(a) Introduction: Payback period is the time period required to cover the cost of an investment or it is the duration of time needed to recover the initial cost of an investment. To explain: If the Payback period is enough for the company to decide to accept a project or not.

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Answer 1

Question

Chapter 11, Problem 13E

To determine

(a)

Introduction:

Payback period is the time period required to cover the cost of an investment or it is the duration of time needed to recover the initial cost of an investment.

To explain:

If the Payback period is enough for the company to decide to accept a project or not.

To determine

(b)

Introduction:

Net present value is calculated as the difference between present cash inflows and present cash outflows. A positive value of NPV states that the investment is profitable and negative value of NPV states that the investment will result in a loss.

To state:

The company will accept or reject the project, using NPV method.

To determine

(c)

Introduction:

Payback period is the time period required to cover the cost of an investment or it is the duration of time needed to recover the initial cost of an investment.

Net present value is calculated as the difference between present cash inflows and present cash outflows. A positive value of NPV states that the investment is profitable and negative value of NPV states that the investment will result in a loss.

To state:

The reason for a difference of statements in part 1 and part 2 and the advice that will help the management to take a better decision.

To determine

(d)

Introduction:

Net present value is calculated as the difference between present cash inflows and present cash outflows. A positive value of NPV states that the investment is profitable and negative value of NPV states that the investment will result in a loss.

To state:

The impact it will have on NPV, if company’s cost of capital was 10%.

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During June, the production department of a process operations system completed and transferred to finished goods a total of 82,000 units of product. At the end of May, 18,000 additional units were in process in the production department and were 70% complete with respect to materials. The beginning inventory included a materials cost of $92,400 and the production department incurred a direct materials cost of $276,800 during June. Compute the direct materials cost per equivalent unit for the department using the weighted-average method.

Mistral Inc. reported $85,000 in net profit for the year using absorption costing. The company had no units in beginning inventory, planned and actual production was24,000 units and sales were 20,500 units during the year. Variable manufacturing costs were $25 per unit and total budgeted fixed manufacturing overhead was $120,000. There was no underapplied or overapplied overhead reported during the year. Determine the net profit under variable costing.

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Answer 2

Question

Chapter 11, Problem 13E

To determine

(a)

Introduction:

Payback period is the time period required to cover the cost of an investment or it is the duration of time needed to recover the initial cost of an investment.

To explain:

If the Payback period is enough for the company to decide to accept a project or not.

To determine

(b)

Introduction:

Net present value is calculated as the difference between present cash inflows and present cash outflows. A positive value of NPV states that the investment is profitable and negative value of NPV states that the investment will result in a loss.

To state:

The company will accept or reject the project, using NPV method.

To determine

(c)

Introduction:

Payback period is the time period required to cover the cost of an investment or it is the duration of time needed to recover the initial cost of an investment.

Net present value is calculated as the difference between present cash inflows and present cash outflows. A positive value of NPV states that the investment is profitable and negative value of NPV states that the investment will result in a loss.

To state:

The reason for a difference of statements in part 1 and part 2 and the advice that will help the management to take a better decision.

To determine

(d)

Introduction:

Net present value is calculated as the difference between present cash inflows and present cash outflows. A positive value of NPV states that the investment is profitable and negative value of NPV states that the investment will result in a loss.

To state:

The impact it will have on NPV, if company’s cost of capital was 10%.

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Answer 3

Question

Chapter 11, Problem 13E

To determine

(a)

Introduction:

Payback period is the time period required to cover the cost of an investment or it is the duration of time needed to recover the initial cost of an investment.

To explain:

If the Payback period is enough for the company to decide to accept a project or not.

To determine

(b)

Introduction:

Net present value is calculated as the difference between present cash inflows and present cash outflows. A positive value of NPV states that the investment is profitable and negative value of NPV states that the investment will result in a loss.

To state:

The company will accept or reject the project, using NPV method.

To determine

(c)

Introduction:

Payback period is the time period required to cover the cost of an investment or it is the duration of time needed to recover the initial cost of an investment.

Net present value is calculated as the difference between present cash inflows and present cash outflows. A positive value of NPV states that the investment is profitable and negative value of NPV states that the investment will result in a loss.

To state:

The reason for a difference of statements in part 1 and part 2 and the advice that will help the management to take a better decision.

To determine

(d)

Introduction:

Net present value is calculated as the difference between present cash inflows and present cash outflows. A positive value of NPV states that the investment is profitable and negative value of NPV states that the investment will result in a loss.

To state:

The impact it will have on NPV, if company’s cost of capital was 10%.

Expert Solution & Answer

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Answer 4

Question

Chapter 11, Problem 13E

To determine

(a)

Introduction:

Payback period is the time period required to cover the cost of an investment or it is the duration of time needed to recover the initial cost of an investment.

To explain:

If the Payback period is enough for the company to decide to accept a project or not.

To determine

(b)

Introduction:

Net present value is calculated as the difference between present cash inflows and present cash outflows. A positive value of NPV states that the investment is profitable and negative value of NPV states that the investment will result in a loss.

