Solve this accounting problem A steel fabrication company invested $900,000 in anew shearing unit. The company obtains a monthlynet income of $25,000. If the company uses aminimum acceptable rate of return of 18% per year,compounded monthly, the equivalent paybackperiod for this investment would be closest to:A. 5 yearsB. 4 yearsC. 3 yearsD. 2 yearsFormula used:

Step 1: Define Monthly compoundingMonthly compounding refers to the mode of compounding in which the…

Answered: A steel fabrication company invested…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 17EA: Gardner Denver Company is considering the purchase of a new piece of factory equipment that will...

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Caduceus Company is considering the purchase of a new piece of factory equipment that will cost $565,000 and will generate $135,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return In Excel, see Appendix C.
A restaurant is considering the purchase of new tables and chairs for their dining room with an initial investment cost of $515,000, and the restaurant expects an annual net cash flow of $103,000 per year. What is the payback period?
A certain investment costs $3400. The investment produces income of $1500 at the end of the first year and $2500 at the end of the second year. Find the annual return on the investment.
Carson, Inc. invests in cost saving technology. Based on the data below, the annual cost savings would be closest to: Investment required now $10,000 Net present value $1,300 Annual cost savings ? Discount rate 14% Life of the project 8 years
Example: A new process for a manufacturing process will have a first cost of $55,000 with annual costs of $38,000. Extra income associated with the new process is expected to be $62,000 per year. What is the payback period at j = 12% per year? a) 2.29 b) 3.00 c) 6.00 d) 2.14
An investment will cost $10,000 today for equipment plus expenses for labor andmaterials at a continuous annual rate of $2,000 per year for the next four years. Theproject will begin earning back money at a continuous rate of $3,000 per year beginningfour years from now and continuing forever. Assuming an annual effective rate i=2%,calculate the discounted payback period.
1. A company is planning to start an investment, for which there are 6 alternatives. The company can choose only one of these, in other words: the projects are mutually exclusive. Data given: • All projects have the same useful life, of 6 years. • The (annual nominal, compounded annually) MARR is 10% if the investment is $1,250 or less, 11% if more than $1,250. Table containing the Initial Investment, the Annual net cash flows (constant) and the IRR: 1 2 3 4 5 6 Initial Investment -$1,000 -$750 -$1,500 -$500 -$2,000 -$2,500 Annual net cash flow IRR $225 9% $200 $350 $120 $500 $650 15% 11% 12% 13% 14% What is the best project? a) Apply the incremental investment analysis procedure to the NPV-method
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! Required information A process for producing the mosquito repellant Deet has an initial investment of $165,000 with annual costs of $43,000. Income is expected to be $90,000 per year. What is the annual breakeven production quantity for both payback periods if net profit, that is, income minus cost, is $10 per gallon? (Consider the rounded values of years calculated in part a. Also, round your answer to the nearest integer.) When i = 0%, the annual breakeven production quantity is determined to be When i = 12%, the annual breakeven production quantity is determined to be gallons per year. gallons per year.
(engineering economic) a company considers purchasing a machine for $3000. The tool is planned to be used for 10 years and after that it will be sold for 25% of its purchase price. With the purchase of the tool, the company must incur operating costs of $ 400 per year. If the owner of the company wants a return of 10% annually on the investment made, what is the uniform annual income for at least 10 years that must be obtained from the heavy equipment so that the wishes of the owner of the company are fulfilled?
Determine the ROR, AW, and PP of the following engineering project when the MARR is 20% per year. Is the project acceptable? Engineering Project Details Investment cost $60,000 Expected life 7 years Annual receipts $15,000 Annual expenses $2,675.40 a. The Rate of Return of the project is ? Write the answer in percentage value, up to 2 decimal places. b. How much is the cash flow excess? Roundoff answer to the whole number. c. The payback Period is Write the answer in two decimal places.
3.

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