1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Vilka [71]
3 years ago
7

Your firm has the opportunity to invest $90,000 in a new project opportunity but due to cash flow concerns, your boss wants to k

now when you can pay back the original investment. Using the discounted payback method, you determine that the project should generate inflows of $30,000, $35,000, $30,000, $25,000, and $20,000 respectively for an expected five years after completion of the project. Your firm's required rate of return (ror) is 10%. Calculate how long it should take to pay back the initial project investment. [Hint: List your all cash flow by year, investment can be seen as happening in year zero, calculate the NPV of inflow using Discount factor = 1/(1 + ror)^t, find the nearest break-even year using accumulated cash flow, then find the decimal point assuming cash flow are evenly distributed within a year]

Business
2 answers:
aev [14]3 years ago
8 0

Answer: 3.67 years

Explanation:

Cashflow by year

Year 0 $90,000(Investment)

Year 1 $30,000

Year 2 $35,000

Year 3 $30,000

Year 4 $25,000

Year 5 $20,000

Rate of return(ror) = 10%= 0.1

Calculating Net present value(NPV) using discount factor ;

Discount factor = 1/(1 + ror)^t

YEAR 1

Discount factor:

1/(1 + 0.1) = 1/1.1 =0.9

NPV = 0.9 × $30,000 = $27,000

YEAR 2

Discount factor:

1/(1 + 0.1)^2 = 1/1.1^2 =0.83

NPV = 0.826 × $35,000 = $29,050

YEAR 3

Discount factor:

1/(1 + 0.1)^3 = 1/1.1^3 =0.75

NPV = 0.75 × $30,000 = $22,500

YEAR 4

Discount factor:

1/(1 + 0.1)^4 = 1/1.1^4 =0.68

NPV = 0.68 × $25,000 = $17,000

YEAR 5

Discount factor:

1/(1 + 0.1)^5 = 1/1.1^5 =0.62

NPV = 0.62 × $20,000 = $12,400

Year 1: $90,000 - $27,000 = $63,000

Year 2: $63,000 - $29,050 = $33,950

Year 3: $33,950 - $22,500 = $11,450

Year 4: $17,000

Year 5: $12,400

3 years + ($11,450/$17000)

3 years + 0.67years

3.67 years.

Rus_ich [418]3 years ago
4 0

Answer:

Complete solution in tabular form  is given below:

You might be interested in
Coursework beyond that of a bachelor's degree is known as interdisciplinary.<br><br> True<br> False
Marysya12 [62]

Answer:

false

Explanation:

6 0
3 years ago
A monopolist sells 2,000 units for $20 each. The total cost of 2,000 units is $30,000. If the price falls to $19, the number of
leonid [27]

Answer:

Decrease by $1

Explanation:

Given:

Old data:

Q0 = 2,000 units

P0 = $20

Total revenue before change = 2,000 x $20 = $40,000

After change in Price.

Q1 = 2,100 units

P1 = $19

Total revenue After change = 2,100 x $19 = $39,900

Computation of Marginal Revenue:

Marginal Revenue = (P1 - P0) / (Q1 - Q0)

= ($39,900 - $40,000) / (2,100 - 2,000)

= -100 / 100

= $(-1)

Marginal revenue will decrease by $1

8 0
3 years ago
True or false?
valentina_108 [34]
True total utility always decreases when marginal utility is present
6 0
3 years ago
Activity Levels and Cost Drivers Shroeder Machine Shop has the following activities:
zepelin [54]

Answer:

a. Machine Operation

Unit level, No. of units produced

b. Machine setup

Batch level, No. of batch setup

c. Production scheduling

Batch level, No. of batch setup

d. Material receiving

Unit level, Unit of material used in production of a single unit

e. Research and development

Facility level, Research done and used in development

f. Machine maintenance

Unit level, No. of units made

g. Product design

Product level, Changed product designs

h. Parts administration

Facility level, No. of parts changed

i. Final inspection of a sample of products

Batch level, No. of batched inspected

j. Materials handling

Facility level, Quantity of raw material handled

Explanation:

a. Machine Operation

Unit level, No. of units produced

b. Machine setup

Batch level, No. of batch setup

c. Production scheduling

Batch level, No. of batch setup

d. Material receiving

Unit level, Unit of material used in production of a single unit

e. Research and development

Facility level, Research done and used in development

f. Machine maintenance

Unit level, No. of units made

g. Product design

Product level, Changed product designs

h. Parts administration

Facility level, No. of parts changed

i. Final inspection of a sample of products

Batch level, No. of batched inspected

j. Materials handling

Facility level, Quantity of raw material handled

5 0
3 years ago
Presented below are four statements which you are to identify as true or false.
slavikrds [6]

Answer:

1. GAAP is the term used to indicate the whole body of FASB authoritative literature.  <u>TRUE</u>.

The Financial Accounting Standards Board are the authors of the GAAP and as such GAAP is used to indicate the whole body of their literature.

2. Any company claiming compliance with GAAP must comply with most standards and interpretations but does not have to follow the disclosure requirements.  <u>FALSE. </u>

To claim compliance with GAAP, all standards and interpretations including Disclosure requirements should be followed.

3. The primary governmental body that has influence over the FASB is the SEC.  <u>TRUE.</u>

The Securities and Exchange Commission (SEC) is the Government body that is meant to oversee the application of Accounting standards and as such, they have influence over the FASB.

4. The FASB has a government mandate and therefore does not have to follow due process in issuing a standard.<u> FALSE. </u>

Even though they have a Government mandate, the FASB must follow due process when establishing principles so that people might be able to contribute to or criticize the guidelines should they please.

4 0
3 years ago
Other questions:
  • When your music teacher asks that you increase the decibels in a particular part of your performance, he is specifically request
    10·1 answer
  • Jo mielziner' s set for the original production of death of a salesman was:
    8·1 answer
  • When you finance a project partly with debt, you should still view the project as if it were all equity-financed, treating all c
    14·2 answers
  • One of the criticisms of average cost regulated pricing of a natural monopoly is that the firm Group of answer choices has no in
    14·1 answer
  • n investor purchased the following five bonds. Each bond had a par value of $1,000 and a 8% yield to maturity on the purchase da
    10·1 answer
  • A year​ ago, the IT team earned​ corporate-wide recognition for its performance. More​ recently, it has begun to experience some
    12·1 answer
  • At the beginning of the year, Camille purchased 300 shares of stock at $25.50 per share, then sold them at the end of the year f
    11·1 answer
  • the lease on a new office requires an immediate payment of $24,000 (in year 0) plus $24,000 per year at the end of each of the n
    7·1 answer
  • Marle Construction enters into a contract with a customer to build a warehouse for $950,000 on March 30, 2021, with a performanc
    7·1 answer
  • ______ helps managers understand work flow, select the best applicants for jobs, improve employees' job performance, and ensure
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!