Active Mama manufactures baby furniture, clothing, strollers, and accessories. In the current year the company plans on purchasing a new machine to improve the quality and efficiency of production. Active Mama has prepared estimates of future cash flows over the following four years, at which point it will sell the machine for $9.500. The company focuses on tax minimization and calculated depreciation over the four years using the straight-line method, a useful life of four years, and a residual value of $0. (Click the icon to view the future cash flows.) The NPV of the investment is $37,016. Active Mama has just heard about payback period and IRR. Assume the CCA rate is 20% and refer to the relevant cash flows. Required Requirement 1. Calculate the payback period. (Round your final answer to two decimal places.) The payback period of the investment is year(s). Future cash flows Initial investment Annual cash flows from operations (excluding depreciation) Cash flow from sale of machine Required return on investment Income tax rate Relevant Cash Flows at End of Each year 1 2 3 Today (22,400) 10% 35% 24,000 24,000 Depreciation method. CCA rate declining balance for income tax purposes 24,000 4 - X 24,000 9,500

Active Mama manufactures baby furniture, clothing, strollers, and accessories. In the current year the company plans on purchasing a new machine to improve the quality and efficiency of production. Active Mama has prepared estimates of future cash flows over the following four years, at which point it will sell the machine for $9.500. The company focuses on tax minimization and calculated depreciation over the four years using the straight-line method, a useful life of four years, and a residual value of $0. (Click the icon to view the future cash flows.) The NPV of the investment is $37,016. Active Mama has just heard about payback period and IRR. Assume the CCA rate is 20% and refer to the relevant cash flows. Required Requirement 1. Calculate the payback period. (Round your final answer to two decimal places.) The payback period of the investment is year(s). Future cash flows Initial investment Annual cash flows from operations (excluding depreciation) Cash flow from sale of machine Required return on investment Income tax rate Relevant Cash Flows at End of Each year 1 2 3 Today (22,400) 10% 35% 24,000 24,000 Depreciation method. CCA rate declining balance for income tax purposes 24,000 4 - X 24,000 9,500

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Description: Active Mama manufactures baby furniture, clothing, strollers, and accessories. In the current year the company plans on purchasing a new machine to improve the quality and efficiency of production. Active Mama has prepared estimates of future cash f

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 22P: The Scampini Supplies Company recently purchased a new delivery truck. The new truck cost $22,500,...

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