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Pavlova-9 [17]
2 years ago
9

1. Park Co. is considering an investment that requires immediate payment of $31,500 and provides expected cash inflows of $12,00

0 annually for four years. What is the investment's payback period?
2. Park Co. is considering an investment that requires immediate payment of $21,530 and provides expected cash inflows of $6,500 annually for four years. If Park Co. requires a 7% return on its investments. What is the internal rate of return?
3. Peng Company is considering an investment expected to generate an average net income after taxes of $3,400 for three years. The investment costs $50,400 and has an estimated $10,200 salvage value. Assume Peng requires a 10% return on its investments. Compute the net present value of this investment. Assume the company uses straight-line depreciation.
Business
1 answer:
Aliun [14]2 years ago
7 0

Answer:

1. Park Co. is considering an investment that requires immediate payment of $31,500 and provides expected cash inflows of $12,000 annually for four years. What is the investment's payback period?

payback period = $31,500 / $12,000 = 2.625 years

2. Park Co. is considering an investment that requires immediate payment of $21,530 and provides expected cash inflows of $6,500 annually for four years. If Park Co. requires a 7% return on its investments. What is the internal rate of return?

using a financial calculator, the IRR = 8%

the IRR is the discount rate that makes a project's NPV = 0

3. Peng Company is considering an investment expected to generate an average net income after taxes of $3,400 for three years. The investment costs $50,400 and has an estimated $10,200 salvage value. Assume Peng requires a 10% return on its investments. Compute the net present value of this investment. Assume the company uses straight-line depreciation.

depreciation per year = ($50,400 - $10,200) / 3 = $13,400

net cash flows:

  • year 0 = -$50,400
  • cash flow year 1 = $3,400 + $13,400 = $16,800
  • cash flow year 2 = $3,400 + $13,400 = $16,800
  • cash flow year 3 = $3,400 + $13,400 + $10,200 = $27,000

NPV = -$50,400 + $16,800/1.1 + $16,800/1.1² + $27,000/1.1³ = -$50,400 + $49,442.52  = -$957.48

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Economic models like the _____________________ are not physical models, but instead are diagrams or graphs or even mathematical
amid [387]

Answer:

circular flow diagram

Explanation:

Economic models like the <em>circular flow diagram</em> are not physical models, but instead are diagrams or graphs or even mathematical equations that represent economic patterns or theories.

8 0
3 years ago
Crich Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct
Brrunno [24]

Answer:

Underapplied overhead= $1,640

Explanation:

<u>First, we need to calculate the predetermined overhead rate:</u>

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= 497,040 / 21,800

Predetermined manufacturing overhead rate= $22.8 per direct labor hour

<u>Now, we can allocate overhead:</u>

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 22.8*21,500

Allocated MOH= $490,200

<u>Finally, the over/under allocation:</u>

Under/over applied overhead= real overhead - allocated overhead

Under/over applied overhead= 492,040 - 490,200

Underapplied overhead= $1,640

6 0
2 years ago
Assume a single taxpayer is taxed at 10% on the first $9,275 of taxable income, 15% on the next $28,375 of income, and at 25% fo
Ksenya-84 [330]

Answer:

14.93%

Explanation:

Given:

For taxable income $9,275, tax rate = 10%

For taxable income $28,375, tax rate = 15%

For taxable income $53,500, tax rate = 25%

Now,

Tax on income =  tax rate  × taxable income

thus,

Total Tax on first $9,275 = $9,275 × 10% =  $927.5

and,

Total tax on next $28,375 = $28,375 × 15% = $4,256.25

Therefore, the total income that has been taxed till the $9,275 + $28,375

= $37,650.

and, the amount left to be taxed = $42,000 - $37,650 = $4,350

Thus,

Tax on remaining $4,350 = $4,350 × 25% = $1,087.5

Total tax = $927.5  + $4,350  + $1,087.5  = $6,365

Therefore,

The average tax rate = \frac{\textup{Total tax}}{\textup{Taxable income}}\times100

or

The average tax rate = \frac{6,365}{42,000}\times100

or

Average tax = 14.93%

6 0
3 years ago
The following are insured for medical payments under a Personal Auto Policy (PAP):
Marina86 [1]

Answer:

The correct answer to the following question is option D) all of the above statements A,B,C are correct .

Explanation:

Personal auto policy (PAP) is a pretty standardize policy design for auto insurance , where such policies provides coverage for medical payments , damage from both under insured and un insured motorists, for the liability and any damage to the vehicle. Under this policy any person who is injured by insured or insured himself or his family members and even any other person who is in possession of covered auto are all insured for receiving medical payments.

3 0
3 years ago
Indicate where each item should be presented in the statement of cash flows (indirect method) using these four major classificat
saw5 [17]

Answer:

a.  Payment of interest on notes payable - Operating Activity

b.  Exchange of land for patent - Non Cash investing activity

c.  Sale of building at book value - Investing Activity

d.  Payment of dividends - Financing Activity

e.  Depreciation - Operating Activity

f.   Receipt of interest on notes receivable - Operating Activity

g.  Issuance of Capital Stock - Financing Activity

h.  Amortization of patent - Operating Activity

i.   Issuance of bonds for land - Non Cash investing activity

j.   Purchase of land - Investing Activity

3 0
3 years ago
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