Calculate the accounting rate of return for this project

Assignment Help Accounting Basics
Reference no: EM133161448

Question - Your family business has chosen to invest in a project that should generate cash flows of $132,000 per year for 5 years. The initial investment cost is $520,000.

a) Should we accept this project if the required payback period is 4 years.

b) Should we accept this project if the required discounted payback period is 4 years knowing that the discount rate is 4%.

c) Should we accept this project if the minimum rate of return required is 10%.

d) Suppose that each year, the expected annual net benefits of this project constitute 25% of the annual cash flows generated by this project. Calculate the accounting rate of return for this project by considering a linear amortization of the cost of the project.

Reference no: EM133161448

Questions Cloud

Major issues in labor-management relations : In your opinion, what were the major issues in labor-management relations in the US before 1930? What role did the industrial revolution play in labor-managemen
What is the market value of the bond : A 10-year bond pays 8% annual interest (paid semi-annually). If similar bonds are currently yielding 5% annually, what is the market value of the bond
What additional assumption must he make : For Brad to know what his $4,000 per year will accumulate to in 25 years, what additional assumption (or piece of information) must he make (or have)
Industrial revolution play in labor-management relations : In your opinion, what were the major issues in labor-management relations in the US before 1930? What role did the industrial revolution play in labor-managemen
Calculate the accounting rate of return for this project : Calculate the accounting rate of return for this project by considering a linear amortization of the cost of the project
Developing a cloud-based solution : Developing a cloud-based solution where customers can access the software remotely on their own devices
Ethical implications of severance pay : This assignment explores the ethical implications of severance pay at different levels of employment.
Prepare alfonso journal entry to record the assets : Prepare Alfonso's journal entry to record the assets acquired and the liabilities assumed in the Belaire merger on January 1, 2020
Create a hypothesis based on covid-19 investigation : Can you explain the steps involved in an outbreak investigation and use descriptive epidemiology to create a hypothesis based on Covid-19 investigation identify

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

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