What is the Accounting rate of return. Calculate the payback period in years & months Compute the net present value using factors from the tables listed below. The capital investment committee of Fantasy Land Co. is currently considering purchasing a new hologram machine to create fictitious voters and has the following information: Purchase price $240,000 Residual value 40,000 Desired payback period 4 years Minimum rate of return 15% Estimated data for the investment is as follows: Projected Year Net Income Cash inflow Cash outflow 1 $ 46,000 $ 200,000 $ 104,000 2 34,000 180,000 96,000 3 22,000 260,000 88,000 4 10,000 140,000 80,000 $ 112,000 780,000 $ 368,000 Present value of $1 to be received at the Present value of an Annuity of $1 received end of a given number of Time Periods Each period for a given number of Time Periods Year 12 % 15% 20% Year 12 % 15% 20% 1 0.893 0.870 0.833 1 0.893 0.870 0.833 2 0.797 0.756 0.694 2 1.690 1.626 1.528 3 0.712 0.658 0.579 3 2.402 2.283 2.106 4 0.636 0.572 0.482 4 3.037 2.855 2.589 5 0.567 0.497 0.402 5 3.605 3.353 2.991
- What is the Accounting
rate of return . - Calculate the payback period in years & months
- Compute the
net present value using factors from the tables listed below.
The capital investment committee of Fantasy Land Co. is currently considering purchasing a new hologram machine to create fictitious voters and has the following information:
Purchase price $240,000
Residual value 40,000
Desired payback period 4 years
Minimum rate of return 15%
Estimated data for the investment is as follows:
Projected
Year Net Income
1 $ 46,000 $ 200,000 $ 104,000
2 34,000 180,000 96,000
3 22,000 260,000 88,000
4 10,000 140,000 80,000
$ 112,000 780,000 $ 368,000
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Present value of $1 to be received at the |
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Present value of an |
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|
end of a given number of Time Periods |
|
Each period for a given number of Time Periods |
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|
Year |
12 % |
15% |
20% |
|
Year |
12 % |
15% |
20% |
|
1 |
0.893 |
0.870 |
0.833 |
|
1 |
0.893 |
0.870 |
0.833 |
|
2 |
0.797 |
0.756 |
0.694 |
|
2 |
1.690 |
1.626 |
1.528 |
|
3 |
0.712 |
0.658 |
0.579 |
|
3 |
2.402 |
2.283 |
2.106 |
|
4 |
0.636 |
0.572 |
0.482 |
|
4 |
3.037 |
2.855 |
2.589 |
|
5 |
0.567 |
0.497 |
0.402 |
|
5 |
3.605 |
3.353 |
2.991 |
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