HomeworkLib
Question

Sheridan Specialties just purchased inventory-management computer software at a cost of $2,015,950. Cost savings from the...

Sheridan Specialties just purchased inventory-management computer software at a cost of $2,015,950. Cost savings from the investment over the next six years will produce the following cash flow stream: $201,340, $354,240, $336,600, $552,250, $793,320, and $598,740. What is the payback period on this investment? (Round answer to 2 decimal places,e.g. 15.25.)

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1
Year Cash flows Cumulative Cash flows
0 (2,015,950) (2,015,950)
1 201,340 (1,814,610)
2 354,240 (1,460,370)
3 336,600 (1,123,770)
4 552,250 (571520)
5 793,320 221800
6 598,740 820,540

Payback period=Last period with a negative cumulative cash flow+(Absolute value of cumulative cash flows at that period/Cash flow after that period).

=4+(571520/793,320)

=4.72 years(Approx).

1 0
Add a comment
Know the answer?
Add Answer to:
Sheridan Specialties just purchased inventory-management computer software at a cost of $2,015,950. Cost savings from the...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

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

  • Northern Specialties just purchased inventory-management computer software at a cost of $1,241,950. Cost savings from the...

    Northern Specialties just purchased inventory-management computer software at a cost of $1,241,950. Cost savings from the investment over the next six years will produce the following cash flow stream: $146,340, $263,240, $296,600, $526,250, $720,320, and $565,740. What is the payback period on this investment? (Round answer to 2 decimal places, e.g. 15.25.) Payback period is years Click if you would like to Show Work for this question: Open Show Work

  • Blossom Specialties just purchased inventory-management computer software at a cost of $1,332,950. Cost savings from the...

    Blossom Specialties just purchased inventory-management computer software at a cost of $1,332,950. Cost savings from the investment over the next six years will produce the following cash flow stream: $183,340, $249,240, $329,600, $520,250, $777,320, and $670,740. What is the payback period on this investment?

  • Sample Test Problem 9.1 Techno Corp. management is considering developing new computer software. The cost of...

    Sample Test Problem 9.1 Techno Corp. management is considering developing new computer software. The cost of development will be $675,000, and management expects the net cash flow from sale of the software to be $195,000 for each of the next six years. If the discount rate is 14 percent, what is the net present value of this project? (Round answer to 0 decimal places, e.g. 5,275.) Net present value

  • Sample Test Problem 9.4 Management is considering developing new computer software. The cost of development will...

    Sample Test Problem 9.4 Management is considering developing new computer software. The cost of development will be $675,000, and management expects the net cash flow from sale of the software to be $195,000 for each of the next six years. If the discount rate is 14 percent, What is the IRR on this project? (Round answer to 3 decimal places,e.g. 15. 221 .) IRR Click if you would like to Show Work for this question: Open Show Work

  • Management of Franklin Mints, a confectioner, is considering purchasing a new jelly bean-making machine at a...

    Management of Franklin Mints, a confectioner, is considering purchasing a new jelly bean-making machine at a cost of $353,558. They project that the cash flows from this investment will be $150,100 for the next seven years. If the appropriate discount rate is 14 percent, what is the IRR that Franklin Mints management can expect on this project? (Round answer to 2 decimal places, e.g. 5.25%.) Champlain Corp. management is investigating two computer systems. The Alpha 8300 costs $2,677,625 and will...

  • 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 9 percent discount rate for production systems projects, Year System 1 System 2 0 -$12,790 -$46,521 1 12,897 33,430 2 12,897 33,430 3 12,897 33,430 Compute the IRR for both production system 1 and production system 2. (Do not round intermediate...

  • Wildhorse Solutions, Inc., has just invested $4,080,100 in new equipment. The firm uses a payback period...

    Wildhorse Solutions, Inc., has just invested $4,080,100 in new equipment. The firm uses a payback period criteria of rejecting any project that takes more than four years to recover its costs. Management anticipates cash flows of $624,500, $705,700, $904,500, $1,436,300, $2,102,500, and $2,549,500 over the next six years. (Round answer to 2 decimal places, e.g. 15.25.) What is the payback period of this investment? Should Wildhorse Solutions, Inc. go ahead with this project?

  • Management of Sheridan, Inc., an aviation firm, is considering purchasing three aircraft for a total cost...

    Management of Sheridan, Inc., an aviation firm, is considering purchasing three aircraft for a total cost of $155,174,783. The company would lease the aircraft to an airline. Cash flows from the proposed leases are shown in the following table. Years Cash Flow 1–4 $27,055,000 5–7 56,140,000 8–10 74,880,000 What is the IRR of this project? (Round answer to 2 decimal places, e.g. 15.25%.) The IRR of this project is enter the IRR of this project in percentages rounded to 2...

  • Problem 9.11 Management of Franklin Mints, a confectioner, is considering purchasing a new jelly bean-making machine...

    Problem 9.11 Management of Franklin Mints, a confectioner, is considering purchasing a new jelly bean-making machine at a cost of $282,730. They project that the cash flows from this investment will be $103,710 for the next seven years. If the appropriate discount rate is 14 percent, what is the IRR that Franklin Mints management can expect on this project? (Round answer to 2 decimal places, e.g. 5.25%.) 642 82.23 is the y por ste tematy the IRR is Problem 9.14...

  • Your answer is incorrect. Management of Sheridan Home Furnishings is considering acquiring a new machine that...

    Your answer is incorrect. Management of Sheridan Home Furnishings is considering acquiring a new machine that can create customized window treatments. The equipment will cost $323,550 and will generate cash flows of $68,750 over each of the next six years. If the cost of capital is 11 percent, what is the MIRR on this project? (Round intermediate calculations to 3 decimals and final answers to 1 decimal places, e.g. 15.5%. Do not round factor values.) MIRR eTextbook and Media

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