Hughes Corporation is considering a project that would require an investment of$343,000 and would last for 8 years. The incremental annual revenues andexpenses generated by the project during those 8 years would be as follows(Ignore income taxes.):SalesVariable expensesContribution marginFixed expenses:SalariesRentsDepreciationTotal fixed expensesNet operating income$ 227,00052,000175,000O 3.0 yearsO 5.1 yearsO 3.2 yearsO 4.8 years27,00041,00040,000108,000$ 67,000The scrap value of the project's assets at the end of the project would be$23,000. The cash inflows occur evenly throughout the year. The paybackperiod of the project is closest to:

Payback Period: It represents the period in which the initial cost of an investment or a project is…

Fixed expenses: Salaries Rents gin Depreciation Total fixed expenses Net operating income O 3.0 years O 5.1 years O 3.2 years O 4.8 years 175,000 27,000 41,000 40,000 108,000 $ 67,000 The scrap value of the project's assets at the end of the project would be $23,000. The cash inflows occur evenly throughout the year. The payback period of the project is closest to:

Fixed expenses: Salaries Rents gin Depreciation Total fixed expenses Net operating income O 3.0 years O 5.1 years O 3.2 years O 4.8 years 175,000 27,000 41,000 40,000 108,000 $ 67,000 The scrap value of the project's assets at the end of the project would be $23,000. The cash inflows occur evenly throughout the year. The payback period of the project is closest to:

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Required information A company that manufactures magnetic flow meters expects to undertake a project that will have the cash flows estimated. First cost, $. Equipment replacement cost in year 2, $ Annual operating cost, $/year Salvage value, $ Life, years -870,000 -300,000 -920,000 250,000 4 At an interest rate of 10% per year, what is the equivalent annual cost of the project? Find the AW value using tabulated factors. The equivalent annual cost of the project is $-1
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Required information. [The following information applies to the questions displayed below.] Project Y requires a $331,500 investment for new machinery with a five-year life and no salvage value. The project yields the following annual results. Cash flows occur evenly within each year. (PV of $1. FV of $1. PVA of $1. and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation). Depreciation Machinery Selling, general, and administrative expenses Income Years 1-5 4. Determine Project Y's net present value using 9% as the discount rate. Note: Do not round intermediate calculations. Round your present value factor to 4 decimals and final answers to the nearest whole dollar. Net present value Not Cash Flows Project Y $ 400,000 Present Value of Annuity at 9% 179,200 66,300 29,000 $ 125,500 Present Value of Net Cash Flows
Required Information [The following information applies to the questions displayed below.] Project Y requires a $327,000 investment for new machinery with a four-year life and no salvage value. The project yields the following annual results. Cash flows occur evenly within each year. (PV of $1, FV of $1, PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Project Y $ 360,000 161,280 81,750 26,000 $ 90,970 2. Determine Project Y's payback period. Project Y Payback Period Numerator: 1 Denominator: 1 Payback Period = 0
Cash Payback Period A project has estimated annual net cash flows of $37,500. It is estimated to cost $127,500. Determine the cash payback period. Round your answer to one decimal place. years

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