User Account

All Pages

What is the payback period

Assignment Help Accounting Basics
Reference no: EM132708464

Question - 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 -

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

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

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

(d) What is the NPV of this investment?

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

Reference no: EM132708464

Questions Cloud

Demonstrate how the given course research has connected : At UC, it is a priority that students are provided with strong educational programs and courses that allow them to be servant-leaders in their disciplines.
What is effective annual interest rate : Your client has just purchased a business for $200,000 and made a cash payment for 20% of the purchase price. What is effective annual interest rate
Different types of tickets : The Hollywood bowl is selling two different types of tickets to their concerts: general and VIP. Both tickets include admission to the show at first come first
How much is basic earnings per share amount : How much is basic earnings per share amount for 2011?(round to two decimal points) Creekside Company reported net income of $1,868 million in 2011.
What is the payback period : Turrican Ltd is considering whether to purchase a new machine. It will cost $440,000 to purchase and $20,000 to install. What is the payback period
What was the result of implementing cloud computing : Describe the organization's Cloud Computing implementation and the benefits they realized from the implementation. What was the result of implementing Cloud.
Compute what net cash provided by operating activities was : Compute What Net cash provided by operating activities was? In preparing a company's statement of cash flows using the indirect method
How much should you bid for the contract : An event for 750 at an average cost $3.90; and an event for 1,200 at an average cost of $3.75. How much should you bid for the contract
How is ai perceived as different in various industries : What is your opinion of AI, is the technology currently available? Why or why not? How is AI perceived as different in various industries and locations?

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

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