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3 years ago

Compute the payback period for each of these two separate investments:

Business

1 answer:

musickatia [10]3 years ago

5 0

Answer:

1.89 years and 2.91 years

Explanation:

The formula to compute the payback period is shown below:

= Initial investment ÷ Net cash flow

For first case

The initial investment is $260,000

And, the net cash flow is shown below:

= Depreciation + incremental after tax income

where,

Depreciation equals to

= (Original cost - residual value) ÷ (useful life)

= ($260,000 - $10,000) ÷ (4 years)

= ($20,000) ÷ (4 years)

= $62,500

And the incremental after tax income is $75,000

So, the net cash flow would equal to

= $62,500 + $75,000

= $137,500

So, the payback period would be

= $260,000 ÷ $137,500

= 1.89 years

For second case

The initial investment is $170,000

And, the net cash flow is shown below:

= Depreciation + incremental after tax income

where,

Depreciation equals to

= (Original cost - residual value) ÷ (useful life)

= ($170,000 - $14,000) ÷ (9 years)

= ($156,000) ÷ (9 years)

= $17,333

And the incremental after tax income is $41,000

So, the net cash flow would equal to

= $17,333 + $41,000

= $58,333

So, the payback period would be

= $170,000 ÷ $58,333

= 2.91 years

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Answer:

The correct answer is option a.

Explanation:

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The price that the buyers have to pay increases while the price that the sellers receive decreases. But this tax wedge does not depend on whom the tax is levied, it depends on the elasticity of demand and supply. So whether the tax is levied on buyers or sellers, the tax wedge will remain the same.

The tax burden will be shared between both buyers and sellers. So it is incorrect to say that the taxes levied on sellers and taxes levied on buyers are not equivalent.

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3 years ago

3. Which of the following is not a characteristic of a service? (1 point)

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Answer:

marketability is not correct

Explanation:

Four characteristics of service are;

intangibility,

inseparability,

variability and.

perishability.

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3 years ago

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Answer:

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Explanation:

This management style is based on the belief that two heads are better than one, and that every employee (no matter position they hold) deserves to have a say.

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As a downside, these organizations tend be more messy (informal) and decision making processes are very time consuming.

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Answer:

C. less than 1

Explanation:

Supply is elastic if producers can increase output without a rise in cost or a time delay which means Price elasticity of supply is more than 1.

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3 years ago

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Answer:

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Explanation:

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