Magsaysay Company is evaluating an investment that would have an eight-year life and would require a P300,000 purchase of equipment which has no salvage value. The project has the following additional information: Sales, P500,000; Cash Variable Expenses, P200,000; Fixed cash expenses, P150,000; Depreciation expense, P37,500. If the company's required rate of return is 10%, what is the payback period of the investment? a. 3 years b. 2 years c. 2.5 years d. 2.67 years

Q: June Co. is evaluating a project requiring a capital expenditure of $620,000. The project has an…

A: Capital expenditure = 620,000 Salvage Value = 0 N = 4 Depreciation per year = Capital expenditure /…

Q: Diamond Company is considering purchasing a machine that would cost $756,000 and have a useful life…

A: Payback period: Payback period is the length of time in which an investment reaches its break-even…

Q: BAM Co. is evaluating a project requiring a capital expenditure of $806,250. The project has an…

A: Average rate of return = Average annual income / Average investment Average annual income = Total…

Q: Majestic Aircraft Corporation is considering purchasing composite wing fixtures for the assembly of…

A: Net annual cash flow = Revenue per year - annual operating cost

Q: Almendarez Corporation is considering the purchase of a machine that would cost $190,000 and would…

A: Net present value is difference between present value of cash flow and initial investment.

Q: Cendrawasih Inc. is considering replacing the equipment it uses to produce crayons. The equipment…

A: Capital budgeting is used to evaluate the best suitable long-term investment in order to meet the…

Q: Angat Corporation is evaluating the purchase of a P 500,000 die attach machine. The cash inflows…

A:

Q: Serkin Corporation is considering an investment in a new product line. The investment would require…

A: Cost of equipment: $100,000 Useful life: 4 years Depreciation per year under straight line method:…

Q: cost of the assembly system is $3 million with life expectancy of 10 years, annual operating cost of…

A: NPV= Present value of cashinflows - Present value of cashoutflows. If results are positive then it…

Q: Sommers Company is evaluating a project requiring a capital expenditure of $300,000. The project has…

A:

Q: Clapton Corporation is considering an investment in new equipment costing $750,000. The equipment…

A: Accounting Rate-of-Return (ARR) is used to measure profitability of investment proposals ignoring…

Q: amble Company is considering a capital investment of $203,500 in additional productive facilities.…

A: Cash payback period is the number of years within in which initial outflow of an investment is…

Q: We are evaluating a project that costs $660,000, has a life of 5 years, and has no salvage value.…

A: Cash flows are the series of payment of the income received over the period of time on the initial…

Q: What is the accounting break even quantity?

A: Given in the question: Selling Price Per unit = $515 per unit Variable Cost Per Unit = $420 per unit…

Q: June Co. is evaluating a project requiring a capital expenditure of $620,000. The project has an…

A: (a) Average rate of return = Average net income/Average investment x 100            = 37,500/310,000…

Q: um, Inc. is considering the purchase of new mining equipment. The equipment will cost $1,500,000 and…

A: NPV is net present value and is the difference between the present value of cash flow and initial…

Q: Hayden Company is considering the acquisition of a machine that costs $389,000. The machine is…

A: Given: Initial investment = $ 389,000 Net cash flow per annum = $ 86,000 Operating income = $ 73,100…

Q: Mimi Company is considering a capital investment of $275,000 in new equipment. The equipment is…

A: Capital budgeting is the process undertaken to evaluate projects and investments. The construction…

Q: Majestic Aircraft Corporation is considering purchasing composite wing fixtures for the assembly of…

A: Net annual cash flow can be defined as the per year cash inflows as deducted by the per year cash…

Q: Lor Industries is analyzing a capital investment proposal for new machinery to produce a new product…

A: 3 types of cash flow activities. Operating activities  Investing  Financing    Cash Outflow Cash…

Q: We are evaluating a project that costs $1,675,000, has a six-year life, and has no salvage value.…

