Quary Company is considering an investment in machinery with the following information. Initial investment $ 254,000 Materials, labor, and overhead (except depreciation) $ 57,150 Useful life 9 years Depreciation—Machinery 26,000 Salvage value $ 20,000 Selling, general, and administrative expenses 6,350 Expected sales per year 12,700 units Selling price per unit $ 10 (a) Compute the investment’s annual income and annual net cash flow. (b) Compute the investment’s payback period.
Quary Company is considering an investment in machinery with the following information. Initial investment $ 254,000 Materials, labor, and overhead (except depreciation) $ 57,150 Useful life 9 years Depreciation—Machinery 26,000 Salvage value $ 20,000 Selling, general, and administrative expenses 6,350 Expected sales per year 12,700 units Selling price per unit $ 10 (a) Compute the investment’s annual income and annual net cash flow. (b) Compute the investment’s payback period.
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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Quary Company is considering an investment in machinery with the following information.
| Initial investment | $ 254,000 | Materials, labor, and overhead (except |
$ 57,150 | |
| Useful life | 9 | years | Depreciation—Machinery | 26,000 |
| Salvage value | $ 20,000 | Selling, general, and administrative expenses | 6,350 | |
| Expected sales per year | 12,700 | units | Selling price per unit | $ 10 |
(a) Compute the investment’s annual income and annual net cash flow.
(b) Compute the investment’s payback period.
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