Calculate the payback period and the accounting rate, Cost Accounting

Freshly Ground Investments have just made an investment of $550 000 in a new Toyota Hilux (with trailer) delivery vehicle. This vehicle will be used for deliveries and generate revenues from such activities. Further details: Expected useful life 5 years (straight line depreciation)

Salvage value 50 000

Cost of Capital 10 % after tax

Year                            Cash flows

1                                    220 000

2                                     200 000

3                                        120 000

4                                       110 000

5                                         50 000


1. Calculate the payback period and the accounting rate of return.

2. Freshly Ground Investments requires a payback period of no more than 3 years and a return of at least 30%. Purely on the basis of these criteria, should this project be accepted. Explain

3. The payback method makes a crucial omission in the calculation, namely the time value of money. Can you complete the above computation using a method that accounts for the time value of money? On the basis of this calculation, should the project be accepted? Explain

Posted Date: 3/29/2013 2:40:16 AM | Location : United States

Related Discussions:- Calculate the payback period and the accounting rate, Assignment Help, Ask Question on Calculate the payback period and the accounting rate, Get Answer, Expert's Help, Calculate the payback period and the accounting rate Discussions

Write discussion on Calculate the payback period and the accounting rate
Your posts are moderated
Related Questions
By the discussions we had previous, it is not tough to come to the conclusion that numerous factors influence the fund or net working capital needs. Fund needs vary along with t

ASSUMPTIONS OF BREAK EVEN ANALYSIS 1. Fixed costs for all time remain constant. 2. All costs are divided into fixed and variable costs. 3. Selling price will not alter de

Operating Income 1. Operating Income is derived from two sources, Rental Income from businesses operating in the warehouse complex and Interest Income of the project operating

ADVANTAGES OF STANDARD COSTING 1.     It offers a yardstick for measurement of performance. 2.     It helps 'Management by Exception'. 3.     It allows the management to

Tony Allan Inc is a small manufacturer of metal products in Toronto.  The company rents its factory building.  It uses a job order costing system because it has a wide variety of p

Under a contract with the provincial government, ChemLabs Inc. analyzes the chemical and bacterial composition of well water in various municipalities in the interior of British Co

Learning Objective: After completing the project, the student will have gained familiarity, understanding and mastery of programming a realistic but simple application in Assembly

Apportionment of Overheads Apportionment of overheads occurs whereas the net value of an overhead item is shared among more or two cost centers that employ the overheads. Th

LaNora White received her accounting degree in 1992. Since graduating, she has obtained significant experience in a variety of job settings. Her skills include auditing, income and

Bull Bay Ltd. Manufacturers two types of surfboard, "Winner" and "Surf King", whose selling prices are $300 and $900 respectively. Each surfboard passes through two manufacturing d