To state:

The company will accept or reject the project, using NPV method.

To determine

(c)

Introduction:

Payback period is the time period required to cover the cost of an investment or it is the duration of time needed to recover the initial cost of an investment.

Net present value is calculated as the difference between present cash inflows and present cash outflows. A positive value of NPV states that the investment is profitable and negative value of NPV states that the investment will result in a loss.

To state:

The reason for a difference of statements in part 1 and part 2 and the advice that will help the management to take a better decision.

To determine

(d)

Introduction:

Net present value is calculated as the difference between present cash inflows and present cash outflows. A positive value of NPV states that the investment is profitable and negative value of NPV states that the investment will result in a loss.

To state:

The impact it will have on NPV, if company’s cost of capital was 10%.

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Answer 5

Chapter 11, Problem 13E

To determine

(a)

Introduction:

Payback period is the time period required to cover the cost of an investment or it is the duration of time needed to recover the initial cost of an investment.

To explain:

If the Payback period is enough for the company to decide to accept a project or not.

To determine

(b)

Introduction:

Net present value is calculated as the difference between present cash inflows and present cash outflows. A positive value of NPV states that the investment is profitable and negative value of NPV states that the investment will result in a loss.

To state:

The company will accept or reject the project, using NPV method.

To determine

(c)

Introduction:

Payback period is the time period required to cover the cost of an investment or it is the duration of time needed to recover the initial cost of an investment.

Net present value is calculated as the difference between present cash inflows and present cash outflows. A positive value of NPV states that the investment is profitable and negative value of NPV states that the investment will result in a loss.

To state:

The reason for a difference of statements in part 1 and part 2 and the advice that will help the management to take a better decision.

To determine

(d)

Introduction:

Net present value is calculated as the difference between present cash inflows and present cash outflows. A positive value of NPV states that the investment is profitable and negative value of NPV states that the investment will result in a loss.

To state:

The impact it will have on NPV, if company’s cost of capital was 10%.

Answer 6

Chapter 11, Problem 13E

To determine

(a)

Introduction:

Payback period is the time period required to cover the cost of an investment or it is the duration of time needed to recover the initial cost of an investment.

To explain:

If the Payback period is enough for the company to decide to accept a project or not.

Answer 7

Chapter 11, Problem 13E

To determine

(a)

Introduction:

Payback period is the time period required to cover the cost of an investment or it is the duration of time needed to recover the initial cost of an investment.

To explain:

If the Payback period is enough for the company to decide to accept a project or not.

Answer 8

To determine

(b)

Introduction:

Net present value is calculated as the difference between present cash inflows and present cash outflows. A positive value of NPV states that the investment is profitable and negative value of NPV states that the investment will result in a loss.

To state:

The company will accept or reject the project, using NPV method.

Answer 9

To determine

(b)

Introduction:

Net present value is calculated as the difference between present cash inflows and present cash outflows. A positive value of NPV states that the investment is profitable and negative value of NPV states that the investment will result in a loss.

To state:

The company will accept or reject the project, using NPV method.

Answer 10

To determine

(c)

Introduction:

Payback period is the time period required to cover the cost of an investment or it is the duration of time needed to recover the initial cost of an investment.

Net present value is calculated as the difference between present cash inflows and present cash outflows. A positive value of NPV states that the investment is profitable and negative value of NPV states that the investment will result in a loss.

To state:

The reason for a difference of statements in part 1 and part 2 and the advice that will help the management to take a better decision.

Answer 11

To determine

(c)

Introduction:

Payback period is the time period required to cover the cost of an investment or it is the duration of time needed to recover the initial cost of an investment.

Net present value is calculated as the difference between present cash inflows and present cash outflows. A positive value of NPV states that the investment is profitable and negative value of NPV states that the investment will result in a loss.

To state:

The reason for a difference of statements in part 1 and part 2 and the advice that will help the management to take a better decision.

Answer 12

To determine

(d)

Introduction:

Net present value is calculated as the difference between present cash inflows and present cash outflows. A positive value of NPV states that the investment is profitable and negative value of NPV states that the investment will result in a loss.

To state:

The impact it will have on NPV, if company’s cost of capital was 10%.

Answer 13

To determine

(d)

Introduction:

Net present value is calculated as the difference between present cash inflows and present cash outflows. A positive value of NPV states that the investment is profitable and negative value of NPV states that the investment will result in a loss.

To state:

The impact it will have on NPV, if company’s cost of capital was 10%.

Answer 14

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Answer 15

Expert Solution & Answer

Answer 16

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Answer 17

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(a) Introduction: Payback period is the time period required to cover the cost of an investment or it is the duration of time needed to recover the initial cost of an investment. To explain: If the Payback period is enough for the company to decide to accept a project or not.

Solution Summary: The author explains the payback period as the time period required to cover the cost of an investment or the duration of time needed to recover the initial cost.

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(a)

Introduction:

Payback period is the time period required to cover the cost of an investment or it is the duration of time needed to recover the initial cost of an investment.

To explain:

If the Payback period is enough for the company to decide to accept a project or not.

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Chapter 11 Solutions