Determine the payback period for each machine

Assignment Help Financial Accounting
Reference no: EM132892305

Nova Products has a 5-year maximum acceptable payback period. The firm is considering the purchase of a new machine and must choose between two alternative ones. The first machine requires an initial investment of Tk.14,000 and generates annual after-tax cash inflows of Tk.3,000 for each of the next 7 years. The second machine requires an initial investment of Tk.21,000 and provides an annual cash inflow after taxes of Tk.4,000 for 20 years.

Problem a) Determine the payback period for each machine.

Problem b) Comment on the acceptability of the machines, assuming that they are independent projects.

Problem c) Which machine should the firm accept? Why?

Problem d) Do the machines in this problem illustrate any of the weaknesses of using payback? Discuss.

Reference no: EM132892305

Questions Cloud

Determine function that represents projected daily revenue : The park will lose an average of 750 customers each day. Determine the function that represents the projected daily revenue
What are the three major functions of the financial manger : What is agency problem? What should be the goal of an organization? Differentiate between Wealth maximization and Profit maximization.
What important consideration regarding his estate planning : Gary was recently widowed and is meeting with Harvey to discuss his estate planning. What important consideration regarding his estate planning
What yearly payment would make the two offers identical : What yearly payment would make the two offers identical in value at a cost of capital of 9%? NPV Simes Innovations, Inc., is negotiating to purchase exclusive.
Determine the payback period for each machine : Do the machines in this problem illustrate any of the weaknesses of using payback? Discuss. Determine the payback period for each machine.
What are total liabilities at the end of the year : Accounts Payable, Census Company had the accounts and balances at the end of the year. What are total liabilities at the end of the year?
What is the optimal number of euros to be delivered : What is the optimal number of euros to be delivered in the short forward contract according to the minimum variance hedge ratio
How can repair credit history : What do you believe your credit report says about you? No credit report because of a lack of credit. What do you want your report to say about you.
Show appropriate journal entries amounts that would apper : Lease is for 7 years. Interest rate is 3.0%. Show the appropriate journal entries amounts that would appear on the Balance Sheet.

Reviews

Write a Review

Financial Accounting Questions & Answers

  What effective annual rate? of each? certificate of deposit

Find What is the effective annual rate (the EAR) of each CD, and which CD do you recommend to your grandmother? Your grandmother asks for your help in choosing

  Prepare the required journal entries for gator

On October 1, 2014, Gator Inc assigns $1,600,000 of its accounts receivable to American Bank as collateral for a $1,200,000 loan. The bank assesses a finance charge of 2% of the receivables assigned and interest on the note of 7%.

  Prepare the adjusting journal entry at december

Prepare the adjusting journal entry at December 31, 2014 required to report the note payable at fair value. Prepare the adjusting journal entry at December 31, 2015 required to reflect the note payable at fair value.

  What is the active return on the managed portfolio

In 2019, the risk-free rate of return was 2.2% and the return on the S&P 500 was 28.9%. What is the active return on the managed portfolio

  How would you describe sunset boards cash flows

How would you describe Sunset Boards' cash flows for 2014? Write a brief discussion. In light of your discussion in the previous question, what do you think about Tad's expansion plans?

  How will be recorded in the partnership accounts with

If a depreciating asset is brought into the partnership, it will be recorded in the partnership accounts (books) with?debit to asset only (as per the current)

  Classified the lease as operating or capital

Develop two lease examples, operating and capital which includes the lease terms. State the requirements for determining whether a lease is an operating or capital lease. Provide journal entries that set up the lease and entries for payments. Show ho..

  Find how much profit did gcc make

The inflation rate during 20X4 was 5%. How much profit did GCC make according to the physical (productive capacity) concept of capital maintenance?

  What would be the following the rnoa

What would be the following the RNOA of the subsequent company?

  What was the balance in the cash account at the beginning

The account was debited for a total of $12,200 and credited for a total of $11,500. What was the balance in the Cash account at the beginning of August?

  How many vinyl and laminate dining table company manufacture

How many vinyl and laminate dining tables the company will manufacture in house and how many it will buy from another manufactory? How much would vinyl tables have to cost in order for the company to consider purchasing these items rather than mak..

  Define normal business status and what are the non cash item

Discuss the major differences between your analysis of the 30 June 2013 report and the 30 June 2011 report (prior to the takeover of CTEC).

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