Please help:
2 answers:
Answer:
It will take 26 Months to achieve payback on investment of $2,000,000
Explanation:
Let me start by simplifying the question:
The initial investment is $2 Million. The outcome of investment is the consistent increase of 1.7% in the demand of product, which means our sales will increase by the 1.7% each subsequent year. The contribution to the revenue from additional sales is 33.6%.
Consider this table below below attached to this answer:
It gives us that in the next 2 years, $1.8 Million <u>(</u>1,875,298 to be precise) is derived.
Hence, the near answer to reach the goal of payback of $2 Million would be the 26 months.
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Answer:
The depreciation expense for year 1 is $16,000
Explanation:
Depreciation: The depreciation was occurred due to tear and wear, obsolesce, time period, etc
Under the straight-line method, the depreciation should be charged with the same amount over the useful life.
The calculation is shown below:
=
=
= $16,000
The depreciation should be charged for $16,000 in year 1. Moreover, it is shown in the income statement in the debit side and in the cash flow statement also.