Payback period: Capital budgeting is a planning process used to know whether a long term investment or options like to keep the old machine will be profitable or not involving factors like present value factors. There are many capital budgeting techniques. The technique that will be discussed here is – Payback period of the investment Payback period – Payback period of the investment is calculated as under – P a y b a c k p e r i o d = I n i t i a l I n v e s t m e n t – S a l v a g e v a l u e o f o l d e q u i p m e n t A n n u a l n e t c a s h i n f l o w Break-even time or discounted payback period: The break-even time is discounted payback period. When payback period concept includes the concept of present value, it is termed as break-even time. Requirement 1 To compute: • Payback period • Break-even time

Question

Want to see the full answer?

Answer 1

Question

Chapter 25, Problem 27E

To determine

Concept Introduction:

Payback period:

Capital budgeting is a planning process used to know whether a long term investment or options like to keep the old machine will be profitable or not involving factors like present value factors.

There are many capital budgeting techniques. The technique that will be discussed here is –

Payback period of the investment

Payback period –

Payback period of the investment is calculated as under –

$P a y b a c k p e r i o d = \frac{I n i t i a l I n v e s t m e n t - S a l v a g e v a l u e o f o l d e q u i p m e n t}{A n n u a l n e t c a s h i n f l o w}$

Break-even time or discounted payback period:

The break-even time is discounted payback period. When payback period concept includes the concept of present value, it is termed as break-even time.

Requirement 1

To compute:

• Payback period

• Break-even time

To determine

Requirement 2

To discuss:

Advantage of Break-even time over the payback period

To determine

Requirement 3

To list:

Two conditions under which payback period and break-even time are similar

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

As of December 31, 2018, Blossom Company has assets of $41,800 and stockholders' equity of $20,400. What are the liabilities for Blossom Company as of December 31, 2018? A. $20,400. B. $41,800. C. $62,200. D. $21,400.

Kenney Co. uses process costing to account for the production of canned energy drinks. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Equivalent units have been calculated to be 19,200 units for materials and 16,000 units for conversion costs. Beginning inventory consisted of $11,200 in materials and $6,400 in conversion costs. April costs were $57,600 for materials and $64,000 for conversion costs. The ending inventory still in process was 6,400 units (100% complete for materials, 50% for conversion). The cost per equivalent unit for materials using the weighted average method would be: a. $0.9167 b. $3.0000 c. $3.5833 d. $7.2500

General accounting

Answer 2

Question

Chapter 25, Problem 27E

To determine

Concept Introduction:

Payback period:

Capital budgeting is a planning process used to know whether a long term investment or options like to keep the old machine will be profitable or not involving factors like present value factors.

There are many capital budgeting techniques. The technique that will be discussed here is –

Payback period of the investment

Payback period –

Payback period of the investment is calculated as under –

$P a y b a c k p e r i o d = \frac{I n i t i a l I n v e s t m e n t - S a l v a g e v a l u e o f o l d e q u i p m e n t}{A n n u a l n e t c a s h i n f l o w}$

Break-even time or discounted payback period:

The break-even time is discounted payback period. When payback period concept includes the concept of present value, it is termed as break-even time.

Requirement 1

To compute:

• Payback period

• Break-even time

To determine

Requirement 2

To discuss:

Advantage of Break-even time over the payback period

To determine

Requirement 3

To list:

Two conditions under which payback period and break-even time are similar

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 25, Problem 27E

To determine

Concept Introduction:

Payback period:

Capital budgeting is a planning process used to know whether a long term investment or options like to keep the old machine will be profitable or not involving factors like present value factors.

There are many capital budgeting techniques. The technique that will be discussed here is –

Payback period of the investment

Payback period –

Payback period of the investment is calculated as under –

$P a y b a c k p e r i o d = \frac{I n i t i a l I n v e s t m e n t - S a l v a g e v a l u e o f o l d e q u i p m e n t}{A n n u a l n e t c a s h i n f l o w}$

Break-even time or discounted payback period:

The break-even time is discounted payback period. When payback period concept includes the concept of present value, it is termed as break-even time.

Requirement 1

To compute:

• Payback period

• Break-even time

To determine

Requirement 2

To discuss:

Advantage of Break-even time over the payback period

To determine

Requirement 3

To list:

Two conditions under which payback period and break-even time are similar

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 25, Problem 27E

To determine

Concept Introduction:

Payback period:

Capital budgeting is a planning process used to know whether a long term investment or options like to keep the old machine will be profitable or not involving factors like present value factors.

