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Alex_Xolod [135]
3 years ago
12

Cash Payback Period for a Service Company Prime Financial Inc. is evaluating two capital investment proposals for a drive-up ATM

kiosk, each requiring an investment of $200,000 and each with an eight-year life and expected total net cash flows of $320,000. Location 1 is expected to provide equal annual net cash flows of $40,000, and Location 2 is expected to have the following unequal annual net cash flows:
Year 1 $60,000 Year 5 $30,000
Year 2 50,000 Year 6 30,000
Year 3 50,000 Year 7 30,000
Year 4 40,000 Year 8 30,000

Determine the Cash Paybck period for both location proposals.
Business
1 answer:
sashaice [31]3 years ago
4 0

Answer:

Location 1 = 5 years

Location 2  = 4 years

Explanation:

The period in which initial investment is recovered by a business is known as payapack period.

Location 1

Net cash flow = $320,000

Cash Flow per year = $320,000 / 8 = $40,000

Payback period = Initial Investment / Yearly cash flow = $200,000 / $40,000 per year = 5 years

Location 2

As per given Data

Cash Flows

Year1 $60,000    Year2 $50,000

Year3 $50,000     Year4 $40,000

Year5 $30,000    Year6 $30,000

Year7 $30,000    Year8 $30,000

Payback period                  Balance      

Year0 ($200,000)            ($200,000)    

Year1 $60,000                  ($140,000)

Year2 $50,000                 ($90,000)

Year3 $50,000                  ($40,000)

Year4 $40,000                     ($0)

It took 4 year to recoveer the initial investment, so the payaback period is 4 years.

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Answer:

A. the FCAC is less than the TBC

Explanation:

If the amount of cumulated actual costs is less than difference between the total budgeted cost and the re-estimate, then the FCAC is less than the TBC

3 0
3 years ago
To pay for investment advice from financial consultants Smith and Jones, Tony signs a check payable to "Smith or Jones." A prope
DedPeter [7]

Answer:

to Smith only, or Jones only, or Smith and Jones

Explanation:

In this specific scenario, a proper indorsement of the check would be to Smith only, or Jones only, or Smith and Jones. That is because a check needs to be as specific as possible and cannot have various options. The check needs to be made to a single specific individual and if it is for more than one individual then both need to be included as a requirement (and). Making it so that both recipients must cash the check together for it to be accepted.

6 0
3 years ago
A marine biologist is planning to move from Sydney, Australia to San Francisco. She has $5,000 Australian dollars (AUD) to make
natita [175]

Answer:

Now, if takes 0.765 USD to be equal 1 AUD. when the dollar increases, it will take fewer dollars to equal 1 AUD. for instance, it takes 0.5 dollars per 1 AUD. The conversion will change to:5,000 AUD * (0.5 USD/AUD)

5,000 * 0.5

= $2,500

so, her AUD will be worth more now.

Explanation:

Solution

Given that:

Her present  $5,000 AUD is worth $3,825 USD.

Then

5,000 AUD * (0.765 USD/AUD)

5,000 * 0.765

= $3,825

So,

If the USD dollar increases against the AUD, then, the ratio will reduce.

For example, it takes 0.765 USD to be equal 1 AUD. when the dollar increases, it will take fewer dollars to equal 1 AUD. for instance, it takes 0.5 dollars per 1 AUD. The conversion will change to:

5,000 AUD * (0.5 USD/AUD)

5,000 * 0.5

= $2,500

Therefore, her AUD will be worth more now.

6 0
3 years ago
Freya plans to invest $3,200 a year for 25 years starting at the end of this year. How much will this investment be worth at the
Dmitry [639]

Answer:

$240,885.11

Explanation:

The formula to be used is = annual payment x annuity factor

Annuity factor = {[(1+r) ^N ] - 1} / r

R = interest rate = 8.2 percent

N = number of years = 25

[(1.082^25) - 1 ] / 0.082 = 75.276598

75.276598 x $3,200 = $240,885.11

I hope my answer helps you

5 0
2 years ago
After visiting several automobile dealerships, Richard selects the used car he wants. He likes its $11,500 price, but financing
aksik [14]

Explanation:

I = Prt

I = (10000)(.11)(4) = $4400

Total Cost = Down Payment + Principal Borrowed + Interest

Total Cost = 2000 + 8000 + 4400

= $14,400

Monthly Payment = (Principal Borrowed + Total interest) / Total number of payments

Monthly Payment = (10,000 + 4400) / 48

= $300

APR= (2 × n × I) / [P × (N + 1)]

APR = (2 × 12 × 4400) / [10,000 × (48+1)]

= 21.55%

3 0
3 years ago
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