Determine the cash payback period

Assignment Help Accounting Basics
Reference no: EM131804931

Question - ALGS Inc. wants to purchase a new machine for $29,800, excluding $1,550 of installation costs. The old machine was bought five years ago and had an expected economic life of 10 years without salvage value. This old machine now has a book value of $2,100, and ALGS Inc. expects to sell it for that amount. The new machine would decrease operating costs by $8,320 each year of its economic life. The straight-line depreciation method would be used for the new machine, for a five-year period with no salvage value.

Instructions -

(a) Determine the cash payback period.

(b) Determine the approximate internal rate of return.

(c) Assuming the company has a required rate of return of 10%, state your conclusion on whether the new machine should be purchased.

Reference no: EM131804931

Questions Cloud

Descriptive characteristics in strategy formulation : Discuss the use of descriptive characteristics in strategy formulation. What are some of the descriptive characteristics of successful organizations
Formal system of reporting : During strategy implementation, the formal system of reporting must have certain characteristics to have value. What are these characteristics
Explaining the marketing efforts during off-air flights : What are some social media actions that a company can do to maintain it's marketing efforts during "off-air" flights (when commercials on not running on air).
Introduction to conflict management class : Consider the following: You are a supervisor at XYZ Corporation, and there is an opening for a management position on your team. Two members of your staff
Determine the cash payback period : ALGS Inc. wants to purchase a new machine for $29,800, excluding $1,550 of installation costs. Determine the cash payback period
Determine the cost of goods available for sale : Determine the ending inventory and the cost of goods sold under each of the assumed cost flow methods
Process that completes an oil change : The QuickChange Co. currently uses a process that completes an oil change with a mean of 25 minutes and a standard deviation of 2 minutes.
Problem on high levels of business success : Many persons who attain very high levels of business success were only below-average students in school. Why might this be so?
Decisions about employment or educational : Should race, gender, religion, disability or other differences ever be relevant to making decisions about employment or educational opportunities?

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

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