User Account

All Pages

Determine each project payback period

Assignment Help Accounting Basics
Reference no: EM131540032

Question: Micelli Company has an opportunity to invest in one of two projects. Project A requires a $480,000 investment for new machinery with a three-year life and no salvage value. Project B also requires a $480,000 investment for new machinery with a four-year life and no salvage value. The two projects yield the following predicted annual results. The company uses straight-line depreciation, and cash flows occur evenly throughout each year.

1448_AB.png

Required: 1. Compute each project's annual expected net cash flows. (Round net cash flows to the nearest dollar.)

2. Determine each project's payback period. (Round the payback period to two decimals.)

3. Compute each project's accounting rate of return. (Round the percentage return to one decimal.)

4. Determine each project's net present value using 10% as the discount rate. For part 4 only, assume that cash flows occur at each year-end. (Round net present values to the nearest dollar.) Analysis Component

5. Identify the project you would recommend to management and explain your choice.

Reference no: EM131540032

Questions Cloud

Compute pretax income before depreciation : Cologne Corporation is considering a new project requiring a $25,000 investment in an asset having no salvage value.
What is net present value of this piece of equipment : what is the net present value of this piece of equipment and should you invest in it based on the net present value decision rule?
Disadvantages of payback period decision rule : Which of the following are disadvantages of the payback period decision rule?
What will the cash flows for project be : KADS, Inc., has spent $360,000 on research to develop a new computer game. What will the cash flows for this project be?
Determine each project payback period : Micelli Company has an opportunity to invest in one of two projects. Project A requires a $480,000 investment for new machinery with a three-year life.
What is the expected return on GT stock : What is the value of BW equity? What is the value of GT equity? What is the expected return on GT stock?
Compute straight-line depreciation for each year : Concorde Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $100,000 cost.
Define the comparative income statement : Windtrax Company manufactures and sells to local wholesalers approximately 200,000 units per month at a sales price of $1 per unit.
Sinking fund accumulate the future value : Find the monthly payment, needed to have a sinking fund accumulate the future value, $16,000. The yearly interest rate is 6.7% and the number of payments is 20.

Reviews

Write a Review

Accounting Basics Questions & Answers

  Prepare a proposal for migrating your firm to ifrs from gaap

Your firm is planning to move to International Financial Reporting Standards reporting within next fiscal year. Develop a proposal for migrating your firm to IFRS from GAAP. Discuss how you will educate your users in IFRS.

  Kennewick manufacturing company expects a 15 increase over

kennewick manufacturing company expects a 15 increase over the 200000 units of product vip sold last year and a 20

  Prepare journal entries for each expenditure

Prepare journal entries for each expenditure. Refer to the Chart of Accounts for exact wording of account titles.

  Santana corporation manufactures snowmobiles in its blue

santana corporation manufactures snowmobiles in its blue mountain wisconsin plant. the following costs are budgeted for

  Original manufacturing cost

Original manufacturing cost

  Lispell co manufactures in-line skates that sell for 128 a

lispell co. manufactures in-line skates that sell for 128 a pair. the company is currently operating at capacity 2000

  Potential costs due to the discovery of a possible defect

potential costs due to the discovery of a possible defect related to one of its products. these costs are probable and

  Residual income for the boxed candy division

The purchase of Truffles Inc. will require an investment of $800,000 and with the synergy between the two companies will increase the Boxed Candy Division's operating income by $76,000. The residual income for the Boxed Candy Division after the pu..

  A machine with a cost of 120000 has an estimated residual

1 a machine with a cost of 120000 has an estimated residual value of 15000 and an estimated life of 5 years or 15000

  Draw the total costs line on the scatter diagram

Alden Co.'s monthly sales and cost data for its operating activities of the past year follow. Management wants to use these data to predict future fixed.

  The landers corporation needs to raise 160 million of debt

the landers corporation needs to raise 1.60 million of debt on a 20-year issue. if it places the bonds privately the

  Conducting analytical procedures

Research professional standards (AU 329) determine the requirement related to developing an expectation and conducting analytical procedures when those procedures are intended to provide substantive evidence.

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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