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Payback Period and Discounted Payback Period

Payback Period; Rate of Return; Return on Investment

Use the following to answer questions 44-45. Mackenzie Corporation is evaluating a proposal to invest in a machine costing \$60,000. The machine has an estimated useful life of ten years, and an estimated salvage value of \$10,000. The machine will increase the company's net income by approximately \$7,000 per year. All revenue an

Average Carrying Value/ Investment; Salvage Value; Payback Period, etc.

0. The average carrying value (or average investment) of an asset with no salvage value is equal to: a. The original cost of the asset divided by its estimated useful life. b. The original cost of the asset divided by two. c. The average annual net cash flow of the asset multiplied by the asset's estimated useful life. d. Th

Average Collection Period, Inventory, & Total Asset Turnover

See attached file. Use the attached annual information to answer the three questions that follow: Calculate the following asset activity ratios for the end of 1999. 1. Average Collection Period 2. Inventory Turnover 3. Total Asset Turnover.

Payback period

Flash Company wants to purchase a new computer that will allow the company to do in-house printing rather than sub-contract the work out to a printer. The machine will cost \$45,000. FLash also believes there will be substantial savings on printing costs over the five-year life of the machine. Savings are anticipated at:

Payback

Payback is considered an unsophisticated budgeting techique, and as such ______. gives no consideration to timing of cash flows and therefore the time value of money, gives no consideration to risk exposure, does consider the timing of cash flows and therefore gives explicit consideration to the time value of money, or g

Payback period method

Assume a capital project requires \$42,000 as an initial investment and expects a net cash inflow of \$12,000 per year. The payback period method _________. would consider the capital project accepable if the company requires a minimum payback of three years, is usually used as a screening device to eliminate capital project

Determining the Payback Period for the Project

An investment project requires a net investment of \$100,000. The project is expected to generate annual net cash inflows of \$28,000 for the next 5 years. The firm's cost of capital is 12%. Determine the payback period for the project.

Do you think that the payback method has increased or decreased in popularity in recent years? Explain

Do you think that the payback method has increased or decreased in popularity in recent years? Explain

Payback

A project that costs \$2500 to install will provide annual cash flows of \$600 for the next 6 yrs. The firm accepts projects with payback periods of less than 5 years. Will the project be accepted? Should this project be pursued if the discount rate is 2%? What if the discount rate is 12%? Will the firm's decision change as t

Calculating the payback period

3. I have a project that will cost \$150,000 to start (implementation costs) and there is no terminal cash flow. The operating cash flows over the next 5 years are as follows: Revenue Operating Costs Year 1 \$25,000 \$35,000 Year 2 55,000 30,000 Year 3 85,000 35,000 Year 4 100

Cash flows, payback period

Details: ABC Manufacturing is thinking of launching a new product. The company expects to sell \$900,000 of the new product in the first year and \$1,500,000 each year thereafter. Direct costs including labor and materials will be 55% of sales. Indirect incremental costs are estimated at \$80,000 a year. The project will require a

ABC Manufacturing is thinking of launching a new product.

ABC Manufacturing is thinking of launching a new product. The company expects to sell \$900,000 of the new product in the first year and \$1,500,000 each year thereafter. Direct costs including labor and materials will be 55% of sales. Indirect incremental costs are estimated at \$80,000 a year. The project will require a new plant

Cash flows NPVs, IRRs, Payback Periods

Assistance is needed to draw up an incremental cash flow for the following two options (attached files) then calculate the net present values, internal rate of return and payback period.

Investment Decisions, Payback Method

The Payback method: notes

Calculate the payback period for a set of cash flows

What is the payback period for the following set of cash flows? Year 0 Cash Flow is -\$2,500; year 1 cash flow is \$300; year 2 cash flow is \$1500; year 3 cash flow is \$900; year 4 cash flow is \$300