Evaluiate the annual rate of return

Assignment Help Financial Accounting

Reference no: EM1311311

Capital budgeting Accounting rate of return and cash pay back period.

Rondello Company is considering a capital investment of $150,000 in additional productive facilities. The new machinery is expected to have a useful life of 5 years with no salvage value. Depreciation is by the straight-line method. During the life of the investment, annual net income and cash inflows are expected to be $18,000 and $48,000, respectively. Rondello has a 12% cost of capital rate, which is the minimum acceptable rate of return on the investment.

Instructions

Compute (1) the annual rate of return and (2) the cash payback period on the proposed capital expenditure.

Reference no: EM1311311

Questions Cloud

Essay on american women: education and rights : American Women: Education and Rights.Write the essay about American Women: Education and Rights.

Repairers claim-standard deviation : You find that a random sample of five microwave ovens has a mean repair cost of $75 and a standard deviation of $12.50. At α = 0.01, do you have enough evidence to support the repairer's claim?

Evaluate the missing quantity : Use the expanded accounting equation to compute the missing quantity.

Determining isocost graph : Suppose you are reviewing an isocost graph. The axis on the graph shows capital units on the vertical axis, and labor units on the horizontal axis.

Evaluiate the annual rate of return : Capital budgeting Accounting rate of return and cash pay back period - Evaluiate the annual rate of return and (2) the cash payback period on the proposed capital expenditure

Find the surface tension force on water : Find the surface tension force on water inside a tube and height to which the water rises in the tube.

Perform hypothesis testing : Perform hypothesis testing on one variable's data.

Determine total and controllable volume overhead variances : Overhead variance Fixed And variable - determine the total, controllable, and volume overhead variances.

Government regulation on extraction of natural resources : Taxi fares in New York recently were increased by nearly 50%. Predict the effect on the price of taxicab medallions, the earnings of taxicab drivers and congestion in New York streets.

User Account

All Pages