1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
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
Suppose there is a simple one good economy that only produces spinning rims. In 2015, the economy was able to produce 1 million
Alex_Xolod [135]

Answer: 0

Explanation:

Firstly, we will calculate the nominal value in 2015 which will be:

= $500 x 1 million

= $500 million

The nominal value in 2016 will be:

= $1000 x 1 million

= $1 billion

Real GDP will be the price of the base year multiplied by the quantity of the current year which will be:

= $500 million x 1 million sets

= $500 million

Therefore, the increase in real GDP is zero.

4 0
3 years ago
You have an opportunity to invest in Australia at an interest rate of 8%. Moreover, you expect the Australian dollar (A$) to app
earnstyle [38]

Answer:

10.16%

Explanation:

The computation of the effective return for this investment is shown below:

Let us assume that we invested an amount in Australian dollars 100

The return is 8%

After one year, the amount is 108

Now the converting amount is 110.16 (108 × 102%)

Now the effective rate for this investment is

= 110.16 - 100

= 10.16%

7 0
3 years ago
Mr Chavez has assets of S250.000 and liabilities of $18 000 Hedecides to finance the entire amount of tho purchase of a carvalue
Scorpion4ik [409]
The right answer for the question that is being asked and shown above is that: "Mr Chavez did not increase his assets or his net worth."
<span>Mr Chavez has assets of S250.000 and liabilities of $18 000 Hedecides to finance the entire amount of tho purchase of a carvalued at S20000. That statement is true.</span>
3 0
3 years ago
Read 2 more answers
matt, a shareholder, can run for director by simply placing his name on the company's proxy statement. True or False?​
IgorLugansk [536]
False

Reason: A Shareholder cannot go for the director's by writing his name on the proxy Statement. Instead he has to place his name on the AGM or Annual General Meeting, where Shareholders meet, propose for their plans and Vote for The Company's Director.
6 0
3 years ago
 Because of its importance in summarizing your strategy, the Introduction and Overview of your business plan should be 
Rashid [163]

Answer:

Because of its importance in summarizing your strategy, the Introduction and Overview of your business plan should be written last-B.

3 0
3 years ago
Other questions:
  • Providing training for unemployed individuals is primarily intended to reduce
    11·1 answer
  • The u.s. health care system has been historically resistant to change due to entrenched interests from
    15·1 answer
  • A(n) ________ occurs when the purchasing agent orders additional units of products that have previously been purchased.
    5·1 answer
  • Salespeople bringing suggestions for a new fast food item to the headquarters of their food manufacturer is an example of ______
    7·1 answer
  • Are outstanding credit card balances counted as part of the money supply?
    7·1 answer
  • Sheridan Corp is looking to invest in a three-year bond that makes semi-annual coupon payments at a rate of 5.825 percent. If th
    5·1 answer
  • A general rule in investing is to buy high, sell high<br><br> 1) true<br> 2) false
    6·1 answer
  • All of the following statements are true regarding the periodic inventory system except Under the periodic system, a company use
    8·1 answer
  • In the best-selling book, Good to Great, the author examined the characteristics of eleven successful companies by studying the
    8·1 answer
  • By what authority was the creation and existence of a u. S. National bank deemed legitimate?.
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!