Calculate the accounting rate of return

Assignment Help Accounting Basics
Reference no: EM13825010

You are considering purchasing a new production facility in order to expand operations. The building and machinery will cost $800,000 and be depreciated over 10 years using the straight-line method with no salvage value at the end of the equipment-life. You require a 12% rate of return on the project.

The cost and revenue information follows in the table below

Determine the NPV of the new facility.

Calculate the IRR (approximate).

Calculate the payback period.

Calculate the accounting rate of return.

Taking into considerations all of the calculations above, will you invest in the new production facility? Why or why not? What nonfinancial information will you consider in your decision?

Verified Expert

In the given assignment, calculated NPV of the project , Internal rate of return, average rate of return and payback period. i have also discussed about financial factor which should be consider while deciding the acceptance of any project.

Reference no: EM13825010

Questions Cloud

Prepare journal entries for the following transactions : Prepare journal entries for the following transactions involving notes payable for Homer Company, whose fiscal year ends June 30. Omit explanations
Immanuel kant approach on ethical decision : If a Middle Eastern culture and an East Asian culture differ as to the morality of a particular action, under ethical relativism:
Distinct and independent branches of the us government : 1. Which of the following is correct regarding the decisions of state trial courts?
Prepare the journal entry to record giltz wages : Assuming a 6.2 percent social security tax rate and a 1.45 percent Medicare tax rate, prepare the journal entry to record Giltz's wages and related liabilities. Round to the nearest penny
Calculate the accounting rate of return : The building and machinery will cost $800,000 and be depreciated over 10 years using the straight-line method with no salvage value at the end of the equipment-life.
A warm front is approaching from the south : If a warm front is approaching from the south, has a slope of 1:300 and is moving toward you at an average warm-front speed of about 4.9 km/hour, how long will it take before it passes your area?
Independent branches of us government : Which of the following is correct regarding the decisions of state trial courts?
Why has there been a trend within supply chain logistics : Why has there been a trend within supply chain logistics managemen
Visibility is in a health care organization : How important do you think visibility is in a health care organization? Does your manager's presence accessibility impact your perception of their support and their staff initiatives? Why or why not

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd