Calculate the payback period for the proposed investment

Assignment Help Managerial Accounting
Reference no: EM132995292

Problem - Payback period; net present value; even cash flows: bank - The management of Ballarat National Bank is considering an investment in automatic teller machines. The machines would cost $513 000 each and have a useful life of seven years. The bank's finance manager has estimated that the automatic teller machines will save the bank $110 000 per machine during each year of their life. The machines will have no salvage value. Ignore company income taxes.

Required -

1. Calculate the payback period for the proposed investment.

2. Calculate the net present value of the proposed investment, assuming a discount rate of:

(a) 8 per cent.

(b) 10 per cent.

(c) 12 per cent:

3. What can you conclude 'From Your answers to requirements 1 and 2 about the limitations of the payback method?

Reference no: EM132995292

Questions Cloud

How the type of auction used to uncover the value of product : How the type of auction used to uncover the value of the product or service is better at uncovering value than other types of auctions.
Business analytics and decision support : Provide your own answers for questions, search, explanation and reflection on the lab work - Provide a professional formatted word document
Determine the value of each of the next five payments : This annuity consists of 9 annual payments with the first four payments being $8,000 each starting today. Determine the value of each of the next five payments
Coalition team balancing the aspects of power : In which of the following ways can a leader form an effective change coalition and enabling it?
Calculate the payback period for the proposed investment : The machines would cost $513 000 each and have a useful life of seven years. Calculate the payback period for the proposed investment
Different theories of wealth maximization : What are the pros and cons of the two different theories of wealth maximization?
Current state of information governance : Research the current state of information governance in the healthcare industry. Make use of Internet search engines and library resources.
Differences between production and ad hoc workflow systems : Explain the similarities and differences between production and ad hoc workflow systems. Include in your explanation a reflection on the type of support they pr
Company personnel policies and procedures : When it comes to a company's personnel policies and procedures - that is, how it handles the hiring, firing, promoting, and paying of the people who work for it

Reviews

Write a Review

Managerial Accounting Questions & Answers

  How estimate the company total variable cost per unit

Estimate the company's total variable cost per unit, and its total fixed costs per year. (Remember ththis is a manufacturing firm.)

  Portraits unlimited company budgeting projectkarl richards

portraits unlimited company budgeting projectkarl richards president of portraits unlimited company was just concluding

  Product costing- traditional and activity

Determine total product cost per unit for each product using an activity based costing system. Use the number of units as the cost driver for each activity.

  What is DNA Company labour rate variance

DNA Company's actual labour hours were 320,000 hours at total labour cost of $4,160,000. What is DNA Company labour rate variance

  Find when does absorption costing net operating income

Find When does absorption costing net operating income and variable costing net operating income require reconciliation? Explain different situations.

  Research and analyse current social issues in accounting

This assessment is designed to allow students to research and analyse current social issues in accounting and evaluate their impact on various stakeholders.

  Organization assessment report on nordic investment bank

Organization assessment report on Nordic Investment Bank.

  What effect accepting order have on net operating income

What effect would accepting this order have on the company's net operating income if a special price of $171.00 is offered per bracelet for this order

  Based on the limited information provided

Based on the limited information provided, give Cindy an estimate of the net effect of the coupon campaign on annual profit. (Ignore taxes.)

  Which consolidation entry to eliminate transaction in year

The consolidation entry to eliminate this transaction in the year ended 30 June 2021 would include which of the following line items?

  Which of the reflect job costing systems

Which of the reflect job costing systems? Allocates costs based on usage of different resources./ Allocates costs based on quantity

  Prepare the sales budget showing sales budgets

Prepare the Sales budget showing sales budgets on a monthly basis with a quarter total for each of the three months from July to September 2020

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