Payback period and the rate of return from the investment

Assignment Help Financial Management

Reference no: EM131561407

A robot cell has been proposed for a certain industrial operation. The robot cell will cost $130,000 installed. Operating costs are estimated to be $14,000 per year for the 4-year expected life of the project. Revenues will be generated from the installation of $60,000 per year. For purposes of the analysis, the robot will have a sero salvage value at the end of the 4 year project is figured into the analys.

(a) Determine the payback period and the rate of return from the investment.

(b) If the robot has a purchase price of $60,000, engineering and installation costs for the project are $70,000, an expected life of 6 years, and the appropiate salvage value of the robot will have a zero salvage value, determine the payback period adn the rate of return from the investment.

(c) Given that the company uses a minimum attractive rate of return of 25%, determine the equivalent uniform annual cost for the proposed project, if the salvage value is figured into the problem.

Reference no: EM131561407

Questions Cloud

What should be the current per share value of this stock : The dividend growth rate is expected to be 7% per year. What should be the current per share value of this stock?

Determine the working capital for the company : Determine the working capital for the company. Compute the current ratio from the financial data provided.

How do you figure out annual depreciation expense : How do you figure out annual depreciation expense? Should a stock exchange enforce some governance standards on the firms listed on the exchange?

Explain how the fed lowers and raises the federal funds rate : Explain how exchange rates are determined use purchasing power parity. Explain how the Fed lowers and raises the federal funds rate.

Payback period and the rate of return from the investment : A robot cell has been proposed for a certain industrial operation. Determine the payback period and the rate of return from the investment.

What are reward-to-risk ratios : If the risk-free rate is 5.0 percent and the market risk premium is 7.8 percent, what are the reward-to-risk ratios of Y and Z?

Monthly estimates of the required financing or excess funds : Prepare monthly estimates of the required financing or excess funds—that is, the amount of money Bowers will need to borrow or will have available to invest.

What would the risk-free rate have to be for two stocks : What would the risk-free rate have to be for the two stocks to be correctly priced relative to each other?

What is beta of your portfolio : The betas for the stocks are .8, 1.8, and .7, respectively. What is the beta of your portfolio?

User Account

All Pages