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LenaWriter [7]
3 years ago
11

ayback Period Payson Manufacturing is considering an investment in a new automated manufacturing system. The new system requires

an investment of $1,200,000 and either has: Even cash flows of $400,000 per year or The following expected annual cash flows: $150,000, $150,000, $400,000, $400,000, and $100,000. Required: Calculate the payback period for each case. Round your answer to one decimal place. a. years b. years
Business
1 answer:
algol133 years ago
3 0

Answer:

a) 3 years

b) 5 years

Explanation:

The new system requires an investment of $1,200,000

The payback period is the number of year whereas the cash inflow is equal to the total investment regardless the present value of cash inflow. It means we don't apply any rate in the calculation/

a) if the even cash flows of $400,000 per year, then the payback period is 3 years ($1,200,000 = $400,000 * 3)

b) The following expected annual cash flows: $150,000, $150,000, $400,000, $400,000, and $100,000. And total cash flows in 5 years is $1,200,000 = total investment $1,200,000

The payback period in this case is 5 years.

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Morgarella [4.7K]
<span>This is false. An increase in demand is more major than an increase in quantity demanded. Quantity demand refers to the demand of a product at a particular price and is only a movement on the demand curve. An increase in demand would cause the demand curve to shift which is more major than a movement and it encompasses the entire relationship between price and demand.</span>
7 0
3 years ago
Pelzer Printing Inc. has bonds outstanding with 10 years left to maturity. The bonds have a 9% annual coupon rate and were issue
miv72 [106K]

Answer:

The answer is 9.85%

Explanation:

The number of periods N = 9years(10 years minus 1 year ago)

Yield to Maturity (I/Y) = ?

Present value of the bond (PV) = $950.70

Future value of the bond(FV) = $1,000

Annual payment (PMT) = $90 (9% x $1,000)

Using a financial calculator to solve the problem ( BA II plus Texas instruments):

Yield to Maturity (I/Y) = 9.85%

8 0
3 years ago
A company is evaluating a new 4-year project. The equipment necessary for the project will cost $3,500,000 and can be sold for $
tresset_1 [31]

Answer:

d) $677,532.

Explanation:

1.

Written down value of the equipment after 4 years = Cost x ( 100% - 1st year MACRS - Second-year MACRS - Third-year MACRS - Fourth-year MACRS ) = $3,500,000 x ( 100% - 20% - 32% - 19.20% - 11.52% ) = $604,800

2.

Now calculate the gain on the sale of equipment

Gain on the sale of equipment = Sale Price - Written down Value after 4 years = $715,000 - $604,800 = $110,200

3.

Tax owed = Gain on the sale x Tax rate = $110,200 x 34% = $37,468

After-tax salvage value = Sales price - Tax = $715,000 - $37,468 = $677,532

4 0
2 years ago
CA1.4 (LO 1) (Financial Accounting) Omar Morena has recently completed his first year of studying accounting. His instructor for
natima [27]

Answer:

The complete answers are below.

Explanation:

a) The main difference between Financial Accounting and Managerail Accounting is its purposes and the stakeholders who make use of the information that each one provides.  

While financial accounting refers to the aggregation of accounting information in the financial statements, management accounting refers to the internal processes used to account for business transactions.

For instance: Financial accounting reports on the results of an entire business, Managerial accounting reports at a more detailed level. Financial accounting must comply with various accounting standards, whereas managerial accounting does not have to comply with any standards when information is compiled for internal consumption.

b) The financial statements most frequently provide are: Balance Sheet or Financial Position, Income Statement, Statement of cash flows and Statement of Changes in Equity.

c) In general, financial reports and financial statements differ in the formal status of financial statements in business and accounting, and these respond to standards such as GAAP and IFRS. While the financial reports have a format or presentation rules given by management, the financial statements, in the other hand, are prepared on regular basis as specific entities are required to do so according to applicable laws. It can be said that financial accounting provides financial statements and managerial accounting is responsible for financial reports.

4 0
2 years ago
During the past year, a firm produces 250 tablet devices at an average variable cost of $40 and at an average fixed cost of $10.
Bumek [7]

The total costs = Total variable costs + Total fixed costs

Given,

Average variable costs = $ 40

Average fixed cost = $ 10

Tablets produced during the year = 250

Total variable cost = Average variable costs × Tablets produced during the year

Total variable cost = 250 tablets × $ 40 = 10,000

Total fixed cost = Average fixed costs × Tablets produced during the year

Total fixed cost = 250 tablets × $ 10 = $ 2,500

Total costs = Total variable cost + Total fixed cost

Total costs = $ 10,000 + $ 2,500 = $ 12,500

6 0
3 years ago
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