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sladkih [1.3K]
3 years ago
10

The management of Nebraska Corporation is considering the purchase of a new machine costing $490,000. The company's desired rate

of return is 10%. The present value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing information, use the following data in determining the acceptability:
Year Income from Operations Nat cash flow
1 $100,000 40,000
2 40,000 10,000
3 10,000 120,000
4 100,000 90,000
5 120,000 180,000

The cash payback period for this investment is ______.
Business
1 answer:
ankoles [38]3 years ago
6 0

Answer:

The payback period is more than 5 years

Explanation:

Net present value is the Net value of all cash inflows and outflows in present value term. All the cash flows are discounted using a required rate of return.

Year  Cash flow    PV factor   Present Value

0       ($490,000)       1              ($490,000)

1         $40,000       0.909         $36,360

2        $10,000        0.826         $8,260

3        $120,000      0.751          $90,120

4        $90,000       0.683         $61,470

5        $180,000      0.621        <u> $111,780 </u>

Net Present Value                   ($182,010)

NPV of this Investment is negative so, it is not acceptable.  

Payback period

Total Net cash inflow of the investment is $440,000 and Initial investment is $490,000. This investment will take more than 5 years to payback the initial investment.

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Scilla [17]

Answer:

The net cash flows from financing activities is -$45,000

Explanation:

The computation of the net cash flows from financing activities is shown below:

=  Additional common stock issued - purchase of treasury stock - dividend paid - long term note payable issued

= $160,000 - $75,000 - $40,000 - $90,000

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3 0
3 years ago
Accounting information systems:
Dafna1 [17]

Answer:

The correct answer is letter "D": are an information system that records, processes, and reports on transactions to provide financial and non-financial information for decision making and control.

Explanation:

An Accounting Information System or AIS is a way to track all of a company's accounting activities. An AIS provides easy access to the same information to different departments. An AIS collects, stores, retrieves and processes the data. The data can come from internal and external sources allowing managers to make decisions about the business operations.

3 0
3 years ago
A change in the price of a good has two effects on the quantity consumed. What are these​ effects?
ipn [44]

Answer:

The answer is B

Explanation: This because when we consume something it goes while if we do not the price goes down.

8 0
2 years ago
During 2011, Clark Company manufactured equipment for its own use at a total cost of $2,400,000. The project required the entire
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8 0
3 years ago
Sally’s parents deposited $15,000 into a college savings account on her third birthday. The account had an interest rate of 9.6%
kozerog [31]

Answer:

The correct option is yes,the $15,000 will double each 7.5 years.In 15 years ,it will double twice.

Explanation:

The 72 rule stipulates that the number of years it would take an investment to achieve accumulate a certain amount- future value, can be computed by dividing 72 by the interest rate earns by the investment

N, the number of years=72/9.6

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Invariably,in 7.5 years' when Sally would have been 10.5 years(3 years now+7.5 years) the investment would have doubled.

By another 7.5 years when Sally would have been 18 years(10.5 years +7.5 years), the investment would have doubled twice.

The 72 rule is fast-track approach to calculating the duration of an investment.

7 0
3 years ago
Read 2 more answers
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