Merigold company is considering investing in new equipment that will cost $1,417,000 with a 10-year useful life. The new equipment is expected to produce annual net income at $63,700 over its useful life. Depreciation expense, using the straight-line rate is $141,700 per year. Compute the cash pay back period. (Round answer to one decimal place, e.g. 15.2.)

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Q: Multiple Choice

A: $265,600 Explanation: Non-cash expenditures like depreciation and amortization are excluded from…

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A: annual net income = annual increase in net cash flows  - Depreciation If no specific method is given…

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A: Net present value(NPV)  is the difference  between present value of all cash inflows and initial…

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A: EUAC is uniform annual equivalent cost that is equivalent to all costs of equipment.

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

Q: The UltimateFlying Disc Company considering a new expansion project that requires a fixed asset…

A: Calculation of Depreciation- Depreciation per year = Cost / Useful lifeDepreciation per year = $300…

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A: Payback period The method used in capital budgeting to help investors understand the approximate…

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A: Initial cost = $1,875,000 Annual cash flow = $415,350 Period = 7 years

Q: Hayden Company is considering the acquisition of a machine that costs $320,000. The machine is…

A: Formulas: Cash payback period = Cash out flows / Cash inflows

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A: Payback period:   Payback period is the expected time period which is required to recover the cost…

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A: It is a percentage that represents the average annual rate of return at which the NPV of future cash…

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Q: Walen Co. has intends to purchase a new forklift for $88,000.00 cash. It expects annual net…

A: Step 1: Given,Initial cost of the forklift = $88,000.00Annual net operating cash flows = $13,700 per…

Q: Newport Corporation is considering the purchase of a new piece of equipment. The cost savings from…

A: Cash Flow = cf = $210,000Initial Cost = i = $890,000Time = t = 6 YearsCost of Capital = r = 9%

Q: A potential investment has a cost of $395,000 and a useful life of 6 years. Annual cash sales from…

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A: Variables in the question:Q1:First Cost=-$950000Replacement Cost, year 2=-$450,000AOC,…

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A:

Q: Rihanna Company is considering purchasing new equipment for $452,400. It is expected that the…

A: Payback period is the time required to recover the initial investment amount. Always lower payback…

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A: Solution:When an amount is invested somewhere, it earns interest on it.The amount initially invested…

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A: Solution: Amount pay for investment = Future amount * Present value of $1 @11% for 6th period =…

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A: The present value indicate the current value of money to be received or paid in the future. It helps…

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Q: * Your answer is incorrect. Sheridan Oil Company is considering investing in a new oil well. It is…

A: The first step in calculating the annual rate of return is to determine the annual net income. This…

Q: Hayden Company is considering the acquisition of a machine that costs $553,000. The machine is…

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Q: RODEO, Inc., is purchasing machinery at a cost of $2,957,720. The company’s management expects the…

A:

Q: Grady Corp. is considering the purchase of a new piece of equipment. The equipment costs $50,700,…

A: Solution a: Present value of increase in annual cash flows = $6,110 * PVA of 1 at 13% for 6 periods…

Q: Grayson Corp. is considering the purchase of a piece of equipment that costs $34,269. Projected net…

A: Year Annual Cash inflows Cumulative Cash inflows 0 $(34,269) $(34,269) 1 6,702 (27567) 2…

Q: The year-end operating and maintenance costs of a certain drilling platform are estimated to be…

A: Present worth and future worth The value of a financial asset over time at a particular interest…

Q: Christopher Electronics bought new machinery for $5,045,000 million. This is expected to result in…

A: The payback period is calculated by dividing the amount of the investment by the annual cash flow.

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Q: What is its approximate internal rate of return? (Round answer to O decimal place, e.g. 13%.)

A: The internal rate of return (IRR) is the rate at which the present value of cash inflow becomes…

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Q: Ava Company projects an increase in net income of $34,766 each year for the next five years if it…

A: Annual rate of return on the investment = Net income / Initial investment

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.