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Katena32 [7]
2 years ago
13

Compute the payback period for each of these two separate investments: A new operating system for an existing machine is expecte

d to cost $280,000 and have a useful life of five years. The system yields an incremental after-tax income of $80,769 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $11,000. A machine costs $200,000, has a $15,000 salvage value, is expected to last seven years, and will generate an after-tax income of $44,000 per year after straight-line depreciation.
Business
1 answer:
Westkost [7]2 years ago
6 0

Answer and Explanation:

The computation of the payback period for each investment is shown below;

For Option 1

= Initial Investment ÷  Annual Cash Flow

= $280,000 ÷ $134,569

= 2.081 Year

Here Annual cash inflow is

= Net income + Depreciation

= $80,769 + (($280,000 - $11,000) ÷ 5)

= $134,569

For Option-2

= Initial Investment ÷ Annual Cash Flow

= $200,000 ÷ $70,429

= 2.84 Year

Here Annual cash inflow is

= Net income + Depreciation

= $44,000 + (($200,000 - $15,000) ÷ 7)

= $70,429

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6 0
2 years ago
Given the total fixed-cost curve in gray and the total variable-cost curve in color, draw the total cost curve. Three points on
saveliy_v [14]

Answer:

TFC : Horizontal Line parallel to X axis

TVC : Upward sloping inverse S shape curve from origin

TC : Upward sloping increase S shape curve, with Y axis intercept = TFC

Explanation:

Total Fixed cost [TFC] is the total production expenditure, done on fixed factors of production (Eg - on machine, building etc). It is incurred even at zero level of output, stays same (constant) irrespective of output level. So, it's curve is a  constant horizontal line.

Total Variable Cost [TVC] is the total production expenditure, done on variable factors of production (Eg - on raw material). It is zero at zero level of output,  directly related to level of output thereafter. It first increases at a decreasing rate, then increases at an increasing rate. So, it's curve is inverse S upward sloping curve from origin.

Total Cost [TC] is the total cost incurred on all factors of production (fixed & variable). It is sum of TVC & TFC. As TFC is constant at all levels of output, TC changes due to change in TVC. So, TC is also directly related to output level, first increases at increasing rate & then at decreasing rate. Hence, it is also a inverse S upward sloping curve. But, it also includes constant TFC. So, the curve has intercept on Y axis = TFC (it doesn't start from origin).

4 0
3 years ago
When the ace hardware store located in franklin mails an advertising flyer to all the residents in the community, it is an examp
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Bank balance as of August 31                 $21,837

Add: Deposit in transit          <u>                   $ 7,350</u>

                                                                 $29,187

<u>Less: Outstanding check                        $(5,800)</u>

Adjusted cash balance                          $23,387

Cash balance as of August 31                $22,662

Add: Collection of Note receivable     <u>   $     870</u>

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<u>Less: Bank service charge                      $(    145)</u>

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6 0
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Answer:

single seller competition in the short run

Explanation:

because Monopoly is considered a product maximizer so it can't be minimal and it most definitely is not close substitute for their products and services

5 0
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