A: NPV stands for Net Present Value which is defined as the difference among the cash inflows present…

Q: Santana Co. is evaluating a project requiring a capital expenditure of $790,000. The project has an…

A:

Q: You got asked to analyze a 5-year project for your firm. The project produces an annual revenue of…

A: Initial Investment  $  20,000.00 Annual revenue  $  28,500.00 Labor and materials cost  $…

Q: Olinick Corporation is considering a project that would require an investment of $349,000 and would…

A: Annual net operating income = $61,000 Annual net cashflow = Annual net operating income +…

Q: Dickerson Co. is evaluating a project requiring a capital expenditure of $810,000. The project has…

A: Average profit = Total net income / No. of years = $320,000 / 4 years = $80,000

Q: Cadillac Company is evaluating an investment that would have an eight-year life and would require a…

A: The payback period is the time it takes an investor to repay the cost of an investment, or to reach…

Q: The net present value if the equipment were purchased is?

A: Net present value (NPV) of an alternative/project refers to the variance between the initial…

Q: Company is considering the development of a plan. The company estimates that the plant and equipment…

A: NPV = Present value of cash inflows  - initial  investment

Q: The management of SoComfy Hotel wishes to capitalize on an investment project that will cost the…

A: Given:

Q: Al’ain Corporation is studying a project that would have a ten-year life and would require a…

A: Payback period =Initial investmentAnnual cash flows   Initial investment =$420000 Annual cash flows…

Q: The ATS corp. has recently evaluated a proposal to invest in cost-reducing production technology.…

A: Solution: Initial investment = 18,000 NPV at 10% discount rate = 1,788 Period = 5 years PV of cash…

Q: Pat Inc, is considering a project that would have a ten-year life and would require a $1,000,000…

A: Rate of return on the project means how much operating income has been earned on investing some…

Q: Majestic Aircraft Corporation is considering purchasing composite wing fixtures for the assembly of…

A: Standard Disclaimers“Since you have asked multiple question, we will solve the first question for…

Q: We are evaluating a project that costs RM604,000, has an 8-year life, and has no salvage value.…

A: Cash flows refer to the series of cash payments and receipts over the period of time. Net present…

Q: The Gamma Inc. is planning to spend P600,000 for a machine that will depreciate on a straight-line…

A: Solution: Annual depreciation = P600,000 / 10 = P60,000 Annual operating income = Cash flow from…

Q: The firm’s is considering an investment in some additional equipment. The equipment has a net cost…

A:

Q: We are evaluating a project that costs RM604,000, has an 8-year life, and has no salvage value.…

A: Initial cost = $604000 Depreciation as per SLM = (604000 -0)/8 = 75500 Depreciation tax shield =…

Q: Giant Machinery Ltd is considering to invest in one of the two following Projects to buy a new…

A:

Q: Diamond Company is considering purchasing a machine that would cost $756,000 and have a useful life…

A: Capital Budgeting: Capital budgeting decisions are the most important decision in corporate…

Q: lue of P50,000 and a life of 7 years. The annual maintenance cost is P6,000. While not in use by the…

A: Given information : Proposal 1   Cost reduction 400000 Cost of equipment 300000 Salvage…

Q: We are evaluating a project that costs $630,700, has a seven-year life, and has no salvage value.…

A: -

Q: XYZ Corporation is studying a project that would have a ten-year life and would require a $450,000…

A: Payback period is the time that recovers the investment. To find the annual net cash flow, only cash…

Q: Tasty Bakery Co. is considering a new product line. In order to manufacture the new product, the…

A: If the present value of cash flows is more than the amount of current investment, then the project…

Q: The Cap Company is considering the replacement of Machine A with Machine B that will cost P160,000…

A:

Q: Heidi Company is considering the acquisition of a machine that costs $828,800. The machine is…

A: Payback period: Payback period is the length of time in which an investment reaches its break-even…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.