What is the payback period for investment for joshua company

Assignment Help Financial Accounting
Reference no: EM133006924

The Joshua Company contemplates the replacement of certain machinery. The annual cost of operating the machinery is P138,600, excluding depreciation, while the estimate for the new machinery is P91,800. Cost of the new equipment is P160,000, net of the trade-in allowance, with a useful life estimate of 8 years and no salvage value. Assume an income tax rate of 50% and 8% cost of capital, and straight line depreciation of P20,000 per year. The book value of the old machine is zero.

Problem 1: The payback period for the investment is

A. 3.419 years
B. 5.970 years
C. 4.790 years
D. 8.000 years

Reference no: EM133006924

Questions Cloud

Calculate effective annual interest : Calculate effective annual interest of an investment which pay 12.6 percent stated annual rate of interest compounded annually
What the net present value using the rate of return is : What the net present value using the rate of return of 8% is? The Joshua Company contemplates the replacement of certain machinery.
What is the gain or loss from change in fair value : What is the gain or loss from change in fair value to be recognized in profit or loss in 2016? Is it a gain or loss? Are the statement correct or incorrect
What the average annual return on original investment is : Cost of the new equipment is P160,000, net of the trade-in allowance, What the average annual return on original investment is?
What is the payback period for investment for joshua company : What the payback period for the investment is? The Joshua Company contemplates the replacement of certain machinery. The annual cost of operating the machinery.
Compute systematic risks of stock a and b : Stock B residual standard deviation = 100%; Market standard deviation (sigma M) = 20%; Compute systematic risks of stock A and B
What net present value of candy capital budgeting proposal : The before-tax annual cash inflow due to this investment is P10,000, What is the net present value of Candy's capital budgeting proposal?
Compute expected rate of returns and standard deviation : Probabilities of these states of the economy are 0.15, 0.15 and 0.70 respectively. Compute expected rate of returns and standard deviation
What is year four accumulated depreciation : The useful life of the computer system is estimated to be 7 years and the computer residual value is $100,000.00. What is year four accumulated depreciation

Reviews

Write a Review

Financial Accounting Questions & Answers

  What deferred tax asset in blossom december balance sheet

If Blossom expects taxable income in future years, the deferred tax asset in Blossom's December 31, 2021 balance sheet should be

  What is your estimate to the terminal value

Earnings are expected to grow by 15% each year for the next 5 years and 3% thereafter. What is your estimate to the Terminal Value

  What is the amount of cash received on the sale of equipment

Equipment with an original cost of $80,000 and a book value of $60,000 is sold at a loss of $6,000. What is the amount of cash received on the sale of equipment

  What is the present value of the same annuity due

If the present value of an ordinary, 8-year annuity is $7,000 and interest rates are 8.0 percent, what's the present value of the same annuity due?

  What was the capital gain from price appreciation on stock

An investor purchases one share of stock for $50. What was the capital gain from price appreciation on the stock, in percentage terms?

  What are some of the fundamental problems coco-cola

What are some of the fundamental problems Coco-Cola might run up against when financing in international trade. Taking the role of CFO

  Evaluate the cost of the land

Evaluate the cost of the land and the cost of the building as they should be recorded on the books of Martin Buber Co. Assume that the land survey was for the building.

  Draw the contingency graph from Afridi position

Afridi sold a call option on Euros for $0.01 per unit where the strike price was $1.25. Draw the contingency graph from Afridi's position on call option

  Prepare the consolidation worksheet entries

Prepare the BVCR and pre-acquisition worksheet entries ONLY at 1 July 2011 - Prepare the consolidation worksheet entries (BCVR, pre-acquisition and intra-group adjustment entries) at 30 June 2016.

  Prepare the journal entry on march

Lease also gave Retail the right to rent store space for 5 years. Interest rates for notes of this type were 6% at issue. Prepare the journal entry on March

  Brake company utilizes the perpetual inventory method

brake company utilizes the perpetual inventory method. inventory information for part ab124 revealed the following for

  Find how many shares would have to sell to get back

Find how many shares would you have to sell to get back to the initial margin debt level if the share price suddenly drops to $28?

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!

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