Question

10.6 Payback: Refer to Problem 10.5. What are the payback periods for production systems 1 and 2? If the systems are mutually

Please show work with excel cells

0 0
Add a comment Improve this question Transcribed image text
Answer #1

If the payback period needs to be calculated then the discount rate is not required as it is used only for the discounted payback period method.

As the annual cash flows are the same as 15,000 and 32,000 respectively, the formula will be: Cash outflow/Annual cash inflow

So in excel, just divide 15000 by 15000 for system 1 and the payback period will be 1 year,

For system 2, divide 45000 by 32000, the payback period will be 1.41 years

=45000/32000

Add a comment
Know the answer?
Add Answer to:
Please show work with excel cells 10.6 Payback: Refer to Problem 10.5. What are the payback...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • Problem 10.06 Sunland Incorporated management is considering investing in two alternative production systems. The systems are...

    Problem 10.06 Sunland Incorporated management is considering investing in two alternative production systems. The systems are mutually exclusive, and the cost of the new equipment and the resulting cash flows are shown in the accompanying table. The firm uses a 7 percent discount rate for their production systems Year System 1 System 2 $13,600 13,600 13,600 13,600 $46,200 32,400 32,400 32,400 0 2 What are the payback periods for production systems 1 and 2? (Round answers to 2 decimal places,...

  • Blanda Incorporated management is considering investing in two alternative production systems. The systems are mutually exclusive,...

    Blanda Incorporated management is considering investing in two alternative production systems. The systems are mutually exclusive, and the cost of the new equipment and the resulting cash flows are shown in the accompanying table. If the firm uses a 7 percent discount rate for their production systems. Year 0 1 2 3 System 1 -$13,600 13,600 13,600 13,600 System 2 -$46,200 32,400 32,400 32,400 What are the payback periods for production systems 1 and 2? (Round answers to 2 decimal...

  • Carla Vista Incorporated management is considering investing in two alternative production systems. The systems are mutually...

    Carla Vista Incorporated management is considering investing in two alternative production systems. The systems are mutually exclusive, and the cost of the new equipment and the resulting cash flows are shown in the accompanying table. The firm uses a 7 percent discount rate for their production systems. Year System 1 System 2 0 -$13,200 -$46,200 1 13,200 32,400 2 13,200 32,400 3 13,200 32,400 What are the payback periods for production systems 1 and 2? (Round answers to 2 decimal...

  • Problem 10.06 Sandhill Incorporated management is considering investing in two alternative production systems. The systems are...

    Problem 10.06 Sandhill Incorporated management is considering investing in two alternative production systems. The systems are mutually exclusive, and the cost of the new equipment and the resulting cash flows are shown in the accompanying table. The firm uses a 7 percent discount rate for their production systems. Year 0 on m System 1 -$15,000 15,000 15,000 15,000 System 2 -$44,900 33,200 33,200 33,200 What are the payback periods for production systems 1 and 2? (Round answers to 2 decimal...

  • Please show all work. Must be completed using financial formulas, NO EXCEL. a. Calculate the NPV, IRR, MIRR, and traditional payback period for each project, assuming a required rate of return of 8%....

    Please show all work. Must be completed using financial formulas, NO EXCEL. a. Calculate the NPV, IRR, MIRR, and traditional payback period for each project, assuming a required rate of return of 8%. b. If the projects are independent, which project(s) should be selected? If they are mutually exclusive, which project should be selected? Project P costs $10,400 and is expected to produce cash flows of $3,650 per year for five years. Project Q costs $30,000 and is expected to...

  • Choosing between two projects with acceptable payback periods Shell Camping Gear, Inc., is considering two mutually...

    Choosing between two projects with acceptable payback periods Shell Camping Gear, Inc., is considering two mutually exclusive projects. Each requires an initial investment of $180,000. John Shell, president of the company, has set a maximum payback period of 4 years. The after-tax cash inflows associated with each project are shown in the following table: a. Determine the payback period of each project. b. Because they are mutually exclusive, Shell must choose one. Which should the company invest in? a. The...

  • I am needing help with the excel formulas for the following question (the cells highlighted in...

    I am needing help with the excel formulas for the following question (the cells highlighted in green.) Problem 1. West Coast Company is considering two mutually exclusive projects, the project's expected net cash flows are as follows: Expected Cash Flows Year Proj. A Proj. B 0 ($40,000) ($30,000)    1 ($12,000) $8,500 2 $10,000 $8,500 3 $35,000 $8,500 4 $14,000 $8,500 5 $25,000 $8,500 Required Rate of Return 14.00% 14.00% 1.c. (8 points) Calculate the crossover rate of these two...

  • I am needing help with the excel formulas for the following problem (the cells highlighted in...

    I am needing help with the excel formulas for the following problem (the cells highlighted in green) Problem 1. West Coast Company is considering two mutually exclusive projects, the project's expected net cash flows are as follows: Expected Cash Flows Year Proj. A Proj. B 0 ($40,000) ($30,000)    1 ($12,000) $8,500 2 $10,000 $8,500 3 $35,000 $8,500 4 $14,000 $8,500 5 $25,000 $8,500 Required Rate of Return 14.00% 14.00% 1.a. (8 points) Calculate each project's IRR (IRR should be...

  • Problem 10-21 Payback, NPV, and MIRR Your division is considering two investment projects, each of which...

    Problem 10-21 Payback, NPV, and MIRR Your division is considering two investment projects, each of which requires an up-front expenditure of $27 million. You estimate that the cost of capital is 8% and that the investments will produce the following after-tax cash flows (in millions of dollars): Year Project A Project B 1 5 20 2 10 10 3 15 8 4 20 6 What is the regular payback period for each of the projects? Round your answers to two...

  • Problem 10-21 Payback, NPV, and MIRR Your division is considering two investment projects, each of which...

    Problem 10-21 Payback, NPV, and MIRR Your division is considering two investment projects, each of which requires an up-front expenditure of $22 million. You estimate that the cost of capital is 12% and that the investments will produce the following after-tax cash flows (in millions of dollars): Year Project A Project B 1 5 20 2 10 10 3 15 8 4 20 6 What is the regular payback period for each of the projects? Round your answers to two...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT