Compute the net present value of the investment

Assignment Help Managerial Accounting
Reference no: EM132955040

Question - Bigsby LLC wants to buy a CAD machine but needs your help in analyzing a proposal:

Cost $270,000

Salvage value in 8 years $10,000

Annual cash operating savings for 8 years (end of year) $50,000

Estimated useful life in years 8

Minimum desired rate of return 10%

The Bigsby uses straight-line depreciation method for financial reporting. The cash savings from operating the new CAD machine are $50,000. Depreciation expense is not included.

REQUIRED -

A) Compute the net present value of the investment.

B) Compute the payback period.

C) Compute the accounting rate of return using the initial required investment.

Reference no: EM132955040

Questions Cloud

Calculate julie child and dependent care credit prior : Please calculate Julie's child and dependent care credit prior to any tax liability limitation under these two unique scenarios
Did Luther benefit from the forward contract : Simultaneously Luther entered into a one-year forward contract to purchase £375,000. Did Luther benefit from the forward contract
What amounts should Tom Petty report on its balance sheet : What amounts should Tom Petty report on its balance sheet for current assets and current liabilities at 12/31/20
Compute the carrying value of the investment : Inventory's fair value is P2,000,000 greater than its carrying amount. Compute the carrying value of the investment
Compute the net present value of the investment : Annual cash operating savings for 8 years (end of year) $50,000. Compute the net present value of the investment
What is the division roi before the acquisition : The Green Division of Colors Company currently earns P 2,340,000 and has divisional assets of P 19,500,000. What is the division ROI before the acquisition
Would it ever be worth exercising it early : A futures price is currently 60 and its volatility is 25%. The risk-free interest rate is 10% per year. Would it ever be worth exercising it early
How long will it take to settle the loan with payments : Paul obtained a loan of $27,500 at 5.30% compounded monthly. How long will it take to settle the loan with payments of $1,600 at the end of every month
How much will she have in her account : In addition, she will receive $15,000 one year from today and $25,000 two years from today. How much will she have in her account

Reviews

Write a Review

Managerial Accounting Questions & Answers

  Manage budgets and financial plans

Explain the budgeting process and its importance to a business, identifying the components of different budgets, forecast estimates for inclusion in the budgets.

  Prepare a retained earnings statement

Prepare a retained earnings statement for the year and Prepare a stockholders' equity section of given case.

  Prepare a master budget for the three-month period

Prepare a master budget for the three-month period.

  Construct the companys direct labor budget

Construct the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced.

  Evaluate the predetermined overhead rate

Evaluate the Predetermined Overhead Rate

  Determine the company''s bid

Determine the company's bid if activity-based costing is used and the bid is based upon full manufacturing cost plus 30 percent.

  Compute the pool rates for the different activities

Complete the schedule to compute the pool rates for the different activities.

  Prepare Company financial statements

Prepare Company financial statements

  Prepare an analysis of terracycles

This individual assignment is based on the TerraCycle Inc.

  Discuss the ethical issues

Discuss the ethical issues

  Political resources in emerging markets

Calculate the GDP in Income Approach  and Expenditure Approach

  Management accounting - ehsan electronics company

A new plant accountant suggested that the company may be able to assign support costs to products more accurately by using an activity based costing system that relies on a separate rate for each manufacturing activity that causes support costs.

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