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LuckyWell [14K]
3 years ago
9

Fuzzy Tail Industries produces wooden picnic tables for fuzzy creatures (hamster and squirrel size are its most popular products

). The company is deciding whether or not to purchase a new machine that would require an initial investment of $52,000 and is expected to generate future cash flows of $10,000 in years 1 through 3, $8,000 for years 4 and 5, and $2,000 for years 6 and 7, and $4,000 for years 8 through 10. The company prefers a payback period of 4 years or less. What is the payback period for this machine
Business
1 answer:
scoray [572]3 years ago
5 0

Answer:

7.5 Years

Explanation:

The computation of the payback period of the given machine is shown below:

<u>Year       Initial outflow       Cash flow       Cumulative cash flow</u>

               (52000)  

1                                              10,000               10,000

2                                              10,000              20,000

3                                              10,000              30,000

4                                               8,000               38,000

5                                               8,000               46,000

6                                               2,000                48,000

7                                                2,000                50,000

8                                                4,000                 54000

9                                                4,000                 58000

10                                               4,000                 62000

Now the Payback period is

=  Completed years+ required cash ÷ annual cash inflow

= 7 years + 2000 ÷ 4000

= 7.5 Years

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Answer:

A.- 3.45 min to produce two work units

B.- In a 8-hout shift at standard performance 274 work units are produced

Explanation:

The Standart tiem per piece would be:

StandardTime=NormalTime*(1+PFD)

Given your numbers it will be:

3 * (1 + 0.15)= 3.45

This is the time per cycle to produce 2 work units

Now, in an 8 hours shift there are 480 minutes.  Dividing between the standard time of a cycle we get the standard performance

\frac{480}{3.45} = 137.14

Rounding, we will be getting 137 cycles

Lastly, because each cycle produce 2 work units we are having a total of 274 Units

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Interest
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