What is the payback period for the production line on these financial accounting question? Greenfield Manufacturing is considering purchasing a newproduction line for $100,000. The production line would generatean annual cash flow of $28,000 for 6 years. At the end of the 6years, the production line would have no salvage value.What is the payback period for the production line?a. 3.57 yearsb. 5.25 yearsc. 4.57 yearsd. 6 years

Step 1: Define Payback PeriodThe payback period is the time it takes for an investment to recover…

Answered: Greenfield Manufacturing is considering…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 13P

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Falkland, Inc., is considering the purchase of a patent that has a cost of $50,000 and an estimated revenue producing life of 4 years. Falkland has a cost of capital of 8%. The patent is expected to generate the following amounts of annual income and cash flows: A. What is the NPV of the investment? B. What happens if the required rate of return increases?
Gallant Sports s considering the purchase of a new rock-climbing facility. The company estimates that the construction will require an initial outlay of $350,000. Other cash flows are estimated as follows: Assuming the company limits its analysis to four years due to economic uncertainties, determine the net present value of the rock-climbing facility. Should the company develop the facility if the required rate of return is 6%?
Washington-Pacific (W-P) invested $4 million to buy a tract of land and plant some young pine trees. The trees can be harvested in 10 years, at which time W-P plans to sell the forest at an expected price of $8 million. What is W-P’s expected rate of return?
Mason, Inc., is considering the purchase of a patent that has a cost of $85000 and an estimated revenue producing lite of 4 years. Mason has a required rate of return that is 12% and a cost of capital of 11%. The patent is expected to generate the following amounts of annual income and cash flows: A. What is the NPV of the investment? B. What happens if the required rate of return increases?
Although the Chen Company’s milling machine is old, it is still in relatively good working order and would last for another 10 years. It is inefficient compared to modern standards, though, and so the company is considering replacing it. The new milling machine, at a cost of $110,000 delivered and installed, would also last for 10 years and would produce after-tax cash flows (labor savings and depreciation tax savings) of $19,000 per year. It would have zero salvage value at the end of its life. The project cost of capital is 10%, and its marginal tax rate is 25%. Should Chen buy the new machine?
Roberts Company is considering an investment in equipment that is capable of producing more efficiently than the current technology. The outlay required is 2,293,200. The equipment is expected to last five years and will have no salvage value. The expected cash flows associated with the project are as follows: Required: 1. Compute the projects payback period. 2. Compute the projects accounting rate of return. 3. Compute the projects net present value, assuming a required rate of return of 10 percent. 4. Compute the projects internal rate of return.
Dauten is offered a replacement machine which has a cost of 8,000, an estimated useful life of 6 years, and an estimated salvage value of 800. The replacement machine is eligible for 100% bonus depreciation at the time of purchase- The replacement machine would permit an output expansion, so sales would rise by 1,000 per year; even so, the new machines much greater efficiency would cause operating expenses to decline by 1,500 per year The new machine would require that inventories be increased by 2,000, but accounts payable would simultaneously increase by 500. Dautens marginal federal-plus-state tax rate is 25%, and its WACC is 11%. Should it replace the old machine?
Nelson Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in cash flow of $105,000. The equipment will have an initial cost of $420,000 and have a 5 year life. If the salvage value of the equipment is estimated to be $80,000, what is the payback period? Ignore income taxes. Multiple Choice 3.24 years 4.00 years 4.76 years 7.00 years
A company is considering purchasing a machine for P210,000. The machine will generate an after-tax net income of P20,000 per year. Annual depreciation expense would be P15,000. What is the payback period for the new machine? Group of answer choices 10.5 years. 6 years. 42 years. 4 years. 14 years.
i need the answer quickly
Economics Margaret has a project with a £ 24,000 first cost that returns £ 4,900 per year over its 10-year life. It has salvage value of £ 3,200 at the end of 10 years. If the MARR is 6 %, (Use 5 significant figures for your calculations, and round your answers to the nearest dollar. Indicate losses as a negative value.) (a) What is the present worth of this project? (b) What is the annual worth of this project? (c) What is the future worth of this project after 10 years?
As entrepreneur is considering raising a bank loan to buy a firm year life span machine costing two millions(2,000,000) the cost of dept is 15% per annum and the machine will have no salvage value at the end of its life span. If the operation from the machine will yield the following annual cash flows. Year 1= #490000 Year 2=#420000 Year 3=#340000 Year 4=#400000 Year 5=#380000 Determine weather or not the manager should implement the project on the basis of 1. Net Present Value (NPV). 2. Profitability Index (PI). 3. Internal Rate if Return (IRR).

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