Calculate the payback time of the X investment project in years. X, compute the benefit-cost ratio.

2.ARR Sm... Robinson Hardware is adding a new product line that will require an investment of $1,454,000. Annual cash inflows are expected to increase by $500,000 per year. 2 20 000 40 000 Determine the payback period if the expected cash inflows are $14,500 per... What method can be used to determine a project's valuation, other than discounted cash flow? The payback period for Alternative B is … 1year. Installation costs and freight charges were $3,506 and $8... A new manufacturing machine is expected to cost $278,000, have an eight-year life, and a $30,000 salvage value. All non-cash expenses are ignore while computing payback period. The life of each bus is estimated to be... Chee Corporation has gathered the following data on a proposed investment project: Investment required in equipment $240,000 Annual cash inflows $50,000 Salvage value $0 Life of the investment 8 ye... Legend Service Center just purchased an automobile hoist for $34,100. A and B are alternative models. w Year Cash Flow 0 -$ 5,500 1 1,300 2 1,500 3 1,900 4 1,400 What is the payback period for the set of cash flows given above? 1. Is the length of time necessary to recover the entire cost of an investment from its resulting annual net cash flow? A private school is considering the purchase of six school buses to transport students to and from school events.

The project is expected to generate annual net cash flows of $28,000 for the next 5 years.

The length of time a firm must wait to recoup the money it has invested in a project is called the: A. internal return period. Consider the following three projects. the investment will result in additional cash flows of $525,000, $812,500, and $1,215,000 o... Naomi Corporation just purchased machinery at a cost of $3,300.

The term used to describe the time necessary to recover the original cost of an investment from its expected cash inflows. 20k 3.

It is expected to produce the following net cash flows. Gn b. It is shown below: Payback period = $25,000/$10,000= 2.5 years. Required: Compute payback period of the investment. Compute the payback period. The useful life of the machine is 10 years, at the end of which the machine is estimated to have a salvage value... Pinero is considering a $600,000 investment in new equipment that is anticipated to produce the following net cash inflows: Year Net Cash Inflows 1 $120,000 2 250,000 3 110,000 4 80,000 5 160,000 I... Bordan Enterprises is considering a capital expenditure that requires an initial investment of $42,000 and returns after-tax cash inflows of $7,000 per year for 10 years. What is the NPV? Show all your calculations, Tnks so much The equipment has a 10-year useful life. The payback period: a. 1��HB}���x�-N���*C�5�GlC����3@�gR}IvO����`��)~i9��3�U[Xs��qp� ��Q�o����;�}?cA��%�������9 These reductions in cos... Equipment with a cost of $60 000 will, if acquired, generate annual savings of $30 000 for six years, at which time it will have no further use or value. Find the payback period for the following project Project X. $3500. The movie is expected to cost $10.9 miIIion upfront and take a year to make. What is the payback period? 30000

Explanations, Exercises, Problems and Calculators, Capital budgeting techniques (explanations), https://www.accountingformanagement.org/net-present-value-method/. 3.65 years b. NPV (Refer to the TQM Initiative worksheet i... Nova Products has a 5-year maximum acceptable payback period. Both projects' after-tax cash flows are shown on the timeline below... BSU Inc. wants to purchase a new machine for $37,800, excluding $1,400 of installation costs. D. discounted cash period.... ABC Company is considering an investment that will cost the company $566 at time = 0. Between a young investor and a near-retiree investor who do you think will prefer to use payback period as a tool for appraising investment? The expected annual cash inflow of the machine is $10,000. What is the project's payback? b)Avarage rate of return. Year Cash Flow 0 $6,400 1 $1,600 2 $1,900 3 $2,300 4 $1,400. The firm has a maximum acc... Project K costs $55,000, its expected cash inflows are $11,000 per year for 8 years, and its WACC is 14%. An investment of 600,000 results in income of 200,000 per year for six years. 20k. Calculating Payback: An investment project provides cash inflows of $970 per year for eight years. 5k According to payback method, machine Y is more desirable than machine X because it has a shorter payback period than machine X. &���'��u�b`��h``P� �.`RL2t �;:P�aF�? What is the project's payback?

Why does the payback period provide a measure of a project's liquidity risk? The payback period for the following set of cash flows is years. 0000001193 00000 n What is the project payback period if the initial cost is $3,850?

If 12 % of the energy that a PV system will generate over a 30-year lifetime is needed to build the system, what is the energy payback time (the time at which the energy investment is recovered) fo... What is the payback period for the following set of cash flows?
0000002789 00000 n c. Should the project be ac... A project has an initial cost of $1,125, expected net cash inflows of $750.30 per year for 5 years, and a cost of capital of 11.10%. If the... Offshore Drilling Products, Inc.., imposes a payback cutoff of three years for its international investment projects. Compute the following. What if the initial cost is $4,300? 5. year acfs after depre.tax acfs after depre.tax What is the payback period for a project with the following cash flows? Project K costs $55,000, its expected cash inflows are $12,000 per year for 6 years, and its WACC is 9%. a. The inflow and outflow of cash associated with the new equipment is given below: Cost of ingredients: $45,000Salaries expenses: $13,500Maintenance expenses: $1,500. �����ӵ��I��� a. 2.38 years B. The time value of money is 3 percent. What is the project payback period if the initial cost is $4,850? An investment project with a short payback period promises the quick inflow of cash. The project will produce no cash flows for the first two years. 5year. The estimated cash flow for each project is as follows. 2 5,375 9,375 Plz help solving my confusion.

