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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Hello, just need help with the annual net cash flow portion. I haven't computed it in this method
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.
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.
Vandezande Inc. is considering the acquisition of a new machine that costs $370,000 and has a useful life of 5 years with no salvage value. The cash flows that would be produced by the machine are (Ignore income taxes): Net Cash Flows Year 1 $ 128,000 Year 2 $ 105,000 Year 3 $ 126,000 Year 4 $ 123,000 Year 5 $ 122,000 Assume cash flows occur uniformly throughout a year except for the initial investment. The payback period of this investment is closest to:
None
D1.
The Amani Company is planning a $200,000 equipment investment that has an estimated eight-year life with no estimated salvage value. The company has projected the following annual cash flows for the investment. Year Cash Inflows $120,000 $70,000 $60,000 $60,000 $60,000 Total $370,000 1 4. Assuming that the cash inflows occur evenly over the year, what is the payback period for the investment? (Ignore income taxes in this problem.)
Subject: accounting
Sunland is considering the purchase of equipment costing $147000. The equipment has a 12- year useful life, has an estimated salvage value of zero, and is expected to generate $29000 in annual cash flows. The company has a 10% required rate of return and uses the straight-line depreciation method. The accounting rate of return on this equipment is closest to 11.4%. 10.0%. 21.1%. 9.7%. O O O O
The St. Louis to Seattle Railroad is considering acquiring equipment at a cost of $250,000. The equipment has an estimated life of 10 years and no residual value. It is expected to provide yearly net cash flows of $50,000. The company's minimum desired rate of return for net present value analysis is 15%. Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.353 2.991 6 4.917 4.355 4.111 3.785 3.326 7 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 Compute the following: a. The average rate of return, giving effect to straight-line depreciation on the investment. If required, round your answer to one decimal place.fill in the blank 1 of 1% b. The cash payback period. c. The net present value. Use the above table of the present value of an annuity of $1. Round…

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