What is the payback period for the new machine

Assignment Help Financial Accounting

Reference no: EM131266409

A company is considering the purchase of a new machine for $54,000. Management predicts that the machine can produce sales of $16,600 each year for the next 10 years. Expenses are expected to include direct materials, direct labor, and factory overhead totaling $7,400 per year including depreciation of $4,600 per year. The company's tax rate is 40%. What is the payback period for the new machine? 3.25 years. 6.28 years. 5.34 years. 11.74 years. 26.47 years.

Reference no: EM131266409

Questions Cloud

Calculate the price-earnings ratio and market-to-book ratio : You are considering an investment in Roxie's Bed & Breakfast Corp. During the last year, the firm's income statement listed an addition to retained earnings of $13.20 million and common stock dividends of $1.80 million. What is Roxie's Bed & Breakfas..

Calculate the return on assets and dividend payout : Maggie's Skunk Removal Corp.'s 2012 income statement listed net sales of $13.9 million, EBIT of $7.0 million, net income available to common stockholders of $4.6 million, and common stock dividends of $2.6 million. Calculate the return on assets. Cal..

Calculate goodman bees cash ratio and current ratio : You are evaluating the balance sheet for Goodman’s Bees Corporation. From the balance sheet you find the following balances: cash and marketable securities = $260,000; accounts receivable = $1,400,000; inventory = $2,300,000; accrued wages and taxes ..

Account for the arrangement as capital lease : On January 1, year 1, Frost Co. entered into a two-year lease agreement with Ananz Co. to lease 10 new computers. The lease term begins on January 1, year 1 and ends on December 31, year 2. The present value of the minimum lease payments is $13,000. ..

What is the payback period for the new machine : A company is considering the purchase of a new machine for $54,000. Management predicts that the machine can produce sales of $16,600 each year for the next 10 years. Expenses are expected to include direct materials, direct labor, and factory overhe..

Decrease in net income by replacing the current machine : Granfield Company has a piece of manufacturing equipment with a book value of $41,500 and a remaining useful life of four years. At the end of the four years the equipment will have a zero salvage value. The market value of the equipment is currently..

Compute the net present value of the machine : Poe Company is considering the purchase of new equipment costing $85,500. The projected annual cash inflows are $35,700, to be received at the end of each year. The machine has a useful life of 4 years and no salvage value. Poe requires a 10% return ..

What amount will lessee report as a lease obligation : Lessee Company enters into a lease on January 1, 20X2 that is accounted for as a capital lease. The lease calls for quarterly payments of $15,000, beginning on January 1, 20X2, and continuing for 5 years. The last payment is due on October 1, 20X6. T..

Adjusted balance in allowance for uncollectible accounts : On January 1, Year4 the Accounts Receivable and the Allowance for Doubtful Accounts carried NORMAL balances of $30,000 and $500, respectively. What will be the ADJUSTED balance in the allowance for uncollectible accounts at the end of Year4?

User Account

All Pages