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Problem - Payback comparisons 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 alternatives. The first machine requires an initial investment of $12,000 and generates annual after-tax cash inflows of $3,000 for each of the next 12 years. The second machine requires an initial investment of $41,000 and provides an annual cash inflow after taxes of $8,000 for 20 years.
a. Determine the payback period for each machine.
b. Comment on the acceptability of the machines, assuming that they are independent projects.
c. Which machine should the firm accept? Why?
d. Do the machines in this problem illustrate any of the weaknesses of using payback?
Lemming makes an $18,750, 120-day, 8% cash loan to Notions Co. on November 2. Lemming's end-of-period adjusting entry on December 31 should be:
Jan. 2 Issued $8,000,000 of 7 percent, 10-year bonds payable at 97.00. Journalizing bonds payable using the straight-line method and capital lease transactions
Journalize issuance of common stock. Journalize the transactions, assuming that the common stock has a par value of $5 per share.
Calculate the required return and expected return for this stock. An analyst gathered the following information for a stock and market parameters
Should the product be processed further? Suppose that a product can be sold at split-off for $5,000 or processed further at a cost of $1,000
On this date, Passim had total owners' equity of $800,000 consisting of $200,000 in ordinary share, Prepare table of allocation and amortization
During December 2020, James received P90,000 from Red, What amount should Cherry report as total current liabilities in its December 31, 2020 balance sheet
Analyze and compute financial ratios and interpret the results of a multi-year financial ratio analysis using the income statement and the balance sheet?
What the terminal value based on a perpetuity of year three's residual income is closest to? The firm is expected to exhibit a ROE of 20% over next three years.
Locate 1-2 articles from a news source that discusses the Federal Intelligence Surveillance Court (FISA Court) and write a 1-2 page paper that answers the following questions: How and why was this court created?
The market price is $800 for a 17-year bond ($1,000 par value) that pays 9 percent annual interest, What is the bond's yield to maturity
In the note amortization schedule before impairment, how much will appear as the carrying amount of the note as of December 31, 2019
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