Cash payback method: Cash payback period is the expected time period which is required to recover the cost of investment. It is one of the capital investment method used by the management to evaluate the long-term investment (fixed assets) of the business. In simple, the cash payback period is computed as follows: Cash payback period = Initial cost Annual net cash inflow Net present value method: Net present value method is the method which is used to compare the initial cash outflow of investment with the present value of its cash inflows. In the net present value, the interest rate is desired by the business based on the net income from the investment, and it is also called as the discounted cash flow method. To discuss: The uses of the cash payback period for analyzing the financial performance over the net present value method.

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Set the below answers to zero decimal places. On September 22, 2023, Phantom Inc. purchased machinery for $190,000. Residual value was estimated to be $10,000. The machinery will be depreciated over eight years using the sum-of-the-years’-digits method. If depreciation is computed on the basis of the nearest full month, how much depreciation expense for 2024 on this machinery should Marvel record? B. Bower Co. purchased equipment in January of 2014 for $90,000. The equipment was being depreciated on the straight-line method over an estimated useful life of 20 years, with no residual value. At the beginning of 2024, when the equipment had been in use for 10 years, the company paid $15,000 to overhaul the equipment. As a result of this improvement, the company estimated that the useful life of the equipment would be extended an additional 5 years. What should be the depreciation expense recorded for this equipment in 2024? C. In January, 2024, Sparkle Corporation purchased a…

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Chapter 26, Problem 6DQ

To determine

Cash payback method:

Cash payback period is the expected time period which is required to recover the cost of investment. It is one of the capital investment method used by the management to evaluate the long-term investment (fixed assets) of the business.

In simple, the cash payback period is computed as follows:

Cash payback period =Initial costAnnual net cash inflow

Net present value method:

Net present value method is the method which is used to compare the initial cash outflow of investment with the present value of its cash inflows. In the net present value, the interest rate is desired by the business based on the net income from the investment, and it is also called as the discounted cash flow method.

To discuss: The uses of the cash payback period for analyzing the financial performance over the net present value method.

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