(Round your answer to 2 decimal places, e.g., 32.16.)

Create an account to browse all assets today, Biological and Biomedical What are the primary strengths and weaknesses of the payback approach in capital budgeting?

Managers estimate that this investment will have a 10-year life and generate net cash inflows of $300,0... BSU Inc. wants to purchase a new machine for $44,300, excluding $1,500 of installation costs. Do not round your inter... Metro Car Washes, Inc. is reviewing an investment proposal.

Neighbors Corporation is considering a project that would require an investment of $354,000 and would last for 8 years. 1,80,000. (Enter 0 if the project never pays back. Payback Cost savings are expected to be $43,5... Sue Bonno Company has identified that the cost of a new computer will be $40,000, but with the use of the new computer, net income will increase by $5,000 a year. Year 0 1 2 3 Cash Flows -$750 $300 $325 $350 a) 1.91 years b) 2.12 years c) 2.36 years... Doug's Custom Construction Company is considering three new projects, each requiring an equipment investment of $20,330. A company is planning to purchase a machine that will cost $71,000, have a seven-year life, and be depreciated using the straight-line method with no salvage value.

Use payback method for your answer. A new operating system for an existing machine is expected to cost $270,000 and have a useful life of five years. Explain. True or false? Project A requires a $480,000 investment for new machinery with a three-year life and no salvage value. 0000002561 00000 n 20,000. I need a logical reasoning sir… Thank u. In uneven cashflow the minimum year is taken as 3, on what basis it has been taken plz elaborate. Year 0 -$1,039 Year 1 $318 Year 2 $388 Year 3 $586 Calculate the project's regular payback. d)Internal rate of return. Calculate Pay-back. Greetings everyone, anyone to help here please. The machine cost $500,000. The payback method helps firms establish and identify a maximum acceptable payback period that helps in their capital budgeting decisions. (Round answer to 2 decimal places.) a. Compute the payback statistic for Project B if the appropriate cost of capital is 12% and the maximum allowable payback period is three years. In the above examples we have assumed that the projects generate even cash inflow but many projects usually generate uneven cash flow. Which of the following represents a potential drawback of using the payback period calculation for capital budgeting decisions? Stern Associates is considering a project that has the following cash flow data. Since the annual cash inflow is even in this project, we can simply divide the initial investment by the annual cash inflow to compute the payback period. A project has a required payback period of three years.

0000002341 00000 n The firm uses payback period criteria of not accepting any project that takes more than four years to recover its costs. Year Project A(R) Project B(R) Name several advantages and disadvantages of using this method.

The company requires a minimum pretax return of 17% on all investment projects. The cost of the new software will be $168,000. Machine A costs $51,000, and Machine B costs $72,000.
A project with short payback period can improve the liquidity position of the business quickly.

Initial Outlay $8,300 Year 1 $3,350 Year 2 $3,130 Year 3 $3,500 Year 4 $7,490 The answer should be calculated to two decimal places. The equipment will... Rihanna Company is considering purchasing new equipment for $450,000. Under payback method, an investment project is accepted or rejected on the basis of payback period. Do we need to deduct interest while arriving cash inflows to calculate PBP… If yes why ??? According to payback method, the project that promises a quick recovery of initial investment is considered desirable. (e.g., 32.16)). I appreciate the help on bayback. Cfbdt Rs.

(Enter 0 if the project never pays back. Compute the payback statistic for Project X and recommend whether the firm should accept or reject the project with the cash flows shown as follows if the app... A project has the following cash flows: Date Cashflow 0 -$200 1 $80 2 $50 3 $100 4 $15 5 $50 If these cash flows occur uniformly during each period, what is the payback period? The disposal value at the end of the estimated 10-year life is $2,0... What are the main limitations of the pay back method of valuation? a. What is the payback period for the cash flows? You analyze Project W and decide that Year 1 free cash flow is $100,000 too low, and Year 3 free cash flow i... A project with a payback period of four years is acceptable as long as the company's target payback period is greater than or equal to four years. The hoist has an 8-year life and an estimated salvage value of $3,640. A significant disadvantage of the payback period is that it: a) Is complicated to explain. (Do not round intermediate calculations and roun... KTS is trying to estimate the first-year operating cash flow. The system is expected to generate positive cash flows over the next four years in the amounts of $350,000 in yea... Any project deemed acceptable using the discounted payback period will also be acceptable if using the traditional payback period. Which one of the following statements would generally be considered as accurate given independent projects with conventional cash flows a.

A company is planning to purchase a machine that will cost $30,600, have a six-year life, and be depreciated over a three-year period with no salvage value.

What is the project payback period if the initial cost is $1,525? NationaI lnc. These reductions in... An investment project provides cash inflows of $935 per year for eight years. Cash budget 2 $3000. What is the project's payback? EEG, Inc. is considering a new project that will require an initial cash investment of $388,000.

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