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Novay_Z [31]
3 years ago
12

First Choice Carpets is considering purchasing new weaving equipment costing $ 734 comma 000. The​ company's management has esti

mated that the equipment will generate cash inflows as​ follows: Year 1 $ 214 comma 000 2 214 comma 000 3 254 comma 000 4 254 comma 000 5 154 comma 000 Considering the residual value is​ zero, calculate the payback period.​ (Round your answer to two decimal​ places.)
Business
1 answer:
zloy xaker [14]3 years ago
7 0

Answer: 3.20 years

Explanation:

The Payback Period is a financial evaluation technique for the viability of projects by checking how long it will take for a project to pay back it's Initial cost of capital.

The above weaving machine cost $734,000 and will generate cash for 5 years.

In the first 3 years it will generate,

= 214,000 + 214,000 + 254,000

= $682,000

You can tell that the Machine will have paid off by the fourth year judging by how much is left to payback.

However, the exact period is needed. You can get that by dividing the amount remaining by the Cashflow for the year in which it is to be completed. This way you can see the proportion of time it will take for the current year to reach the desired sum.

The Cashflow for Year 4 is $254,000.

= (Initial investment - Amount from Year before Payback Year) / Cashflow in Payback Year

= (734,000 - 682,000) / 254,000

= 52,000/ 254,000

= 0.20

It will take 0.20 of Year 4 to payback the amount fully.

That means that the total Payback Period is,

= 3 years + 0.20

= 3.2 years

You might be interested in
Selene owns a craft store. Her total costs are $1.2 million per year, and her variable costs are $750,000 per year. This means t
iren [92.7K]

Answer:

fixed costs = $450000

Explanation:

given data

total costs = $1.2 million per year

variable costs = $750,000 per year

solution

we get her fixed costs that is express here as

fixed costs = total costs  - variable costs   ...........................1

put here value and we will get fixed costs    

fixed costs = $1.2 million - $750,000  

fixed costs = $1200000 - $750,000  

fixed costs = $450000

7 0
3 years ago
Bank customers try to reduce uncertainty of using a service by drawing inferences from the ________, such as the design of the b
Bas_tet [7]
The answer is "place". Bank clients attempt to decrease vulnerability of utilizing an administration by drawing surmisings from the place, for example, the outline of the building's outside and inside, the format of the work areas, and the length of holding up lines
8 0
3 years ago
Supler Corporation produces a part used in the manufacture of one of its products. The unit product cost is $21, computed as fol
Len [333]

Answer:

$4 advantage

Explanation:

In this question we need to compare the cost between the relevant cost and the outside supplier cost

The relevant cost is

= Direct material per unit + direct labor per unit + variable manufacturing overhead per unit + fixed manufacturing overhead per unit

= $8 + $5 + $3 + $5 × 80%

= $8 + $5 + $3 + $4

= $20

Since 80% of the fixed manufacturing cost above is eliminated so we considered the same

And, the outside supplier cost is $16

So based on the above calculation, the financial advantage is

= $20 - $16

= $4 advantage

This shows the company should purchased from outside supplier as it saves $4

3 0
2 years ago
Dropping small hints to let this employee know that his or her behavior is bothering you.
makvit [3.9K]

Answer:

The statement has to be classified as very effective or very ineffective.

The correct answer is:

Very ineffective

Explanation:

The word effective means "something that results in the desired effect", therefore, ineffective means the opposite "something that does not result in the disired effect".

In this case, the desired effect is to modify the employee's behaviour. If we as employers drop small hints about what is bothering us, the employee may not be able to understand what we mean, and continue behaving in the same manner.

It is more effective to have clear, straightforward communication in the workplace. If an employee behaviour is bothering us, we should simply communicate it in a direct and respectful manner.

5 0
3 years ago
If markets are efficient, what should be the correlation coefficient between stock returns for two nonoverlapping time periods?
S_A_V [24]

Answer: Zero

Explanation:

The Correlation Coefficient measures the relationship between 2 variables under study and ranges from -1 to +1 which -1 meaning that the two are perfectly negatively correlated and +1 meaning they are perfectly positively correlation. A Correlation Coefficient of 0 means that there is no relationship.

An efficient market is one where all information is available to every market participant. This means that one cannot use information from one period to make abnormal profits in another period because all information is available. The Correlation Coefficient will therefore show 0 because information from the previous period is not being used in another period meaning there is no relationship between stock returns.

7 0
3 years ago
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