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
8090 [49]
3 years ago
14

Using payback to make capital investment decisions

Business
1 answer:
Romashka-Z-Leto [24]3 years ago
5 0

Answer: Henry should purchase this plant as it pays back in less than the 6 years it will have to be replaced in.

Payback period = 3.7 years

Explanation:

Payback period is a capital budgeting strategy that shows how long it will take for cash inflow to pay off the original investment.

The formula is;

= Year before payback + Cashflow remaining till payback/ Cash inflow in year of Payback

Year before payback

= 1,200,000/ 325,000

= 3.69

= 3 years

Cashflow remaining

= 1,2000,000 - (325,000 * 3)

= $225,000

= Year before payback + Cashflow remaining till payback/ Cash inflow in year of Payback

= 3 + 225,000/325,000

= 3.69

= 3.7 years

You might be interested in
A firm's _____ resources are also known as labor. economic human intangible financial natural
stepan [7]
<span>A firm's human resources are also known as labor.Labor is the most important powerful resource in firm.They are responsible for the development of the firm.A good firm should have responsible labors and labors want to satisfy with their salary given by firm.Human resources should come up with the new ideas so that it will become an advantage to the firm.</span>
8 0
3 years ago
McFadden, Inc. has collected the following data. (There are no beginning inventories.)Units produced 600 unitsSales price $150 p
vodka [1.7K]

Answer:

The correct answer is B.

Explanation:

Giving the following information:

Units produced 600 units

Direct materials $40 per unit

Direct labor $13 per unit

Variable manufacturing overhead $6 per unit

Variable selling and administrative costs $4 per unit

The variable costing method calculates the cost of goods based on direct material, direct labor, and variable manufacturing overhead.

First, we need to calculate the unitary cost of production:

unitary cost= 40 + 13 + 6= $59

Inventory= 600 units - 450 units= 150 units

Inventory cost= 150*59= $8,850

8 0
3 years ago
What are the weaknesses of the cash payback approach? A. It uses accrual-based accounting numbers B. It ignores the time value o
Debora [2.8K]

Answer:

D. Both (B) and (C) are true

Explanation:

Cash payback approach is helpful to know the number of years, project would take to recover the initial investment. It could be calculated by dividing initial investment by cash flow per year. It is very simple and easy approach to compare projects and find number of years to recover the initial investment. The most serious weekness of cash payback approach is, it ignore the time value for the money, it also ignore project profitablity and project`s return on investment.  As according to cash payback approach, it consider projects with short payback time as profitable and thus ignore useful life of alternative projects.

7 0
3 years ago
In the month of June, a department had 20,000 units in beginning work in process that were 70% complete. During June, 90,000 uni
fgiga [73]

Answer:

100,000 units

Explanation:

The computation of the transferred out units of the process is shown below:

= Transferred units × percentage of completion + ending work in process inventory units × percentage of completion

= 90,000 units × 100% + 10,000 units × 100%

= 90,000 units + 10,000 units

= 100,000 units

All other information which is given is not considered. Hence, ignored it

3 0
3 years ago
In the securitization process, mortgages are pooled together and cash flows are packaged into securities to be sold in the secon
Viefleur [7K]

Answer:

conduits

Explanation:

A mortgage-backed security is one in which is similar to bonds but that usually consists of home loans ought from banks that issued them. It is a type asset-backed security which can be sold through brokers.

investment in mortgage-backed assets means the investor is lending out his money to people that intend to get a home.

A mortgage-backed security can be bought directly from banks or through brokers. These brokers are also called conduits.

Cheers

7 0
3 years ago
Other questions:
  • "The board of directors of Capstone Inc. declared a $0.70 per share cash dividend on its $3 par common stock. On the date of dec
    9·1 answer
  • Blanchard Company manufactures a single product that sells for $140 per unit and whose total variable costs are $112 per unit. T
    12·1 answer
  • When a nation is under-allocating resources to the production of a good, then the:_________.
    8·1 answer
  • Career exploration unit 5 test answers- edgenuity- business management and administration careers
    6·2 answers
  • The City of McNeely sold bonds in the amount of $25,000,000 to finance the construction of a public health center. The bonds are
    12·1 answer
  • A sales invoice included the following information: merchandise price, $4,000; transportation, $300; terms 1/10, n/eom, FOB ship
    7·1 answer
  • On December 15, 2016, the board of directors of Cross Corporation declared a cash dividend, payable on January 8, 2017, of $0.94
    9·1 answer
  • When do the parents enter the echo stage
    8·1 answer
  • While in the restroom, you overhear your boss telling a colleague that Bob is going to be laid off at the end of the quarter in
    10·1 answer
  • isabel and josh engage in a business transaction that leads to a dispute. isabel initiates a lawsuit against josh by filing a co
    6·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!