Bobwhite Laundromat is trying to enhance the services it provides to customers, mostly college students. It is looking into the purchase of new high-efficiency washing machines that will allow for the laundry's status to be checked via smartphone. Bobwhite estimates the cost of the new equipment at $191,000. The equipment has a useful life of 9 years. Bobwhite expects cash fixed costs of $76,000 per year to operate the new machines, as well as cash variable costs in the amount of 5% of revenues. Bobwhite evaluates investments using a cost of capital of 10%. Present Value of $1 table Present Value of Annuity of $1 table Future Value of $1 table Future Value of Annuity of $1 table Read the requirements. Requirement 1. Calculate the payba (Round your answer to two decimal p The payback period in years, for the 1. 2. Requirements Calculate the payback period and the discounted payback period for this investment, assuming Bobwhite expects generate $150,000 in incremental revenues every year from the new machines. Assume instead that Bobwhite expects an uneven stream of incremental cash revenues from installing the new washing machines. Based on this estimated revenue stream, what are the payback and discounted payback periods for the investment? A 1 Year 2 Projected Revenue B с Year 1 Year 2 $ 95,000 $ 95,000 D Year 3 $150,000 Print Xery year from the new machines. E F H I J Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 $120,000 $ 190,000 $180,000 $150,000 $120,000 $195,000 Done
Bobwhite Laundromat is trying to enhance the services it provides to customers, mostly college students. It is looking into the purchase of new high-efficiency washing machines that will allow for the laundry's status to be checked via smartphone. Bobwhite estimates the cost of the new equipment at $191,000. The equipment has a useful life of 9 years. Bobwhite expects cash fixed costs of $76,000 per year to operate the new machines, as well as cash variable costs in the amount of 5% of revenues. Bobwhite evaluates investments using a cost of capital of 10%. Present Value of $1 table Present Value of Annuity of $1 table Future Value of $1 table Future Value of Annuity of $1 table Read the requirements. Requirement 1. Calculate the payba (Round your answer to two decimal p The payback period in years, for the 1. 2. Requirements Calculate the payback period and the discounted payback period for this investment, assuming Bobwhite expects generate $150,000 in incremental revenues every year from the new machines. Assume instead that Bobwhite expects an uneven stream of incremental cash revenues from installing the new washing machines. Based on this estimated revenue stream, what are the payback and discounted payback periods for the investment? A 1 Year 2 Projected Revenue B с Year 1 Year 2 $ 95,000 $ 95,000 D Year 3 $150,000 Print Xery year from the new machines. E F H I J Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 $120,000 $ 190,000 $180,000 $150,000 $120,000 $195,000 Done
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:P22-38 (similar to)
Bobwhite Laundromat is trying to enhance the services it provides to customers, mostly college students. It is looking into the purchase of new high-efficiency washing machines that will allow for the laundry's status to
be checked via smartphone. Bobwhite estimates the cost of the new equipment at $191,000. The equipment has a useful life of 9 years. Bobwhite expects cash fixed costs of $76,000 per year to operate the new
machines, as well as cash variable costs in the amount of 5% of revenues. Bobwhite evaluates investments using a cost of capital of 10%.
Present Value of $1 table Present Value of Annuity of $1 table Future Value of $1 table Future Value of Annuity of $1 table
Read the requirements.
Requirement 1. Calculate the payba
(Round your answer to two decimal p
The payback period in years, for the
1.
Requirements
Calculate the payback period and the discounted payback period for this investment, assuming Bobwhite expects to generate
$150,000 in incremental revenues every year from the new machines.
2. Assume instead that Bobwhite expects an uneven stream of incremental cash revenues from installing the new washing
machines. Based on this estimated revenue stream, what are the payback and discounted payback periods for the
investment?
A
1 Year
2 Projected Revenue
B
с
Year 1 Year 2
95,000 $ 95,000
D
Year 3
$150,000
Print
F
I
J
E
G
H
Year 4 Year 5 Year 6 Year 7 Year 8 Year 9
$120,000 $190,000 $180,000 $150,000 $120,000 $195,000
Done
Question Help
Xery year from the new machines.
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