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grigory [225]
2 years ago
9

Assume that a company buys a new machine for $220,000 that has a useful life of five years and a $20,000 salvage value. The new

machine will replace an old machine that can be sold for a salvage value of $10,000. The machine will generate incremental contribution margin of $37,500 per year. The only fixed expense associated with the new machine is its annual depreciation of $40,000 per year. What is the payback period for this investment
Business
1 answer:
Zarrin [17]2 years ago
8 0
  • Payback period of investment- In case of capital budgeting, it refers to the amount of time taken place to recover the amount or cost of investment.
  • Initial cost of investment = Amount invested – Value of salvage sold

                                                 = $ 220000 – 10000

                                                 = $ 210,000

  • Annual Cash inflow = Contribution margin = $ 52500

  • Payback period = Initial cost of investment /Annual cash inflow

                                     =$210000 / 52500

                                     = 4.0 years

  • Answer = 4.0 years

Hence, in four years pay back period for this investment will take place

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Answer:

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3 years ago
In its first month of operations, Concord Corporation made three purchases of merchandise in the following sequence: (1) 650 uni
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Answer: Average unit cost=$5.800 per unit

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Explanation:

Average unit cost

First purchase= 650 units x $4=$2,600

Second Purchase=750 units x $6 =$4,500

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2 years ago
The total combines customer lifetime values of all of the company’s customers is called - Options
swat32
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3 years ago
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Explanation:

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7 0
2 years ago
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