A project will cost $10,000 up front and $1,000 each year thereafter. The project will bring in $1,000 the first year, then $5,000 each year after. What is the breakeven point (payback period) for the project?

A project will cost $10,000 up front and $1,000 each year thereafter. The project will bring in $1,000 the first year, then $5,000 each year after. What is the breakeven point (payback period) for the project?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 2PA: Jasmine Manufacturing is considering a project that will require an initial investment of $52,000...

See similar textbooks

Related questions

Q: You are considering a project with an initial cost of $7,800. What is the payback the next the cash…

A: A shorter payback period denotes a quicker return of capital and lower financial risk, the payback…

Q: If a project costs $120,000 and is expected toreturn $40,000 annually, how long does it take…

Q: A new project will have an intial cost of $14,000. Cash flows from the project are expected to be…

A: NPV stands for Net Present Value, which is a financial metric used to evaluate the potential…

Q: You are considering a project with an initial cost of $7,800. What is the payback period for this…

A: Calculation of Payback Period:Using Excel Spreadsheet:

Q: Smoot Automotive has implemented a new project that has an initial cost, and then generates inflows…

A: Annual Inflow = 10000 N = 7 Payback period = 4 Initial Outflow = Inflow * Payback period Initial…

Q: What is the internal rate of return (IRR) of a project that costs $20,070 if it is expected to…

A: Internal rate of return is the return at which the present value of the project is zero. In other…

Q: (Paybackperiod, NPV, PI, and IRR calculations) You are considering a project with an initial…

A: Step 1: Step 2: Step 3: Step 4:

Q: Let's say you have a project which will cost $25mm to build or buy. It will produce after-tax cash…

A: It can be solved by IRR function in excel. =IRR(values,[guess]) Values = Cash flows Guess = number…

Q: You are evaluating an investment project costing $42,000 initially. The project will provide $3,000…

A: Given-Project cost/Initial Investment: $42,000Annual cash flows in first year : $3,000Annual cash…

Q: An Investment project provides the cash flow inflows of $615 per year for 8 years. a) What is the…

A: a)Calculation of project payback period:

Q: The initial cost of a project is $18 million. If a project returns $3 million at year 1 and that…

A: Payback period refers to the method of capital budgeting used for estimating the period consumed for…

Q: A project will have an initial investment requirement of $5,000. Then, it will generate 5 years of…

A: Given:

Q: An investment project provides cash inflows of $850 per year for five ears. What is the project…

A: Annual cash inflow = $850 Initial cost = $5,6004

Q: Project P has a cost of $1,000 and cash flows of $300 per year for three years plus another $1,000…

A: Time required of an investment to cover the investor’s expectation without considering time value…

Q: A new project will have an intial cost of $15,000. Cash flows from the project are expected to be…

A: IRR stands for Internal Rate of Return, which is a financial metric used to calculate the potential…

Q: A project costs $880 today, yields $150 / year for three years and $400 for two years. Then there is…

A: Given information: Initial cost is $880 Cash flows for first three years is $150 Cash flows for next…

Q: Find the net present value. 2) Should you take this project?

A: NPV is an abbreviation for Net Present Value. For example, NPV helps us to know the present value of…

Q: A project costs $100,000 and is expected to return profits of $15,000 per year. Calculate the…

A: Payback period: It is the time it takes for an investor's original investment to be repaid by cash…

Q: If a project costs $50,000 and is expected to return $10,000 annually, how long does it take to…

A: Given that; Cost of the project=$50,000 Expected return=$10,000 interest =18% The payback period is…

Q: An investment project costs $120,000. It is expected to have an annual net cash flow of $30,000 for…

A: Payback period is the time period that will be taken by a project to recover the initial investment…

Q: Project K has a cost of $52,125, its expected net cash inflows are $22,000 per year for 6 years, and…

A: Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question…

Q: If a project costs $120,000 and is expected to return $29,000 annually, how long does it take to…

A: Project Cost = 120000Annual expected return = 29000Interest = 16%

Q: A new project will have an intial cost of $10,000. Cash flows from the project are expected to be…

A: Payback period is a financial metric used to measure the amount of time it takes to recover the…

Q: An investment project provides cash inflows of $3,000 per year for five years. What is the payback…

A: Pay back period is the time period in which the project will pay back the initial investment with…

Q: A project that costs $25,200 today will generate cash flows of $4,850 per year for seven years. What…

A: Payback period is amount of time in which original investment amount can be recovered. A lower…

Q: If a project costs $100,000 and is expected to retur $25,000 annually, how long does it take to…

A: Payback period is the period required to recover initial amount of investment of project. Do not…

Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

Step 2

Step 3

Step 4

Step 5

Step 6

Step 7

Step by step

Solved in 7 steps with 5 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

If a copy center is considering the purchase of a new copy machine with an initial investment cost of $150,000 and the center expects an annual net cash flow of $20,000 per year, what is the payback period?
How much must be invested now to receive $30,000 for 10 years if the first $30.000 is received one year from now and the rate is 8%?
A new project will have an intial cost of $10,000. Cash flows from the project are expected to be $3,000, $3,500, and $4,000 over the next 3 years, respectively. Assuming a discount rate of 8%, what is the project's Payback Period?
What is the internal rate of return (IRR) of a project that costs $20,070 if it is expected to generate $8,500 per year for three years?
A project costs $1500 today, yields $300 per year for three years and $700 for two years. Then there is an expense of $500 at the end of the project. The interest rate is 7% per annum. 1) Find the net present value. 2) Should you take this project?
An investment project costs $120,000. It is expected to have an annual net cash flow of $30,000 for 5 years. ?What is the project's payback period
A project costs $100,000 and is expected to return profits of $15,000 per year. Calculate the payback period to 2 decimal places. Your Answer: Answer
A project that costs $25,200 today will generate cash flows of $4,850 per year for seven years. What is the project's payback period? List your answer with two decimal places. Payback Period = years
Project S has a cost of $65,000, and its expected net cash inflows are $15,000 per year for 8 years. a) What is the project's payback period (to the closest year)? b) The cost of capital is 14%. What is the project's NPV? c) What is the project's IRR? Show all work for credit.
A new project will have an intial cost of $15,000. Cash flows from the project are expected to be $4,000, $6,000, and $8,000 over the next 3 years, respectively. Assuming a discount rate of 10%, what is the project's IRR?
Smoot Automotive has implemented a new project that has an initial cost, and then generates inflows of P10,000 a year for the next seven (7) years. The project has a payback period of 4.0 years. 37. What is the project's internal rate of return (IRR)?
You are considering a project with an initial cost of $7,800. What is the payback period for this project if the cash inflows are $1,100, $1, 640, $3,800, and $4,500 a year over the next four years, respectively? Show all calculations.