value Method The following data are accumulated by Geddes Company in evaluating the purchase of $105,900 of equipment, having a four-year useful life: Net Income Net Cash Flow Year 1 $32,000 $55,000 Year 2 20,000 42,000 Year 3 10,000 32,000 Year 4 (1,000) 21,000 Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5. 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 0.665 0.513 0.452 0.376 0.279 0.627 0.467 0.404 0.327 0.233 9 0.592 0.424 0.361 0.284 0.194 10 0.558 0.386 0.322 0.247 0.162 a. Assuming that the desired rate of return is 15%, determine the net present value for the proposal. Use the table of the present value of $1 presented above. If required, round to the nearest dollar. If required, use the minus sign to indicate a negative net present value. Present value of net cash flow Amount to be…
eBook Show Me How Print Item Determine Cash Flows Marigold Inc. is planning to invest in new manufacturing equipment to make a new garden tool. The garden tool is expected to generate additional annual sales of 9,700 units at $52 each. The new manufacturing equipment will cost $210,100 and is expected to have a 10-year life and $16,100 residual value. Selling expenses related to the new product are expected to be 4% of sales revenue. The cost to manufacture the product includes the following on a per-unit basis: Direct labor $8.80 Direct materials 28.90 Fixed factory overhead-depreciation 2.00 Variable factory overhead 4.50 Total $44.20 Determine the net cash flows for the first year of the project, Years 2-9, and for the last year of the project. Use a minus sign to indicate cash outflows. Do not round your intermediate calculations but, if required, round your final answer to the nearest dollar. Marigold Inc. Net Cash Flows Year 1 Years 2-9 Last Year Initial investment Operating cash…
Required information Problem 24-2A (Algo) Payback period, accounting rate of return, net present value, and net cash flow calculation LO P1, P2, P3 [The following information applies to the questions displayed below) Project Y requires a $316,500 investment for new machinery with a six-year life and no salvage value. The project yields the following annual results Cash flows occur evenly within each year of $1. EV of $1 PVA of end EVA of Use appropriate factor(s) from the tables provided.) Sales of now product Екрепко Depreciation Machinery Project Problem 24-2A (Algo) Part 3 3. Compute Project Y's accounting rete of retum $137,35 Age of
Required information Problem 24-2A (Algo) Payback period, accounting rate of return, net present value, and net cash flow calculation LO P1, P2, P3 [The following information applies to the questions displayed below.] Project Y requires a $301,500 investment for new machinery with a four-year life and no salvage value. The project yields the following annual results. Cash flows occur evenly within each year. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Problem 24-2A (Algo) Part 4 Years 1-4 4. Determine Project Y's net present value using 9% as the discount rate. (Do not round intermediate calculations. Round your present value factor to 4 decimals and final answers to the nearest whole dollar.) Initial investment Net present value Net Cash Flows X Present…
Problem 9Hilarious Company provided the following data pertaining to machinery on the date of revaluation: Cost Replacement costMachinery 4, 500, 000 7, 500, 000Accumulated depreciation 900, 000 Age of asset 3 yearsRevised Life of the asset 10 years Required:1. Appreciation or revaluation increase2. Carrying amount3. Depreciated replacement cost4. Revaluation surplus5. What is the original life of the asset?6. Prepare the journal entry to record the revaluation 7. What is/are the rules in solving the problem?
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