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AlekseyPX
3 years ago
5

Ribelin Corporation is adding a new product line that will require an investment of $218,000. The product line is estimated to g

enerate cash inflows of $32,000 the first year, $18,000 the second year, and $21,000 each year thereafter for ten more years. What is the payback period? A. 856 years B. 10.42 years C. 10.00 years D. 11.17 years
Business
1 answer:
Vikentia [17]3 years ago
6 0

Answer:

C. Payback is 10 years

Explanation:

Payback is the number of years it will takes to recover the initial investment, which in this case translates to: how long will it take for Ribelin Corpration to recover the  $218,000 investment given the stated cash-flows.

Year Cash-flow     Balance

0        (218,000.00)        (218,000.00)

1        32,000.00            (186,000.00)

2        18,000.00            (168,000.00)

3        21,000.00             (147,000.00)

4         21,000.00             (126,000.00)

5        21,000.00              (105,000.00)

6        21,000.00              (84,000.00)

7        21,000.00               (63,000.00)

8       21,000.00                (42,000.00)

9        21,000.00               (21,000.00)

10        21,000.00                -    

11        21,000.00             21,000.00  

12        21,000.00            42,000.00  

By end of year 10, total inflows are exactly equal the initial investment, therefore it will take them 10 years

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Requirements
Stella [2.4K]

Journal entries:

Nov. 1, common stocks issued

Dr Cash 41,000

    Cr Common stock 41,000

Nov. 4, office supplies and furniture purchased

Dr Office supplies 1,200

Dr Furniture 2,300

    Cr Accounts payable 3,500

Nov. 6, service revenue

Dr Cash 2,100

    Cr Service revenue 2,100

Nov. 7, land purchased

Dr Land 27,000

    Cr Cash 27,000

Nov. 10, service revenue

Dr Accounts receivable 800

    Cr Service revenue 800

Nov. 14, payment of furniture

Dr Accounts payable 2,300

    Cr Cash 2,300

Nov. 15, wages expense

Dr Wages expense 1,470

    Cr Cash 1,470

Nov. 17, collection of accounts receivable

Dr Cash 500

    Cr Accounts receivable 500

Nov. 20, service revenue

Dr Accounts receivable 680

    Cr Service revenue 680

Nov. 25, received cash in advance

Dr Cash 1,900

    Cr Unearned revenue 1,900

Nov. 28, service revenue

Dr Cash 3,100

    Cr Service revenue 3,100

Nov. 29, purchase prepaid insurance

Dr Prepaid insurance 840

    Cr Cash 840

Nov. 30, wages expense

Dr Wages expense 1,470

    Cr Cash 1,470

Nov. 30, rent expense

Dr Rent expense 650

    Cr Cash 650

Nov. 30, utilities expense

Dr Utilities expense 650

    Cr Accounts payable 650

Nov. 30, dividends distributed

Dr Retained earnings 2,800

    Cr Dividends payable 2,800

Dr Dividends payable 2,800

    Cr Cash 2,800

Since there is not enough space here, I prepared an excel spreadsheet with the T-accounts.

In order to prepare a trial balance sheet, I must first prepare an Income Statement:

Service revenue              $6,680

Wages expense             ($2,940)

Rent expense                   ($650)

<u>Utilities expense              ($650)</u>

Net income:                    $2,440

Retained earnings = $2,440 (net income) - $2,800 (dividends) = ($360)

        STEWART CO.

     BALANCE SHEET

       NOV. 30, 2018

Assets:

Cash $12,070

Accounts receivable $980

Prepaid insurance $840

Office supplies $1,200

Furniture $2,300

Land $27,000

Total assets: $44,390

Liabilities and stockholders' Equity:

Accounts payable $1,850

Unearned revenue $1,900

Common stock $41,000

Retained earnings ($360)

Total liabilities and stockholders' equity: $44,390

Download pdf
8 0
3 years ago
One of the difficulties associated with value-based pricing is that
nikdorinn [45]

One of the difficulties associated with value-based pricing is that the producer may end up running at loss because the price does cover the cost incurred during production.

The value-based pricing entails fixing of prices based on customer's perceived value of the product.

The companies who practiced the value-based pricing do so to make sure the product price and expectation of the customers match.

However, one of the difficulties associated with value-based pricing is that the producer may end up running at loss because the price does cover the cost incurred during production.

Learn more about this here

<em>brainly.com/question/20699420</em>

7 0
3 years ago
What is a companys obligation to contribute to the sustainability of natural resources
FrozenT [24]

Answer:

Companies have a corporate social responsibility towards their environment.

Explanation:

Corporate social responsibility implies that companies are expected to engage in industrial practices that would not result in harm to their environment. For example, the amount of carbon being released into the environment must be controlled as excessive release of carbon can be detrimental to health. It is also not right for waste to be discharged into the oceans because the health of the sea animals, the ocean itself and those who swim in it are at risk.

To promote sustainability, companies avoid practices that would eventually harm their environment. Abiding by these practices might take a longer route, but is eventually cost effective and beneficial.

8 0
3 years ago
steve has converted his garage into a separate living space and listed the property for short term rental on an online platform
mihalych1998 [28]

Answer:

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6 0
3 years ago
A contract that gives the buyer title to goods and the opportunity to return them to the seller at a later time is a:
Vitek1552 [10]
A contract that gives the buyer title to goods and the opportunity to return them to the seller at a later time is a<span> contract for sale with the right of return.</span>
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3 years ago
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