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slava [35]
3 years ago
10

Products is considering producing toy action figures and sandbox toys. The products require different specialized​ machines, eac

h costing ​$1.1 million. Each machine has a​ five-year life and zero residual value. The two products have different patterns of predicted net cash​ inflows: LOADING...​(Click the icon to view the​ data.) Calculate the sandbox toy​ project's payback period. If the sandbox toy project had a residual value of $ 200 comma 000​, would the payback period​ change? Explain and recalculate if necessary. Does this investment pass Toy Universe​'s payback period screening​ rule?
Business
1 answer:
just olya [345]3 years ago
4 0

Answer:

Answer explained below

Explanation:

A. Calculation of Payback Period

1. For Toy Action Figure

Total Investment = $ 1,000,000

First Two Years' Net Cash Flow= $ 371500 + $ 371500

= $ 743,000

Balance Investment to be Recovered from Third Year Cash Flow= Total Investment - First-two Year Net Cash Flow

= $ 1,000,000 - $ 743,000

= $ 257,000

Third Year Net Cash Flow = $ 371,500

Payback period = 2 Years + (12MOnths* $ 257000) / $ 371,500

= 2 Years + 8.30 Months

= 2 Years 8.30 Months

2. For Sandbox Toy Project

Total Investment = $ 1,000,000

First Two Years' Net Cash Flow= $ 540000 + $ 390000

= $ 930,000

Balance Investment to be Recovered from Third Year Cash Flow= Total Investment - First-two Year Net Cash Flow

= $ 1,000,000 - $ 930,000

= $ 70,000

Third Year Net Cash Flow = $ 310,500

Payback period = 2 Years + (12 Months* $ 70000) / $ 310,500

= 2 Years + 2.71 Months

= 2 Years 2.71 Months

B. ARR of the Projects

1. For Toy Action Figure

Total Cash Flows (Given) = $1,857,000

Total Investment (Given) = $ 1,000,000

Net Income= Total Cashflows - Total Investment

= $ 1,857,000 - $ 1,000,000

, = $ 857,000

ARR Year basis = ($ 857,000 / $ 1,000,000)*100 / 5 Years

= 17.14%

2. For Sandbox Toy

Total Cash Flows (Given) = $1,535,000

Total Investment (Given) = $ 1,000,000

Net Income= Total Cashflows - Total Investment

= $ 1,535,000 - $ 1,000,000

= $ 535,000

ARR Year basis = ($ 535,000 / $ 1,000,000)*100 / 5 Years

 = 10.70%

So, Company Internal Policy for both the Project is Fulfill but as per the calculation shown above company should invest in Toy Action Figure Because It will within the payback period and earn maximum Return to the company,

And

If the Sandbox Toy has $ 200,000 Residual value then also the income will not exceed the Toy figure so answer will not change in this condition also.

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Akimi4 [234]

Answer:

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Explanation:

The Question is incomplete but i will do the typical journal entries to the transactions without figures.

1) The salaries are for one month and in brackets there is a $80,000*1/12 calculation meaning the $80,000 is for the year, now if it was already recorded then we debit salaries payable $6,667 credit bank $6,667

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4 0
3 years ago
Better Publications sold annual subscriptions to their magazine for $42,000 in December, 2016. The magazine is published monthly
Amanda [17]

Explanation:

The adjusting entry is as follows

On January 31

Unearned revenue A/c Dr $3,500

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Answer:

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Explanation:

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Present value can be calculated using a financial calculator

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To find the PV using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

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Answer:

A

Explanation:

because Short-term planning takes care of regular expenses in the near future

8 0
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GalinKa [24]

Answer:

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Under such a scenario,<em> cartels are unlikely to be formed to generate more competition among the companies that compose them.</em>

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