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laiz [17]
3 years ago
15

The management of River Corporation is considering the purchase of a new machine costing $380,000. The company's desired rate of

return is 6%. The present value factor for an annuity of $1 at the interest of 6% for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment:Year Income from Operations Net Cash Flow1 $20,000 $95,0002 $20,000 $95,0003 $20,000 $95,0004 $20,000 $95,0005 $20,000 $95,000
The cash payback period for this investment is:
a. 5 yearsb. 4 yearsc. 3 yearsd. 20 years
Business
1 answer:
Westkost [7]3 years ago
6 0

Answer:

option (b) 4 years

Explanation:

Data provided in the question:

Cost of the new machine = $380,000

Annual cash flow = $95,000

Rate of return = 6% = 0.06

The present value factor = 4.212

Now,

The cash payback period for this investment

= [ Amount invested ] ÷ [ Annual Net cash flow]

= $380,000 ÷ $95,000 per year

= 4 years

Hence,

The answer is option (b) 4 years

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3 years ago
In 25 years, a bond with a 4.75% annual interest rate earned $2,375 as interest. What was the principal amount of the bond if th
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Denote the principal amount: P

In 25 years, a bond with a 4.75% annual interest rate earned $2,375 as interest.

=> P x (1 + 4.75/100)^25 - P = 2375

=> P x 3.19 - P = 2375

=> P x 2.19 = 2375

=> P = 2375/2.19 = 1084.48$

The principal is most commonly used to refer to the original amount borrowed on a loan or invested in an investment. It can also refer to the face value of a bond, the owner of a private company, or a key participant in a transaction.

Suppose you buy a home for $ 300,000 with a 20% down payment. In this case, you will pay back $ 60,000 on your loan. The mortgage lender then pays $ 240,000, which is the cost of the loan balance. In this case, the principal balance will be $ 240,000.

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4 0
2 years ago
Betty operates a beauty salon as a sole proprietorship. Betty also owns and rents an apartment building. This year Betty had the
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Answer:

Betty's AGI = $28,934

Complete Page 1 of Form 1040 for Betty is attached.

Explanation:

<u>Adjusted gross income:</u>

Adjusted gross income (AGI) is an income measurement for the purpose of calculation of tax payable.

AGI is calculated by deducting allowable deduction from taxable income.

<u>Notes for the working attached:</u>

  • The salaries and expenses are deductible as business expenses.
  • Depreciation and real estate taxes are deducted as rental/royalty-related deductions.
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3 years ago
A recent annual report for FedEx contained the following data:
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FedEx

Accounts Receivable Turnover

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Credit is generally defined as an agreement between a lender and a borrower. Credit also refers to the creditworthiness or credit history of an individual or entity. In accounting, loans can reduce assets or increase liabilities, and can reduce expenses or increase income.

In personal banking or financial accounting, a credit is an entry indicating that money has been received. Normally, a checking account register has the balance (deposits) on the right and the debits (money spent) on the left. In a loan, all the requested amount is given at once at the time of lending, whereas in a loan, the bank uses the full amount of the loan to give the customer an amount that can be used as needed.

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7 0
1 year ago
A stockholder in a Subchapter S corporation:
Lina20 [59]

Answer:

The answer is C.

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Board of directors/directors are to make sure the business run smoothly while the shareholders provide the fund to meet emergencies.

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