Cash payback method: Cash payback period is the expected time period which is required to recover the cost of investment. It is one of the capital investment method used by the management to evaluate the long-term investment (fixed assets) of the business. Net present value method: Net present value method is the method which is used to compare the initial cash outflow of investment with the present value of its cash inflows. In the net present value, the interest rate is desired by the business based on the net income from the investment, and it is also called as the discounted cash flow method . To determine: The cash payback period for the equipment.

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Answer 1

Question

Chapter 26, Problem 26.2BPR

1. a.

To determine

Cash payback method:

Cash payback period is the expected time period which is required to recover the cost of investment. It is one of the capital investment method used by the management to evaluate the long-term investment (fixed assets) of the business.

Net present value method:

Net present value method is the method which is used to compare the initial cash outflow of investment with the present value of its cash inflows. In the net present value, the interest rate is desired by the business based on the net income from the investment, and it is also called as the discounted cash flow method.

To determine: The cash payback period for the equipment.

b.

To determine

To calculate: The net present value of the investment of SCP Incorporation.

2.

To determine

To prepare: A brief report for advising management on the relative merits of each project.

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Answer 2

Question

Chapter 26, Problem 26.2BPR

1. a.

To determine

Cash payback method:

Cash payback period is the expected time period which is required to recover the cost of investment. It is one of the capital investment method used by the management to evaluate the long-term investment (fixed assets) of the business.

Net present value method:

Net present value method is the method which is used to compare the initial cash outflow of investment with the present value of its cash inflows. In the net present value, the interest rate is desired by the business based on the net income from the investment, and it is also called as the discounted cash flow method.

To determine: The cash payback period for the equipment.

b.

To determine

To calculate: The net present value of the investment of SCP Incorporation.

2.

To determine

To prepare: A brief report for advising management on the relative merits of each project.

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Answer 3

Question

Chapter 26, Problem 26.2BPR

1. a.

To determine

Cash payback method:

Cash payback period is the expected time period which is required to recover the cost of investment. It is one of the capital investment method used by the management to evaluate the long-term investment (fixed assets) of the business.

Net present value method:

Net present value method is the method which is used to compare the initial cash outflow of investment with the present value of its cash inflows. In the net present value, the interest rate is desired by the business based on the net income from the investment, and it is also called as the discounted cash flow method.

To determine: The cash payback period for the equipment.

b.

To determine

To calculate: The net present value of the investment of SCP Incorporation.

2.

To determine

To prepare: A brief report for advising management on the relative merits of each project.

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Answer 4

Question

Chapter 26, Problem 26.2BPR

1. a.

To determine

Cash payback method:

Cash payback period is the expected time period which is required to recover the cost of investment. It is one of the capital investment method used by the management to evaluate the long-term investment (fixed assets) of the business.

Net present value method:

Net present value method is the method which is used to compare the initial cash outflow of investment with the present value of its cash inflows. In the net present value, the interest rate is desired by the business based on the net income from the investment, and it is also called as the discounted cash flow method.

To determine: The cash payback period for the equipment.

b.

To determine

To calculate: The net present value of the investment of SCP Incorporation.

2.

To determine

To prepare: A brief report for advising management on the relative merits of each project.

Expert Solution & Answer

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Answer 5

Chapter 26, Problem 26.2BPR

1. a.

To determine

Cash payback method:

Cash payback period is the expected time period which is required to recover the cost of investment. It is one of the capital investment method used by the management to evaluate the long-term investment (fixed assets) of the business.

Net present value method:

Net present value method is the method which is used to compare the initial cash outflow of investment with the present value of its cash inflows. In the net present value, the interest rate is desired by the business based on the net income from the investment, and it is also called as the discounted cash flow method.

To determine: The cash payback period for the equipment.

b.

To determine

To calculate: The net present value of the investment of SCP Incorporation.

2.

To determine

To prepare: A brief report for advising management on the relative merits of each project.

Answer 6

Chapter 26, Problem 26.2BPR

1. a.

To determine

Cash payback method:

Cash payback period is the expected time period which is required to recover the cost of investment. It is one of the capital investment method used by the management to evaluate the long-term investment (fixed assets) of the business.

Net present value method:

Net present value method is the method which is used to compare the initial cash outflow of investment with the present value of its cash inflows. In the net present value, the interest rate is desired by the business based on the net income from the investment, and it is also called as the discounted cash flow method.

To determine: The cash payback period for the equipment.

Answer 7

Chapter 26, Problem 26.2BPR

1. a.

To determine

Cash payback method:

Cash payback period is the expected time period which is required to recover the cost of investment. It is one of the capital investment method used by the management to evaluate the long-term investment (fixed assets) of the business.

Net present value method:

Net present value method is the method which is used to compare the initial cash outflow of investment with the present value of its cash inflows. In the net present value, the interest rate is desired by the business based on the net income from the investment, and it is also called as the discounted cash flow method.

To determine: The cash payback period for the equipment.

Answer 8

b.

To determine

To calculate: The net present value of the investment of SCP Incorporation.

Answer 9

b.

To determine

To calculate: The net present value of the investment of SCP Incorporation.

Answer 10

2.

To determine

To prepare: A brief report for advising management on the relative merits of each project.

Answer 11

2.

To determine

To prepare: A brief report for advising management on the relative merits of each project.

Answer 12

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Answer 23

Ch. 26 - What are the principal objections to the use of...Ch. 26 - Discuss the principal limitations of the cash...Ch. 26 - Prob. 3DQ Ch. 26 - Your boss has suggested that a one-year payback...Ch. 26 - Prob. 5DQ Ch. 26 - Prob. 6DQ Ch. 26 - A net present value analysis used to evaluate a...Ch. 26 - Two projects haw an identical net present value of...Ch. 26 - Prob. 9DQ Ch. 26 - What are the major disadvantages of the use of the...

Solution Summary: The author explains the cash payback method and the net present value method used by the management to evaluate the long-term investment of the business.

Concept explainers

To calculate: The net present value of the investment of SCP Incorporation.

To prepare: A brief report for advising management on the relative merits of each project.

Chapter 26 Solutions