Indicate whether investment should be accepted or rejected

Assignment Help Finance Basics

Reference no: EM13301199

Yappy Company is considering a capital investment of $320,000 in additional equipment. The new equipment is expected to have a useful life of 8 years with no salvage value. Depreciation is computed by the straight-line method. During the life of the investment, annual net income and cash inflows are expected to be $25,000 and $65,000, respectively. Yappy requires a 10% return on all new investments.

Part (a) Compute each of the following:

1: Payback period.
2: Net present value.
3: Profitability index.
4: Internal rate of return.
5: Accounting rate of return.

(b) Indicate whether the investment should be accepted or rejected

Reference no: EM13301199

Questions Cloud

Explain solution of naoh is required to completely react : It is found that 3.8 mL of a 0.01 g/L solution of NaOH is required to completely react withe all HCl. HOw many moles of HCl are present

Use moving-average method to make seasonally-adjusted trend : Use the moving-average method to make seasonally-adjusted trend estimates for the third and fourth quarters of 2013 and the first two quarters of 2014. Assume that the cyclical and irregular forces have minimal influence on the time series. (Show d..

Focus on several types of analytical tools : Focus on several types of analytical tools, including the six paths framework, the strategy canvas, the four actions framework, and the three tiers of noncustomers. Reflecting upon these analyses, share with your perception of how these metrics work ..

What is the current ratio : A company has current assets of $500,000, net income of $10,000, current liabilities of 250,000 and equity of $250,000. What is the current ratio?

Indicate whether investment should be accepted or rejected : During the life of the investment, annual net income and cash inflows are expected to be $25,000 and $65,000, respectively. Yappy requires a 10% return on all new investments.

Obtain the amplitude of the resulting simple harmonic motion : A block of mass M, at rest on a horizontal fictionless table, is attached to a rigid support by a spring of constant K. obtain the amplitude of the resulting simple harmonic motion

Product management and new-product development : Product Management and New-Product Development

What is the average density of the duck : A duck is floating on a lake with 21% of its volume beneath the water. What is the average density of the duck

What is the internal rate of return on the investment : You purchase machinery for $23,958 that generates cash flow of $6,000 for five years. What is the internal rate of return on the investment?

User Account

All Pages