User Account

All Pages

Which project has a shorter payback period

Assignment Help Financial Accounting
Reference no: EM132539547

Investment 1: Delivery Truck

Acquisition Cost P570,000

Useful Life 6 years

The truck can deliver an additional 150,000 bottles of water per year. The contribution margin per bottle is P2.00. The acquisition of the new truck will cause an increase in fixed operating costs, excluding depreciation of P5 per kilometer. The truck is expected to run at 20,000 kilometers per year.

Investment 2: Bottling Machine

Acquisition Cost P450,000

Useful Life 6 years

The use of the new bottling machine would enable the company to save labor time by 20 hours per day. The labor rate per hour is P40 and there are 280 operating days in a year.

For capital investment projects, the company's minimum desired rate of return is 10%. The company pays income tax at 32% of income before tax.

Question 1: Which project has a shorter payback period?

a. Delivery Truck, by 0.87 year

b. Bottling Machine, by 0.87 year

c. Deliver Truck, by 2.55 years

d. Bottling Machine, by 3.42 years

Reference no: EM132539547

Questions Cloud

Describe john stuart mill concept of utilitarianism : Do you think that there should be equal opportunity in a just society? What would you mean by this phrase? Do you think that it is a realizable ideal?
What are the four different types of market structures : What are the four different types of market structures? In two or more sentences provide at least 3 or more characteristics that separate a perfectly.
Common labor union issues : What are the common labor union issues for nursing staff in an acute care organization? How can these issues be addressed by HRM?
What ideals and consequences are at stake : Analyze the following questions associated with your chosen article and discuss them using concepts you learned in this course. What ideals, effects.
Which project has a shorter payback period : Which project has a shorter payback period? The truck can deliver an additional 150,000 bottles of water per year. The contribution margin per bottle
How might the changes impact your business : What are some of the changes we can expect related to the transportation industry in the future? How might these changes impact your business?
Outputs derived from a business policy : With one (1) example each, state and explain five (5) outputs derived from a business policy
What are principal differences between financial statements : What are the principal differences between the financial statements of the governmental unit's general fund and the financial statements of a business
What is the firm eps given that it pays tax : What is the firm's EPS, given that it pays tax at 30%? Decillion Technologies has 60 million shares outstanding and pays interest of $75 million per year.

Reviews

Write a Review

Financial Accounting Questions & Answers

  Prepare the adjusting entry to record bonds at fair value

Prepare the adjusting entry to record the bonds at fair value at December 31, 2019. The Fair Value Adjustment account has a debit balance of €1,000

  How capital structure decision has to deal with more issues

The capital structure decision has to deal with more issues than the maximization of the firm's market alone? with explanations and provide example

  Preparenbsp a cash receipts and payments schedule based on

preparenbsp a cash receipts and payments schedule based on the details furnished.carter company has projected sales and

  Replacing control device-what is the initial net investment

Cranberry Manufacturing Company is considering an asset replacement project of replacing a control device. This old control device has been fully depreciated but can be sold for $4,000. The new control device, which is more automated, will cost $22,0..

  Determine the taxable amount of social security benefits

Determine the taxable amount of social security benefits for the following situations. Erwin and Eleanor are married and file a joint tax return. They have adjusted gross income of $39,600, no tax-exempt interest, and $13,860 of Social Security benef..

  Find what is the amount of the net fixed assets

$12,700, current assets of $38,200, equity of $53,400, and long-term debt of $11,600. What is the amount of the net fixed assets?

  How is total asset turnover calculated

Your original posting must be at least 250 words and your English usage must be correct. Comment on the postings of 2 other students. These comments must be at least 50 words long and should critique what the other students have said.

  What are the companys inventory tirn over ratio

sorenson inc has sales of $5,119,000 , a gross profit margin of 32.18 percent and inventory of 1,017,000. what are the companys inventory tirn over ratio

  Illustrate what is the value of nebula stock to an investor

Nebula currently pays a dividend of $0.50 per share. Illustrate what is the value of Nebula stock to an investor who requires a 14 percent rate of return?

  What if required rate of return is instead Re-calculate NPV

return (cost of capital) is 15%. The net present value is $736.42. What if the required rate of return is 8% instead? Re-calculate the NPV.

  What net reduction in retained earnings would result

On that date, when the market price of Oliver was $14 per share, there were 180,000 shares of Gibbs outstanding. What NET reduction in retained earnings would result from this property dividend?

  Prepare vitamin t-shirts income statement for the year

Using the variable costing method, prepare Vitamin T-Shirts' income statement for the year.

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