Flynn Corporation is debating whether to purchase a new computerized production system. Tne system will cost $450,000, and have an estimated 10-year life with a salvage value of $70,00. The estimated operating results from the new production system are as follows: Incremental revenue.. $180,000 Incremental expenses:. Expenses other than depreciation.... $85,000 Depreciation (straight-line basis).. 38,000 (123.000) Incremental net income..... $57.000 All revenue and expenses other than depreciation will be received and paid in cash. Compute the following for this proposal: a. Annual net cash flow: $ b. Payback period: years с. Return on average investment: d. Net present value, discounted at an annual rate of 6% (present value of $1 due in 10 years, discounted at 6%, is 0.558; present value of $1 received annually for 10 years, discounted at 6%, is 7.360): $
Flynn Corporation is debating whether to purchase a new computerized production system. Tne system will cost $450,000, and have an estimated 10-year life with a salvage value of $70,00. The estimated operating results from the new production system are as follows: Incremental revenue.. $180,000 Incremental expenses:. Expenses other than depreciation.... $85,000 Depreciation (straight-line basis).. 38,000 (123.000) Incremental net income..... $57.000 All revenue and expenses other than depreciation will be received and paid in cash. Compute the following for this proposal: a. Annual net cash flow: $ b. Payback period: years с. Return on average investment: d. Net present value, discounted at an annual rate of 6% (present value of $1 due in 10 years, discounted at 6%, is 0.558; present value of $1 received annually for 10 years, discounted at 6%, is 7.360): $
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
FP5
![Flynn Corporation is debating whether to purchase a new computerized production system. Tne
system will cost $450,000, and have an estimated 10-year life with a salvage value of $70,00.
The estimated operating results from the new production system are as follows:
Incremental revenue..
$180,000
Incremental expenses:.
Expenses other than depreciation....
$85,000
Depreciation (straight-line basis)..
38,000
(123.000)
Incremental net income.....
$57.000
All revenue and expenses other than depreciation will be received and paid in cash. Compute the
following for this proposal:
a. Annual net cash flow: $
b. Payback period:
years
с.
Return on average investment:
d. Net present value, discounted at an annual rate of 6% (present value of $1 due in 10
years, discounted at 6%, is 0.558; present value of $1 received annually for 10 years,
discounted at 6%, is 7.360): $](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe7ba6475-4e83-42f3-8706-4d296c8ad44f%2F70acfc23-4166-4f24-9ecc-7020b7d60091%2Fr0hrqoq.jpeg&w=3840&q=75)
Transcribed Image Text:Flynn Corporation is debating whether to purchase a new computerized production system. Tne
system will cost $450,000, and have an estimated 10-year life with a salvage value of $70,00.
The estimated operating results from the new production system are as follows:
Incremental revenue..
$180,000
Incremental expenses:.
Expenses other than depreciation....
$85,000
Depreciation (straight-line basis)..
38,000
(123.000)
Incremental net income.....
$57.000
All revenue and expenses other than depreciation will be received and paid in cash. Compute the
following for this proposal:
a. Annual net cash flow: $
b. Payback period:
years
с.
Return on average investment:
d. Net present value, discounted at an annual rate of 6% (present value of $1 due in 10
years, discounted at 6%, is 0.558; present value of $1 received annually for 10 years,
discounted at 6%, is 7.360): $
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 8 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education