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rjkz [21]
3 years ago
8

Allison wants to automate one of its production processes. The new equipment will cost $90,000. In addition, Jupiter will incur

installation and testing costs of $5,000 and $4,500 respectively. The expected life of the equipment is 5 years and the salvage value of the equipment is estimated at $12,000. The annual cash savings are estimated at $29,000. The company uses straight-line depreciation and has a required rate of return of 9%. Ignore income taxes.A. Calculate the payback period for the investment Jupiter Ltd. is considering?B. What is the accrual accounting rate of return for the investment Jupiter Ltd. is considering?
Business
1 answer:
Alexus [3.1K]3 years ago
8 0

Answer:

Jupiter Ltd.

A. The discounted payback period is:

= 3.2 years

B. The accrual accounting rate of return for the investment is:

= 57.79%

Explanation:

a) Data and Calculations:

Cost of new equipment = $90,000

Additional costs:

Installation     $5,000

Testing             4,500            9,500

Total cost of new equip.   $99,500

Rate of return = 9%

Savings:

Salvage value, $12,000 discounted by 0.650 =             $7,800

Annual estimated cash savings, $29,000 by 3.890 = $112,810

Total savings = $120,610

Annual equivalent savings = $31,005 ($120,610/3.890)

Discounted payback period = $99,500/$31,005 = 3.2 years

The returns from the investment:

Salvage value =  $12,000

Cash savings =   145,000

Total savings = $157,000

Initial investment 99,500

Returns =           $57,500

Accrual accounting rate of return = $57,500/$99,500 * 100 = 57.79%

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NU YU announced today that it will begin paying annual dividends. The first dividend will be paid next year in the amount of $.5
konstantin123 [22]

Answer:

The current stock price is $13.60

Explanation:

D1 = $0.53

D2 = $0.58

D3 = $0.73

D4 = $1.03

Growth rate, g = 3.60%

Required return, r = 10.00%

D5 = D4 * (1 + g)

D5 = $1.03 * 1.036

D5 = $1.06708

P4 = D5 / (r - g)

P4 = $1.06708 / (0.10 - 0.036)

P4 = $16.673125

P0 = $0.53/1.10 + $0.58/1.10^2 + $0.73/1.10^3 + $1.03/1.10^4 + $16.673125/1.10^4

P0 = $13.60

So, current stock price is $13.60

7 0
3 years ago
How can you avoid saying "this year I'm going to start my business" for years? Feel good about it. Promise yourself you'll do it
Schach [20]

Don't set yourself up for failure. Starting a business is very hard especially in this climate. Instead of trying to start a business in a year work in steps each year to get to that goal

3 0
3 years ago
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A State A consumer was in a traffic accident with a State B driver. The State A consumer’s car burst into flames, causing horrif
kupik [55]

Answer: The correct answer is B. Yes, because the State B driver's claim is a proper cross-claim and is within the court's supplemental jurisdiction.

Explanation:

Option B is correct because the State B driver can assert his tort claim against the State B manufacturer. The driver's claim is a proper crossclaim and this is because it arises from the same occurrence as with State A consumer's claim.

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3 years ago
Exercise 2-15 Computing net income LO A1 A corporation had the following assets and liabilities at the beginning and end of this
Ipatiy [6.2K]

Answer:

a. $32,039

b. $19,439

c. -$12,961

d. $9,639

Explanation:

We will use accounting equation to solve the above question.

Assets = Liabilities + Equity

Also;

Net income will be the difference in equity plus dividends minus contributions

= [Ending equity - Beginning equity ] + Dividends

Since the beginning and ending equity is the same for all the years, then we'll have

$71,500 = $30,652 + Equity

Equity = $40,848

Ending equity = $122,500 - $49,613

= $72,887

a. Income : $72,887 - $40,848 + 0 - 0

= $32,039

b. $72,887 - $40,848 + $1,050 × 12 - 0

= $19,439

c. $72,887 - $40,848 + 0 - $45,000

= -12,961

d. $72,887 - $40,848 + $1,050 × 12 - $35,000

= $32,039 + $12,600 - $35,000

= $9,639

6 0
3 years ago
Jessica purchased a home on January 1, 2018 for $580,000 by making a down payment of $230,000 and financing the remaining $350,0
Ann [662]

Answer:

$32,600

Explanation:

Calculation to determine her itemized deduction if she used the proceeds of the second loan to finish the basement in her home and landscape her yard

Using this formula

Itemized deduction =(Financing amount * 6 percent)+(Additional amount borrowed*interest rate of 8 percent)

Let plug in the formula

Itemized deduction=( $350,000 * 6 percent)+($145,000 *8 percent)

Itemized deduction=($21,000+$11,600)

Itemized deduction=$32,600

Therefore her itemized deduction if she used the proceeds of the second loan to finish the basement in her home and landscape her yard wi be $32,600

5 0
3 years ago
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