MΟΣMuBonita Inc. is considering purchasing a machine that costs $192000 and is estimated to have no salvage value at the end of its 4-yearuseful life. The straight-line method of depreciation is to be used. Projected annual cash inflows and outflows are as follows:ViExpected AnnualExpected AnnualYearCash InflowsCash Outflows1$79000$22000297000320003104000.3400048400027000The cash payback period isO 2.25 years.O2.59 years.O 3.00 years.O 3.20 years.MuzoQuMult좋은QuMul좋은좋은QuMulQueMulti

Cash Payback pertains to the amount of time for the initial investment to be recovered through a…

Answered: M ΟΣ Mu Bonita Inc. is considering…

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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Foster Company wants to buy a special automated machine to replace an existing manual system. The initial outlay (cost) is $3,500,000. The new machine will last 5 years with no expected salvage value. The expected annual cash flows are as follows: Year Cash Inflow Cash Outflow 0 $ - $ 3,500,000.00 1 $ 3,900,000.00 $ 3,000,000.00 2 $ 3,900,000.00 $ 3,000,000.00 3 $ 3,900,000.00 $ 3,000,000.00 4 $ 3,900,000.00 $ 3,000,000.00 5 $ 3,900,000.00 $ 3,000,000.00 Foster has a cost of capital equal to 10%. 1. Calculate the payback period. Payback period: years
The following present value factors are provided for use in this problem. Periods 1 2 3 4 Present Value of $1 at 8% 0.9259 0.8573 0.7938 0.7350 Xavier Co. wants to purchase a machine for $37,800 with a four year life and a $1,200 salvage value. Xavier requires an 8% return on investment. The expected year-end net cash flows are $12,800 in each of the four years. What is the machine's net present value? Multiple Choice O O $4,595. $(5,477). $(4,595). Present Value of an Annuity of $1 at 8% 0.9259 1.7833 2.5771 3.3121 $43,277.
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Hello, just need help with the annual net cash flow portion. I haven't computed it in this method
B2B Company is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment costs $360,000 and has a 12-year life and no salvage value. The expected annual income for each year from this equipment follows. Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Equipment Selling, general, and administrative expenses Income (a) Compute the annual net cash flow. (b) Compute the payback period. (c) Compute the accounting rate of return for this equipment. Complete this question by entering your answers in the tabs below. Required A Compute the annual net cash flow. Required B Required C Annual Results from Investment Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Equipment Selling, general, and administrative expenses. Income Net cash flow Income $ 225,000 $ 120,000 30,000 22,500 52,500 $ 225,000 120,000 30,000 22,500 $ 52,500 Cash Flow Flow
Terminal cash flow: Replacement decision Russell Industries is considering replacing a fully depreciated machine that has a remaining useful life of 10 years with a newer, more sophisticated machine. The new machine will cost $207,000 and will require $29,200 in installation costs. It will be depreciated under MACRS using a 5-year recovery period (see the table for the applicable depreciation percentages). A $26,000 increase in net working capital will be required to support the new machine. The firm's managers plan to evaluate the potential replacement over a 4-year period. They estimate that the old machine could be sold at the end of 4 years to net $14,000 before taxes; the new machine at the end of 4 years will be worth $73,000 before taxes. Calculate the terminal cash flow at the end of year 4 that is relevant to the proposed purchase of the new machine. The firm is subject to a 21% tax rate. The terminal cash flow for the replacement decision is shown below: (Round to the nearest…
Accounting Sheridan is contemplating a capital investment of $19100. The cash flows over the project's five year life are projected as follows: Expected Annual Cash Inflows Expected Annual Cash Outflows Year 1 $6300 $1100 2 8100 2100 3 10200 2500 4 11700 3100 15600 2600 The asset will be depreciated using the straight-line method with no expected salvage value. The cash payback period is 2.46 years. 2.45 years. 2.36 years. 3.02 years.
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The Lana company is planning to purchase a machine known as machine D. Machine D would cost $ 28580 and would have a useful life of 5 years with zero salvage value. The expected annual cash inflow of the machine is $ 9529. Answer:
Hh2. Account
Roberts Company is considering an investment in equipment that is capable of producing moreefficiently than the current technology. The outlay required is $2,293,200. The equipment isexpected to last five years and will have no salvage value. The expected cash flows associatedwith the project are as follows: Year Cash Revenues Cash Expenses 1 $2,981,160 $2,293,200 2 2,981,160 2,293,200 3 2,981,160 2,293,200 4 2,981,160 2,293,200 5 2,981,160 2,293,200 Required:1. Compute the project’s payback period.2. Compute the project’s accounting rate of return.3. Compute the project’s net present value, assuming a required rate of return of 10 percent.4. Compute the project’s internal rate of return.

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