User Account

All Pages

What is the annual cash flow for years one-eight

Assignment Help Accounting Basics
Reference no: EM132672748

Turrican Ltd is considering whether to purchase a new machine. It will cost $440,000 to purchase and $20,000 to install. It is expected to generate additional annual revenues of $90,000 per year for eight years, at which time it will have no further use or value. The machine will cost an additional $5,000 in electricity to run. The company's required rate of return is 7% (the present value of an annuity of eight years at 7% is 5.97). Ignore depreciation for this question.

Ignore taxes for this question.

Required:

Problem (a) What is the payback period? Show calculations.

Problem (b) What is the cash flow in year zero?

Problem (c) What is the annual cash flow for years 1 - 8?

Problem (d) What is the NPV of this investment?

Problem (e) Should the company accept this project? Why or why not?

Reference no: EM132672748

Questions Cloud

How much revenue should BMW recognize : BMW anticipates delivering the vehicle on February 1, 2013. Under current GAAP, how much revenue should BMW recognize in 2012 and 2013
Mothers of the movement at the dnc in 2016 : Mothers of the Movement at the DNC in 2016. Whom was the MOM appearance meant to appeal to? What was it supposed to signal?
What are the key benefits in adopting the use : What are the key benefits and challenges in adopting the use of data analytics on audit engagements. How are data analytics being used in the financial report
What amount of bad debt expense will Mohan report : Estimating Uncollectible Accounts and Reporting Accounts Receivable - What amount of bad debt expense will Mohan report in its income statement
What is the annual cash flow for years one-eight : TTurrican Ltd is considering whether to purchase a new machine. What is the cash flow in year zero? What is the annual cash flow for years 1 - 8?
List and describe the major social problem : List and describe the major Social Problem (s) associated with Affordable Care Act Inte
Describe the shared security responsibility model : Describe in 500 words the shared security responsibility model that a dba must be aware of when moving to the cloud. The response must be typed.
Write a description of enterprise risk management : Please summarize, in your own words, a description of enterprise risk management. Why do you feel ERM is different from traditional risk management?
What is the tax shield that the company can apply : The tax rate is 30%. What is the tax shield (annual cash saving based on tax) that the company can apply as a cash flow in its NPV calculation?

Reviews

Write a Review

Accounting Basics Questions & Answers

  Negative or positive automatic assumptions

The point here is to be able to identify yourself with a group so that you can then explore and examine the negative or positive automatic assumptions people often apply too such groups.

  Trial balance of the bowler corporation

1.The following account balances were taken from the 2013 post closing trial balance of the Bowler Corporation:

  What is the amount of depreciation expense

Using the units-of-production method, what is the amount of depreciation expense that should be recorded for the second year

  Calculate the expected active return

Calculate the expected active return, expected active risk and expected information ratio of this subset of managers, given the above allocations

  Offset the year-end inventory balance with a fund balance

Why do some accountants believe that it should offset the year-end inventory balance with a fund balance-non-spendable when no comparable fund balance is required for cash, taxes receivable, or most other assets?

  What is the benefit for the furniture division

Suppose that the two divisions agree on a transfer price of $35. What is the benefit for the Furniture Division? For the Motel Division

  Explain the difference between a closed-fact and open-fact

1. explain the difference between a closed-fact and open-fact situation.2. describe the format of a client memo.3.

  How the equipment purchased would be recorded at

How The equipment purchased would be recorded at? Purchase price of equipment$25,000Freight costs1,800Installation costs1,100Damage during installing600.

  What amount should c company record for patent amortization

In early 2021, C Company determined that the patent's economic benefits would last only until the end of 2025. What amount should C Company record for patent amortization in 2021?

  Prepare all entries required to properly record the sale

Prepare all entries required to properly record the sale, Amortization is recorded when interest is received by the straight-line method

  Controlling interest in consolidated total income

SealCoat Company made $50,000 in 2010 and paid no dividends. Primer Company's separate income in 2010 was $625,000. The controlling interest in consolidated net income for 2010 is:

  Compute the amount of marin company inventory

Marin Company follows the practice of pricing its inventory at the lower-of-cost-or-market, on an individual-item basis. Item No.

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd