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Payback Period and Discounted Payback Period

Finding the Investment Alternative with Fastest Payback

See attachment. 3. Choose the investment alternative with the fastest payback. We could ask how long it would take for our $10,000 investment to grow to $20,000 if we invested in the bank at 8% per year. To answer this question we are solving the equation for the number of periods, n: $10,000 = $20,000/1.08n On the fi

Payback period of each project

Refer to two projects with the following cash flows: Year Project A Project B 0 -$200 -$200 1 80 100 2 80 100 3 80 100 4 80 What is t

Upper Darby Park

Upper Darby Park Department is considering a new capital investment. The following information is available on the investment. The cost of the machine will be $144,192. The annual cost savings if the new machine is acquired will be $40,000. The machine will have a 5-year life, at which time the terminal disposal value is expecte

Holding-Period Return for a Single Period

Can anyone explain Holding-Period Return for a Single Period? HPR = [I + (P0 - P1)] / P0 Given: CR = 8% YTM = 8% N = 10 years Compounding = Semiannual P0 = $1000 In six months the rate falls to 7% what is the HPR? I am completely baffled by this one the answer is 10.85% Semiannual. I can not get this to work

Payback Method Projects

I'm trying to determine which of these 2 project would be a better choice to accept: I my firm requires a payback of 3 years or sooner....and both projects have an initial investment of $30,000 Project A -- gives you $10,000 in year 1, $10,000 in year 2, $10,000 in year 3.....and $15,000 in year 4 Project B -- gives you $15,0

Simple Rate of Return and Payback Analysis of Two Machines

Simple Rate of Return and Payback Analysis of Two Machines (LO3, LO4) Blue Ridge Furniture is considering the purchase of two different items of equipment, as described below: 1. Machine A. A compacting machine has just come onto the market that would permit Blue Ridge Furniture to compress sawdust into various shelving p

Payback Period Cost Accounting

Equipment 10 year useful life with no salvage value at end of 10 years. Company expects net annual cash inflows of 54,000. Internal rate of return is 14%. Discount rate is 14%. What is the payback period of equipment? A 1.92 years B 2.70 C 3.7 D 5.22

How to Calculate the Payback Period

Company x is purchasing a new machine for $5,000. Useful life 5 years no salvage value. Will increase cash flows by $2,000 annually for 5 years. Company X uses straightline depreciation. Required rate of return 10%. What is the payback period? A 5 years B 2.5 years C 7.58 years D 8.34 years.

Payback Method Problem

The manager of Simple Company must choose between two investments. Project A costs $50,000 and promises cash savings of $10,000 a year over a useful life of 10 year. Project B costs $60,000, and the estimated cash savings are $11,000 per year over a useful life of 11 years. Using the payback method, determine which project the m

Payback Period

Michigan Mattress Company is considering the purchase of land and the construction of a new plant. The land, which would be bought immediately (at t = 0), has a cost of $100,000 and the building, which would be erected at the end of the first year (t = 1), would cost $500,000. It is estimated that the firm's after-tax cash flo

Classify each cost as either a product cost or a period cost.

The following is a list of costs that were incurred in the production and sale of boats: a. Cost of metal hardware for boats, such as ornaments and tie-down grasps. b. Power used by sanding equipment. c. Yearly cost of maintenance contract for robotic equipment. d. Premiums on business interruption insurance in case of

The NB Corporation: Regular Payback

The NB corporation is considering a project which has an up-front cost paid today at t=0. The project will generate positive cash flows of $70,000, a year at the end of each of the next five years. The project's NPV is $90,000 and the company's WACC is 12%. What is the project simple, regular payback?

Micro Chip's Consolidation Statement of Operations

Consider micro chip's consolidation statement of operations for the year ended Sept. 25, 2004 and answer questions 1 and 2. 1. Use the percentage sales method and a 20% increase in sales to forecast micro chip's consolidated statement of operations for the period Sept. 26, 2004- Sept. 25, 2005. Assume a 15% tax rate for the

Payback Method Question

The Short-Line Railroad is considering a $100,000 investment in either of two companies. The cash flows are as follows: Year Electric Co. Water Works 1 $70,000 $15,000 2 15,000 15,000 3 15,000 70,000 4-10 10,000 10,000 a. Using the payback method, what will the decision be? b. Explain why the answer in part a can be m

What is the project's payback period?

