Calculate the payback period for each project

Reference no: EM13273521

Jackson Company is considering two capital investment proposals. Estimates regarding each project are provided below.

	Project Nuts	Project Bolts
Initial Investment	$175,000	$100,000
Annual Net Income	$30,000	52,000
Annual Cash Inflow	$70,000	$45,000
Salvage Value	$0	$0
Estimated Useful Life	3 years	3 years

The company requires a 9% rate of return on all new investments.

Part (a): Calculate the payback period for each project.
Part (b): Calculate the net present value for each project.
Part (c): Which project should Jackson Company accept and why?

Reference no: EM13273521

Questions Cloud

Advantage of exclusive dealing : Which of the following is an advantage of exclusive dealing?

Dimensions of effective microsystems : There are 8 dimensions of effective Microsystems. Which two (2) do you believe are the most important and why? Please provide examples to illustrate your position.

Explain how much nitric acid to make the fertilizer : corn farmers typically use 5000 kg of ammonium nitrate per square kilometer of cornfield per year. Ammonium nitrate can be prepared by the following reaction. how much nitric acid would be needed to make the fertilizer needed for 1km2 of cornfield..

Determine how many macrostates are possible : Consider a model thermodynamic system in which the allowed (nondegeerate) energy levels are 0, E, 2E, 3E. Determine how many macrostates are possible

Calculate the payback period for each project : Jackson Company is considering two capital investment proposals. Estimates regarding each project are provided below.

What is the overall thermal efficiency of the plant : A typical coal-fired power plant has a generating capacity of about 1.3 X 10^9 W of electric power. What is the overall thermal efficiency of the plant

Explain the putative base pairs is more prone to propeller : One of the putative base pairs is more prone to propeller twist than the other. Which base pair is it and why?

Determine the speed of your friend relative to you : You fly your 20.0m -long spaceship at a speed of c/ 4 relative to your friend. determine the speed of your friend relative to you

What is the weighted average cost of capital : The firm estimates its after-tax cost of debt to be 6%, cost of preferred stock to be 8%, and cost of new common stock to be 15%. What is the weighted average cost of capital?

User Account

All Pages