Calculate the payback period of the investment

Assignment Help Accounting Basics
Reference no: EM13494603

The following data have been collected by capital budgeting analysts at Halda, Inc. concerning an investment in an expansion of the company's product line. Analysts estimate that an investment of $210,000 will be required to initiate the project at the beginning of 2013. Estimated cash returns from the new product line are summarized in the following table; assume that the returns will be received in lump sum at the end of each year.

The new product line will also require an investment in working capital of $30,000; this investment will become available for other purposes at the end of the project. Salvage value of machinery and equipment at the end of the product line's life is expected to be $20,000. The cost of capital used in Hilda, Inc.'s capital budgeting analysis is 10%.

(a.) Calculate the net present value of the proposed investment. Ignore income taxes, and round all answers to the nearest $1.
(b.) Calculate the present value ratio of the investment.
(c.) What will the internal rate of return on this investment be relative to the cost of capital? Explain your answer.
(d.) Calculate the payback period of the investment.

Reference no: EM13494603

Questions Cloud

Explain fin the mass of alcl3 : Fin the mass of AlCl3 that is produced when 25.0 grams of Al2O3 react with HCl according to the following balanced equation
Calculate the net present value of the proposed investment : (a.) Calculate the net present value of the proposed investment. Ignore income taxes, and round all answers to the nearest $1.
Which is not a gaap for investment securities : Users are looking for firms who can generate more future cash flows. which one may mostly decrease earnings quality when the users examine the earnings figures as the indicator of future cash flows?
Explain labeled sketch of a typical redox titration curve : Describe how redox titrations are carried out and draw a labeled sketch of a typical redox titration curve.
Calculate the payback period of the investment : Calculate the payback period of the investment.
What is the output voltage of the secondary coil : An ideal transformer has 890 turns in its primary coil and 150 turns in its secondary coil. What is the output voltage of the secondary coil
Evaluate the volume of 6 m naoh required to react : Calculate the volume of 6 M NaOH required to react completely with the amount of methyl salicylate you used. How much of the 6 M NaOH that you used was in excess of the theoretical amount?
Show computation of sales salaries on accrual basis for 2010 : Sales salaries paid during 2010 were 60,000.Advances to salesmen were 1,100 on jan1, 2010 and 800 on dec 31, 2010, sales salaries accrued were 1360 on jan 1 2010 and 1380 on dec 31, 2010 - show the computation of sales salaries on accrual basis fo..
Define compounds according to increasing covalent character : Which of the answers below is the correct order for these compounds according to increasing covalent character of their bonds? NCl3, HF, NH3 NCl3, NH3, HF HF, NH3, NCl3 NH3, NCl3, HF

Reviews

Write a Review

Accounting Basics Questions & Answers

  Cash balance and minimum cash balance

Prepare cash budget, cash balance and minimum cash balance-Using the information above, prepare a cash budget as of December 31, 2009.

  Prepare journal entries for the selected transactions

Prepare journal entries for the following selected transactions related to this company's stock during the current year:

  H&r block tax preparation software comes bundled

H&R Block tax preparation software comes bundled with the CSUF edition of the  textbook. You may also use other software, such as TurboTax.

  On october 10 the board of directors of pattern corporation

on october 10 the board of directors of pattern corporation declared a 10 stock dividend. on october 10 the company had

  Deferred income tax liability problem

The difference in depreciation is the only temporary difference, and it will reverse equally over the next three years. Cohen's enacted income tax rates are 35% for 2010, 30% for 2011, and 25% for 2012 and 2013. What amount should be included in t..

  A mortgage incurred in exchange for an office building

a mortgage incurred in exchange for an office building would be reported in the statement of cash flows in a. the cash

  Property tax purposes

Hurd Company acquired a building valued at $160,000 for property tax purposes in exchange for 10,000 shares of its $5 par common stock. The stock is widely traded and selling for $15 per share.

  Equivalent units of production for materials

For the month of January, there were no units in the beginning work in process inventory; 60,000 units were started into production in January; and there were 15,000 units that were 40% complete in the ending work in process inventory at the end o..

  Problem related to summary transactions

Topeka Stores accepts both its own and national credit cards. During the year the following selected summary transactions occurred.

  Tom receives 80 in child support payments each week there

tom earns 15 per hour for up to 40 hours of work each week. he is paid 30 per hour for every hour in excess of 40. tom

  What are the two types of proprietary funds

What are the two types of proprietary funds, and what are the major differences between those two?

  Activity on a statement of cash flows

Which of the following should be classified as an investing activity on a statement of cash flows?

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