Oriental Corporation has gathered the following data on a proposed investment project: Investment in depreciable equipment Annual net cash flows Life of the equipment $ 450,000 $ 90,000 Salvage value Discount rate 10 years $ 0 7% The company uses straight-line depreciation on all equipment. Assume cash flows occur uniformly throughout a year except for the initial investment. The payback period for the investment would be: (Round your answer to 1 decimal place.) Multiple Choice
Oriental Corporation has gathered the following data on a proposed investment project: Investment in depreciable equipment Annual net cash flows Life of the equipment $ 450,000 $ 90,000 Salvage value Discount rate 10 years $ 0 7% The company uses straight-line depreciation on all equipment. Assume cash flows occur uniformly throughout a year except for the initial investment. The payback period for the investment would be: (Round your answer to 1 decimal place.) Multiple Choice
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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Question
Transcribed Image Text:EXHIBIT 14B-1
1.
Present Value of $1;
(1+r)"
Periods
4%
5%
6%
7%
8%
9%
10%
11%
12%
13%
14%
16%
0.962 0.952 0.943 0.9350.926 0.917 0.909 0.901| 0.893 0.885 0.877 0.870 0.862
15%
17%
18%
19%
20%
21%
22%
23%
24%
25%
1
0.855 0.847 0.840 0.833 0.826 0.820 0.813
0.806 0.800
2
0.925 0.907 0.890 0.873 0.857 0.842 0.826 0.812 0.797 0.7830.769 0.756 0.743 0.731 0.718 0.706 0.694 0.683 0.672
0.661
0.650 0.640
3
0.889
0.864 |
0.840 0.816 0.794 0.772 0.751 0.731 0.712 0.693 0.675 0.658
0.624 0.609 0.593 0.579 0.564 0.551
0.641 |
0.552 0.534 0.516 0.499 0.482 0.467 0.451
0.537 0.524 0,512
4
0.763 0.735 0.708 0.683 0.659 0.636 0.613 0.592 0.572
0.713 0.681 0.650 0.621 0.593 0.567 0.543 0,519 0.497 0.476 0.456 0.437 0.419 0.402 0.386 0.370 0.355 0.341 0328
0.666
0.855 0.823
0.792
0.822 0.784 0.747
0.437 0.4230.410
0.790 0.746 0.705
0.630 0.596 0.564 0.535 0.507 0.480 0.456 0.432
0.583 0.547 0.513 0.482 0.452 0.425 0.400 0.376
0,540 0.502 0.467 0.434
0.410 0.390
0.354 0.333 0.314 0.296 0.279 0.263
0.305 0.285
0.370 0.352 0.335 0.319
0.289 0.275 0.262
0.303 0
0.249 0.235 0.222 0.210
0.204 0.191
0.167 0.155 0.144
0.711 | 0.665
0.731
0.703
0.676 0.614
0.650 0.585 0.527
0.627 0.582
0.645 0.592 0.544 0.500
0.558 0.508 0.463
0.677
0.467 0.434 0.404 0.376 0.351
0.327
0.308 0.284
0.266
0.249 |
0.233 | 0.218
0.179 | 0.168
9
0.460 0.424 0.391
0.361
0.422 0.386 0.352 0.322 0.295 0.270
0.317 0.287 0.261 0.237
0.263 0.243 0.225 0.209 0.194
0.227 0.208 0.191 0.176 0.162
0.195 0.178 0.162 0.148
0.180
0.134
10
0.247
0.215
0.187
0.229 0.204 0.182 0.163 0.145 0.130 0.116
0.141
0.162 0.137
0.149
0.135 0.123 0.112
0.107
0.094 0.086
0.076 | 0.069
0.068 0.061 0.055
0.055 0.049 0.044
0.126
0.116
11
0.475 0.388 0.350
0.429
0.135
0,103
0.557 0.497 0.444 0.397 0.356
0.368 0.326
12
0.625
0.319
0.286 | 0.257 0.231 | 0.208
0.168
0.152 0.137 0.124
0.102 | 0.092
0.084 0.075
0.062
0.083
0.601 0.5300.469 0.415
0.577 0.505
0.555
0.534 0.458
13
0.104 0.093
0.078
0.065
0.054
0.442 0.388 0.340
0.362
14
0.232 0.205 0.181 0.160
0.183 0.160 0.140
0.299
0.263
0.275 0.239
0.125
0.108
0.111
0.099
0.088
0.069
15
0.481
0.315
0.339 0.292 0.252 0.218
0.371| 0.317 0.270 | 0.231 0.198
0.417
0.074
0.095
0.081
0.209
0.084
0.123
0.141 0.123 0.107
0.057
0.051
0.045
0.040 0.035
16
0.394
0.163
0.170 0.146
0.153 0.130
0.138
0.188
0.093
0.071
0.062
0.047
0.042
0.036
0.032
0.028
17
0.513
0.436
0.125 0.108
0.080
0.069
0.060 0.052
| 0.045
0.039
0.034 0.030
0.026 0.023
0.024 0.021 0.018
0.017
0.093
0.494 0.416 0.350 0.296 0.250 | 0.212 0.180
0.475 0.396
F0.456
0.095
0.083
0.073 0.061
0.093 0.077 0.064 0.053
0.068 0056 0.046
0.038
0.037 | 0.031
0.031 0.026 0.022
0.022 | 0.018
0.018 0.015
18
0.111
0.059 0.051
0.044
0.032 | 0.028
0.027 0.023
0.081
0.069
19
0.331 0.277 0.232 0.194 0.164
0.116
0.098
0.060
0.051
0.044 0.037 0.031
0.038
0.033
0.051 0.043
0.043 0.037
0.070
0.020
0.014
20
0.377
0.215 0.178 0.149
0.087
0.312
0.294
0.258
0.124
0.104
0.016 | 0.014 0.012
0.013 0.0110.009
0.019
0.439
0.422
0.359
0.342
0.135 0.112
0.123 0.101
21
0.242
0.199
0.164
0.026
0.015
0.226 0.184
0.083
0.032 0.026 0.022
0.027 0.022
22
0.278
0.150
0.013
0.011
0.009
0.007
0.406 0.326 0.262 0.211 0.170 0.138
0.390
0.375
23
0.060 0.049 0.040
0.018 0.0115
0.112 0.091
0.102 0.082 0.066
0.074
0.009
0.007
0.006
0.006
0.006 0 005
0.005 | 0.004
0.012
0.007
0.010
0.008
0.007
24
0.310 0.247 0.197 0.158 0.126
0.053 0.043 0.035 0.028
0.023 0.019 0.015
0.013
0.010
0.295 0.233 0.184 0.146 0.116 0.092 0.074 0.059 0.047 0.038 0.030 0.024 0.020 0.016 0.013: 0.010 0.009
O201 0.230 0173
25
0201
001
9:24 AM
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Transcribed Image Text:Oriental Corporation has gathered the following data on a proposed investment project:
Investment in depreciable equipment
$ 450,000
$ 90,000
Annual net cash flows
Life of the equipment
10 years
Salvage value
Discount rate
53
$ 0
7%
The company uses straight-line depreciation on all equipment. Assume cash flows occur uniformly throughout a year except for the initial
investment.
The payback period for the investment would be: (Round your answer to 1 decimal place.)
Multiple Choice
0.2 years
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