There are many capital budgeting techniques. The technique that will be discussed here is –

Payback period of the investment

Payback period –

Payback period of the investment is calculated as under –

$P a y b a c k p e r i o d = \frac{I n i t i a l I n v e s t m e n t - S a l v a g e v a l u e o f o l d e q u i p m e n t}{A n n u a l n e t c a s h i n f l o w}$

Break-even time or discounted payback period:

The break-even time is discounted payback period. When payback period concept includes the concept of present value, it is termed as break-even time.

Requirement 1

To compute:

• Payback period

• Break-even time

To determine

Requirement 2

To discuss:

Advantage of Break-even time over the payback period

To determine

Requirement 3

To list:

Two conditions under which payback period and break-even time are similar

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 25, Problem 27E

To determine

Concept Introduction:

Payback period:

Capital budgeting is a planning process used to know whether a long term investment or options like to keep the old machine will be profitable or not involving factors like present value factors.

There are many capital budgeting techniques. The technique that will be discussed here is –

Payback period of the investment

Payback period –

Payback period of the investment is calculated as under –

$P a y b a c k p e r i o d = \frac{I n i t i a l I n v e s t m e n t - S a l v a g e v a l u e o f o l d e q u i p m e n t}{A n n u a l n e t c a s h i n f l o w}$

Break-even time or discounted payback period:

The break-even time is discounted payback period. When payback period concept includes the concept of present value, it is termed as break-even time.

Requirement 1

To compute:

• Payback period

• Break-even time

To determine

Requirement 2

To discuss:

Advantage of Break-even time over the payback period

To determine

Requirement 3

To list:

Two conditions under which payback period and break-even time are similar

Answer 6

Chapter 25, Problem 27E

To determine

Concept Introduction:

Payback period:

Capital budgeting is a planning process used to know whether a long term investment or options like to keep the old machine will be profitable or not involving factors like present value factors.

There are many capital budgeting techniques. The technique that will be discussed here is –

Payback period of the investment

Payback period –

Payback period of the investment is calculated as under –

$P a y b a c k p e r i o d = \frac{I n i t i a l I n v e s t m e n t - S a l v a g e v a l u e o f o l d e q u i p m e n t}{A n n u a l n e t c a s h i n f l o w}$

Break-even time or discounted payback period:

The break-even time is discounted payback period. When payback period concept includes the concept of present value, it is termed as break-even time.

Requirement 1

To compute:

• Payback period

• Break-even time

Answer 7

Chapter 25, Problem 27E

To determine

Concept Introduction:

Payback period:

Capital budgeting is a planning process used to know whether a long term investment or options like to keep the old machine will be profitable or not involving factors like present value factors.

There are many capital budgeting techniques. The technique that will be discussed here is –

Payback period of the investment

Payback period –

Payback period of the investment is calculated as under –

$P a y b a c k p e r i o d = \frac{I n i t i a l I n v e s t m e n t - S a l v a g e v a l u e o f o l d e q u i p m e n t}{A n n u a l n e t c a s h i n f l o w}$

Break-even time or discounted payback period:

The break-even time is discounted payback period. When payback period concept includes the concept of present value, it is termed as break-even time.

Requirement 1

To compute:

• Payback period

• Break-even time

Answer 8

To determine

Requirement 2

To discuss:

Advantage of Break-even time over the payback period

Answer 9

To determine

Requirement 2

To discuss:

Advantage of Break-even time over the payback period

Answer 10

To determine

Requirement 3

To list:

Two conditions under which payback period and break-even time are similar

Answer 11

To determine

Requirement 3

To list:

Two conditions under which payback period and break-even time are similar

Answer 12

Expert Solution & Answer

Answer 13

Expert Solution & Answer

Answer 14

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 15

Ch. 25 - Prob. 1DQ Ch. 25 - What is capital budgeting?Ch. 25 - Prob. 3DQ Ch. 25 - Prob. 4DQ Ch. 25 - Prob. 5DQ Ch. 25 - Prob. 6DQ Ch. 25 - Prob. 7DQ Ch. 25 - Prob. 8DQ Ch. 25 - Prob. 9DQ Ch. 25 - Prob. 10DQ

Concept explainers

Videos

Requirement 2

To discuss:

Advantage of Break-even time over the payback period

Requirement 3

To list:

Two conditions under which payback period and break-even time are similar

Want to see the full answer?

Chapter 25 Solutions

Concept explainers

Videos

Requirement 2 To discuss: Advantage of Break-even time over the payback period

Requirement 3 To list: Two conditions under which payback period and break-even time are similar

Want to see the full answer?

Chapter 25 Solutions

Requirement 2

To discuss:

Advantage of Break-even time over the payback period

Requirement 3

To list:

Two conditions under which payback period and break-even time are similar