Compute the simple rate of return on this project

Assignment Help Managerial Accounting
Reference no: EM132765549

Question - Gallatin, Inc., has provided the estimates shown below relating to a proposed new project with a 4-year project life. At the end of the 4 years, the equipment purchased for the project will be sold and working capital would revert back to the company to be used for other company needs.

Annual cash sales $250,000

Annual cash expenses $130,000

Annual depreciation on new equipment $75,000

Initial cost of new equipment $300,000

Salvage value of new equipment in 4 years $40,000

Working capital requirement Last 5 digits of your student ID

1. Assuming Gallatin's discount rate is 12%, compute the net present value (NPV) of the project. manner that demonstrates your understanding of the inflows and outflows.

2. Is the Internal rate of return (IRR) on this project greater than or less than 12%? Why?

3. Compute the Simple Rate of Return on this project.

4. Ignoring working capital, salvage value and depreciation, compute the payback period for this investment.

5. Presentation of work.

Reference no: EM132765549

Questions Cloud

Improve the process in health care organization : Outline how implementing a best practice from another industry could provide opportunities to improve the process in a health care organization.
Why is advantageous to divide the funding needs : Why is advantageous to divide the funding needs of a seasonal business into its permanent and seasonal assets when developing a funding strategy?
Discuss specific work of art or historical event : Discuss a specific work of art or a historical event with regard to its relationship to wellness.
Poor listeners or good listeners : Do you believe most people are poor listeners or good listeners? What can organizations do to improve listening skills of employees?
Compute the simple rate of return on this project : Salvage value of new equipment in 4 years $40,000 and Annual depreciation on new equipment $75,000. Compute the Simple Rate of Return on this project
Collaboration related to sustainable innovation : Name a collaboration situation in a firm you have worked for, preferably a collaboration related to sustainable innovation.
What amount should be charged to patent amortization expense : 10 years from the date of acquisition. What amount should be charged to patent amortization expense for the year ended December 31, 2020?
Prepare the memo requested by the chief audit executive : Westgate Company Limited (WCL) is a Canadian manufacturer of public transportation equipment. Sales for the year ended March 31, 2016, amounted to $930 million.
Are insurance brokers required to issue statement of advice : Are insurance brokers required to issue a statement of advice to their clients? Explain your answer. (Summarise characteristics and participants of Australian)

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