What would cash payback period be in years

Assignment Help Financial Accounting
Reference no: EM132492555

Question 1: What would cash payback period be in years and what would net present value be?

Point 1: Sheffield Corporation is considering purchasing a new delivery truck. The truck has many advantages over the company's current truck (not the least of which is that it runs). The new truck would cost $55,700. Because of the increased capacity, reduced maintenance costs, and increased fuel economy, the new truck is expected to generate cost savings of $8,600. At the end of 8 years, the company will sell the truck for an estimated $28,500. Traditionally the company has used a rule of thumb that a proposal should not be accepted unless it has a payback period that is less than 50% of the asset's estimated useful life. Larry Newton, a new manager, has suggested that the company should not rely solely on the payback approach, but should also employ the net present value method when evaluating new projects. The company's cost of capital is 8%.

Question 2: Compute the cash payback period and net present value of the proposed investment.

Reference no: EM132492555

Questions Cloud

What discount rate would the company : What discount rate would the company be indifferent between these two projects? (Do not round intermediate calculations and enter your answer
Incentive to maximize the firm profits : Explain why this manager might nonetheless have a strong incentive to maximize the firm's profits.
What is the index level at the end of the year : Assume that you want to re-index with the index value at the beginning of the year equal to 100. What is the index level at the end of the year
Estate Finance Family Tax Plan Questions : Estate Finance Family Tax Plan Questions - How much income or loss does Jeff recognize on the sale? Analyze what Jeff's basis is in the stock and why
What would cash payback period be in years : Compute the cash payback period and net present value of the proposed investment. What would cash payback period be in years
Positive impact on total spending : Interest rates have fallen dramatically yet there has been a relatively small positive impact on total spending. Provide an explanation as to why this has occur
Calculate the depreciation expense for the equipment : Calculate the depreciation expense for the equipment using the straight-line method. What will be the balance in the accumulated depreciation account
Despite having a telegraph monopoly : Despite having a telegraph monopoly before 1979, Western Union was losing money on this phase of its business.
What is the profitability index for each project : What is the profitability index for each project? (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.)

Reviews

Write a Review

Financial Accounting Questions & Answers

  Prepare the direct materials budget for january

Prepare the direct materials budget for January. Perine Company has 4,872 pounds of raw materials in its December 31, 2019, ending inventory.

  Compute the price of the bonds as of the issue date

Compute the price of the bonds as of their issue date. Prepare the journal entry to record the bonds' issuance. Citywide Company issues bonds with a par value

  Statement of cash flows is required for business enterprises

Statement of cash flows is required for all business enterprises which report both fianacial position (balance sheet) and results of operations (income statement) for a period?

  What is amount of profit on the sale and the interest income

Roman Company leased equipment from Koenig Company on July 1, 2015, for an eight-year period expiring June 30, 2023. Equal annual payments under the lease are $600,000 and are due on July 1 of each year. The first payment was made on July 1, 2015. wh..

  Determine the cost per unit of each

Identify which cost item above is fixed and variable and why and determine the cost per unit of each? what would be the total annual cost and unit cost of fixed and variable costs?

  Prepare the basic financial statements for the month

Prepare the four basic financial statements for the month of March and how many employees does the RTWMTC company have and what is the break down of their salaries

  Audit standards require second set of analytical procedures

Audit standards require that auditors use analytical procedures at two stages in the audit: at the planning, or risk assessment, level and at the final, or concluding, stages of the audit. Why do audit standards require the second (final) set of anal..

  Illustrate what was the amount of the projected benefit

The actuary’s discount rate was 3%. Illustrate what was the amount of the projected benefit obligation at year-end?

  Recognize the described contributed services as revenue

A neurologist serves on the board of trustees of the Neurological Disease Foundation, an organization that funds clinical research. He was asked to serve due to his expertise in neurological research, and he chairs the committee of the board that ..

  Mcminn retail incmcminn retail inc is a retailer that has

mcminn retail inc.mcminn retail inc. is a retailer that has engaged you to assist in the preparation on its financial

  Income statement

Please put together an income statement (multistep)-Please put together a retained earnings statement.

  Calculate the overhead controllable variance

the flexible manufacturing overhead budget shows that budgeted costs are $4 variable per direct labor hour and $50,000 fixed. Calculate the overhead controllable variance.

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