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Katena32 [7]
3 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]3 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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D. A firm's weighted average cost of capital decreases as the firm's debt-equity ratio increases.

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When a person owes more on an item (like a car or house) than it is worth, the person is said to be _________ on the loan. secur
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When a person owes more on an item (like a car or house) than it is worth, the person is said to be <u>upside down</u> on the loan.

<h3><u>Describe an upside-down loan.</u></h3>

You have an upside-down auto loan if you owe more money than the car is truly worth. You may need to make additional payments or modify your insurance coverage in order to prevent being upside-down on your loan or, at the very least, to shorten the amount of time you are in this perilous financial situation.

When you owe more on a car loan than the vehicle is worth, the loan is considered upside-down. If your car is worth $12,000 but your loan total is $15,000, for instance, your loan would be in the negative. You have $3,000 in negative equity in this situation.

It's not always a problem to have an outstanding auto loan. If you don't intend to sell your car, you can make loan payments until the balance is paid off. It won't affect the way you communicate with your lender.

Learn more about upside-down loans with the help of the given link:

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6 0
1 year ago
Carby Hardware has an outstanding issue of perpetual preferred stock with an annual dividend of $7.50 per share. If the required
Ad libitum [116K]

Answer:

The answer is $115.38

Explanation:

Solution

Given that

The annual dividend on preferred stock = $7.50

Required return on preferred stock+= 6.5%

The next step is to find at what price should the preferred stock sell which is given as follows:

The rice of preferred stock = 7.50/6.5%

= $115.38

$115.38 is the price at which the stock preferred was sold.

4 0
3 years ago
What is an essential government role in market economies select one of the options below as your answer:
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The correct answer to this question is letter "b. to prevent monopolies and collusion." An essential government role in market economies is <span>to prevent monopolies and collusion. If it happens that there is monopoly and collision, then it will be a big problem to consumer.</span>
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3 years ago
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Mocha Company manufactures a single product by a continuous process, involving three production departments. The records indicat
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Answer:

c. Work in Process--Department 2 375,000 Work in Process--Department 1 375,000

Explanation:

The journal entry is shown below:

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     To Work in Proces - Department 1 $375,000

(Being the flow of cost from Dept 1 to Dept 2 is recorded)

Here the work in process for dept 2 is debited as it increased the assets and credited the work in process for dept 2 as it decreased the assets

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3 years ago
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