Requirement 1:
Initial Investment = $560,000
Salvage Value = $28,000
Useful Life = 4 years
Annual Depreciation = (Initial Investment - Salvage Value) /
Useful Life
Annual Depreciation = ($560,000 - $28,000) / 4
Annual Depreciation = $133,000
Answer 2.
Answer 3.
Payback Period = Cost of Investment / Annual Net Cash Flow
Payback Period = $560,000 / $241,500
Payback Period = 2.32 years
Answer 4.
Annual Average Investment = (Initial Investment + Salvage Value)
/ 2
Annual Average Investment = ($560,000 + $28,000) / 2
Annual Average Investment = $294,000
Accounting Rate of Return = Annual Net Income / Annual Average
Investment
Accounting Rate of Return = $108,500 / $294,000
Accounting Rate of Return = 36.90%
Answer 5.
Saved Problem 24-1A Computation of payback period, accounting rate of return, and net present value LO...
Problem 24-1A Computation of payback period, accounting rate of return, and net present value LO P1, P2, P3 Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $720,000 cost with an expected four-year life and a $44,000 salvage value. All sales are for cash, and all costs are out-of-pocket, except for depreciation on the new machine. Additional information includes the following. (PV of...
Problem 25-1A Computation of payback period, accounting rate of return, and net present value LO P1, P2, P3 Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $800,000 cost with an expected four-year life and a $52,000 salvage value. All sales are for cash, and all costs are out-of-pocket, except for depreciation on the new machine. Additional information includes the following. (PV of...
Check my work Problem 24-1A Computation of payback period, accounting rate of return, and net present value LO P1, P2, P3 Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $640,000 cost with an expected four-year life and a $36,000 salvage value. All sales are for cash, and all costs are out-of-pocket, except for depreciation on the new machine. Additional information includes the...
Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $500,000 cost with an expected four-year life and a $22,000 salvage value. All sales are for cash, and all costs are out-of-pocket. except for depreciation on the new machine. Additional information includes the following (PV of $1. FV of $1. PVA of $1, and EVA of $1 (Use appropriate factor(s) from the tables provided....
Problem 24-2A Analysis and computation of payback period accounting rate of return and net present value P1 P2 P3 Most Company has an opportunity to invest in one of two new projects Project Y requires a $350,000 invest- ment for new machinery with a four-year life and no salvage value. Project Z requires a $350,000 investment for new machinery with a three-year life and no salvage value. The two projects yield the following predicted an- nual results. The company uses...
factory Company is planning to add a new product to its line. $483,000 cost $23,000 salvage Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine ta $183,000 cost with an expected four year life and a $23,000 salvage value. All sales are for cash, and all costs are out-of-pocket except for depreciation on the new machine. Additional information includes the following (PV of $1. FV...
Problem 24-2A Analysis and computation of payback period, accounting rate of return, and net present value LO P1, P2, P3 [The following information applies to the questions displayed below.] Most Company has an opportunity to invest in one of two new projects. Project Y requires a $335,000 investment for new machinery with a five-year life and no salvage value. Project Z requires a $335,000 investment for new machinery with a four-year life and no salvage value. The two projects yield...
Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $660,000 cost with an expected four-year life and a $38,000 salvage value, All sales are for cash, and all costs are out-of-pocket, except for depreciation on the new machine. Additional information includes the following. (PV of $1, EV of $1, PVA of $1, and FVA of $1) (Use approprlate factor(s) from the tables provided....
Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $500,000 cost with an expected four-year life and a $22,000 salvage value. All sales are for cash, and all costs are out-of-pocket, except for depreciation on the new machine. Additional information includes the following. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided....
Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $640,000 cost with an expected four-year life and a $36,000 salvage value. All sales are for cash, and all costs are out-of-pocket. except for depreciation on the new machine. Additional information includes the following. (PV of $1. FV of $1. PVA of S1, and FVA of $1) (Use appropriate factor(s) from the tables provided....