Jane needs a new floor. It will take $100,000 She thinks that he can improve revenue through fewer misdirected sales inquiry calls, resulting in higher sales. Through analysis, she has determined that improvement to cash flow for the company will be $40,000 in years one through five. Thus, the time horizon is five years a

Corporate Finance

Kim, the chief financial officer of the company, has arranged a meeting with you and the head of manufacturing because she thinks you need to explain to him the time value of money. Kim is concerned that many of the manufacturing projects that have been pursued are based on the payback period and do not recognize that a dollar r

Problem set

Q#2)A Assuming the at the end of the accounting period there are credit balances of $3,400 in Patient Services Revenues and $1,800 in Laboratory Fees Revenue. Prepare the required closing entry in journal form. The accounting period ends December 31. #B Assume that debit balances at the end of the accounting period are

Holding-period return and standard deviation

5. The stock of Business Adventures sells for $40 a share. Its likely dividend payout and end-of-year price depend on the state of the economy by the end of the year as follows: Dividend Stock Price Boom $2.00 $50 Normal economy 1.00 43 Recession .50 34 a. Calculate the expected holding-per

Average collection period

How do I calculate the average collection period is the total accounts receivable is 20,000,000 on annual sales of $200 million?

Pay back

Your company is considering two mutually exclusive investment options. Each involves an initial investment of $250,000. Option A is a bit more risky than option, therefore the discount rate for Option A is 15% and the discount rate for Option B is 12%. The cash flows are as follows: Year Option A Option B 1 $50,000 $75,00

Quantitative Methods: A Four Period Moving Average

Use a four period moving average to forecast attendance at baseball games. Historical records show the attendance at ten consecutive baseball games as 5346, 7812, 6513, 5783, 5982, 6519, 6283, 5577, 6712, 7345.

Solution with excel calibration

On average, Microlimp's accounts receivables total $40,000,000 on annual sales of $400 million. What is Microlimp's average collection period?

Forecasting-Exponential Smoothing

The following data summarizes the historical demand for a product Month Actual demand March 20 April 25 May 40 June 35 July 30 August 45 Use a four period moving average and determine the forecasted demand for July and August

total amount of: Manufacturing overhead, Product costs, Period

E1-3 Caroline Company reports the following costs and expenses in May. Factory utilities $ 8,500 Direct labor $69,100 Depreciation on factory equipment 12,650 Sales salaries 49,400 Property taxes on factory building 2,500 Depreciation on delivery trucks 3,800 Indirect factory labor 48,900 Repairs to office equ

Manufacturing overhead, product costs, period costs.

E1-3 Caroline Company reports the following costs and expenses in May. Factory utilities $ 8,500 Direct labor $69,100 Depreciation on factory equipment 12,650 Sales salaries 49,400 Property taxes on factory building 2,500 Depreciation on delivery trucks 3,800 Indirect factory labor 48,900 Repairs to office equ

What is the project's discounted payback period?

Woodgate Inc. is considering a project that has the following after-tax operating cash flows (in millions of dollars): Year Project Cash Flow 0 -$300 1 125 2 75 3 200 4 100 Woodgate Inc.'s finance department has concluded that the project has a 10 percent cost of ca

Project Payback Period: Woodgate Inc.

Woodgate Inc. is considering a project that has the following after-tax operating cash flows (in millions of dollars): Year Project Cash Flow 0 -$300 1 125 2 75 3 200 4 100 Woodgate Inc.'s finance department has concluded that the project has a 10 percent cost of cap

Offshore Drilling Products: Calculate Payback for two projects

See attached file. Offshore Drilling Products, Inc., imposes a payback cutoff of three years for its international investment projects. If the company has the following two projects available, should it accept either of them? Year Cash Flow (A) Cash Flow (B) 0 (38,000.00) (70,000.00)

Calculating Payback

8-1. Calculating Payback. What is the payback period for the following set of cash flows? Year Cash Flow 0 -$2,500 1 400 2 1,300 3 700 4 600