Cash payback period, net present value analysis, and qualitative considerations The plant manager of Orlando Electronics Company is considering the purchase of new automated assembly equipment. The new equipment will cost $225,C manager believes that the new investment will result in direct labor savings of $75,000 per year for 10 years. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.353 2.991 6 8 4.917 4.355 4.111 7 5.582 6.210 3.785 3.326 4.868 4.564 4.160 3.605 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 a. What is the payback period on this project? years b. What is the net present value, assuming a 10% rate of return? Use the table provided above. Round to the nearest whole dollar. Net present value $ c. What else should the manager consider in the analysis? Taxes and Maintenance costs

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

help please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all working

Cash payback period, net present value analysis, and qualitative considerations
The plant manager of Orlando Electronics Company is considering the purchase of new automated assembly equipment. The new equipment will cost $225,C
manager believes that the new investment will result in direct labor savings of $75,000 per year for 10 years.
Present Value of an Annuity of $1 at Compound Interest
Year
6%
10%
12%
15%
20%
1
0.943
0.909
0.893
0.870
0.833
2
1.833
1.736
1.690
1.626
1.528
3
2.673 2.487
2.402 2.283
2.106
4
3.465 3.170
3.037 2.855
2.589
5
4.212 3.791 3.605
3.353
2.991
6
8
4.917 4.355 4.111
7 5.582
6.210
3.785 3.326
4.868 4.564
4.160
3.605
5.335 4.968
4.487
3.837
9 6.802
5.759 5.328
4.772
4.031
10
7.360 6.145 5.650
5.019
4.192
a. What is the payback period on this project?
years
b. What is the net present value, assuming a 10% rate of return? Use the table provided above. Round to the nearest whole dollar.
Net present value $
c. What else should the manager consider in the analysis?
Taxes and Maintenance costs
Transcribed Image Text:Cash payback period, net present value analysis, and qualitative considerations The plant manager of Orlando Electronics Company is considering the purchase of new automated assembly equipment. The new equipment will cost $225,C manager believes that the new investment will result in direct labor savings of $75,000 per year for 10 years. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.353 2.991 6 8 4.917 4.355 4.111 7 5.582 6.210 3.785 3.326 4.868 4.564 4.160 3.605 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 a. What is the payback period on this project? years b. What is the net present value, assuming a 10% rate of return? Use the table provided above. Round to the nearest whole dollar. Net present value $ c. What else should the manager consider in the analysis? Taxes and Maintenance costs
Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education