Target rate of return on capital

Assignment Help Business Management
Reference no: EM131026118

ASD Ltd is considering the purchase of a new machine. Two options have been suggested, each costing $400,000. Earnings after taxation but before depreciation are expected to be as follows:

Year

Machine X$

Machine Y$

1

2

3

4

5

40,000

120,000

160,000

240,000

160,000

120,000

160,000

200,000

120,000

80,000

On this base, you are required:

a) Compute the Pay-back Period and

b) The Company has a target rate of return on capital @10%. Calculate NPV.

c) To compare profitability index of the machines and state which option you consider financially favourable

Reference no: EM131026118

Questions Cloud

Calculating the size of the money multiplier : Assume a financial system has a monetary base (MB) of $25 million. The required reserves ratio is 10 percent, and no leakages are in the system. a. What is the size of the money multiplier (m)? b. What will be the system's money supply?
How long will you wait from now : You expect to receive $15,500 at graduation in three years. You plan on investing it at 12 percent until you have $86,000. How long will you wait from now? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g...
Consider the reaction of 25.0 ml of 0.20 m agno3 : Consider the reaction of 25.0 mL of 0.20 M AgNO3(aq) with 25.0 mL of 0.20 M NaBr(aq) to form AgBr(s) at 25°C: Ag+(aq) + Br-(aq) ? AgBr(s).  What is ΔG for this reaction? The Ksp of AgBr is 5.0 x 10^-13 at 25°C.
Considering investment that will require initial cash outlay : The happy day care center is considering an investment that will require an initial cash outlay of $300000 to purchase nondepreciable asserts that have a 10 year life. The organization requires a minimum 4 year payback.
Target rate of return on capital : a) Compute the Pay-back Period and b) The Company has a target rate of return on capital @10%. Calculate NPV. c) To compare profitability index of the machines and state which option you consider financially favourable
How structural deviance different from individual deviance : Explain the concept of structural deviance (also called organizational deviance). How is structural deviance different from individual deviance?
What is the case luker makes in arguing : What is the case Luker makes in arguing that the core problem that needs to be addressed is not the problem constructed by claims makers teenage pregnancy but instead poverty itself?
Write an expression for the total return to capital : Rewrite the MPK as a function of output per unit of capital. Write an expression for the total wage bill. Write an expression for the total return to capital. What is the ratio of labor income to capital income for this production function
Ph of a saturated solution of ba(oh)2 : pH of a saturated solution of Ba(OH)2 is 12. The value of solubility product (Ksp) of Ba(OH)2

Reviews

Write a Review

Business Management Questions & Answers

  Appropriate anova values and alternative hypotheses.

Identify the null and alternative hypotheses you should form for this test. State each as an explanation and as a  math equation. Identify the appropriate statistical test to accept or reject the null hypothesis. Calculate the appropriate ANOVA value..

  Effective outline for presentation

What six stages should you go through in preparing an effective outline for presentation? Explain the reasons why each stage is necessary.

  Discuss steps to diversify the card business

Define diversification and its necessity in risk management. Discuss steps to diversify the card business. Suggest how and where funds can be allocated for new investments.

  Employee contractswould you support a law that requires

employee contracts.would you support a law that requires every employer to offer a standardized contract to employees

  Which the auditors ethical behavior is impaired

which the auditors ethical behavior is impaired by their professional obligations? How does the profession view of such obligations relate to how courts tend to view the legal liability of auditors?

  Business intelligence and data warehouses

Businesses today are extremely reliant on large amounts of data for making intelligent business decisions. Likewise, the data warehouses are often structured in a manner that optimizes processing large amounts of data.

  Organizational behavior terminology

Describe and Define the observable aspects of each of the above and provide a brief analysis of the culture and behavior of your organization or an organization with which you are familiar.

  Profitability ratiosexplain what are profitability ratios

profitability ratiosexplain what are profitability ratios? who uses them and why? what do dell and hps profitability

  Which of the following hypothetical new products

Countries with varied climates and varied natural resources generally __________ than countries with less varied climates and natural resources.  have lower per capita incomes  depend less on trade  have more ethnic subgroups have higher endowments o..

  Leader and plans to improve

Discussion of how you will actually use your plan to impact your leadership, your followers, and your organization and show how you will assess and modify your plan to ensure you are on track.

  Assignment on business research methods

Normal 0 false false false EN-US X-NONE X-NONE BUSINESS RESEARCH METHODS.

  Identify all legal issues this company faces in its most

identify all legal issues this company faces in its most recent scandal.what mistakes if any have been made and how

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd