Calculate the payback period for the proposed investment

Assignment Help Financial Accounting
Reference no: EM13826300

Payback, NPV, and IRR Rieger International is attempting to evaluate the feasibility of investing $95,000 in a piece of equipment that has a 5-year life. The firm has estimated the cash inflows associated with the proposal as shown in the following table.

The firm has a 12% cost of capital.

Year (t) Cash inflows (CFt)

1 $20,000

2 25,000

3 30,000

4 35,000

5 40,000

a. Calculate the payback period for the proposed investment.

b. Calculate the net present value (NPV) for the proposed investment.

c. Calculate the internal rate of return (IRR), rounded to the nearest whole percent, for the proposed investment.

d. Evaluate the acceptability of the proposed investment using NPV and IRR. What recommendation would you make relative to implementation of the project? Why?

Reference no: EM13826300

Questions Cloud

After-tax cash inflow expected from liquidation : Expansion versus replacement cash flows Edison Systems has estimated the cash flows over the 5-year lives for two projects, A and B. After-tax cash inflow expected from liquidation. If project A were actually a replacement for project B and the $12,0..
Irrelevant to the value of the firm : It can be argued that whether a company pays or does not pay dividends; it is irrelevant to the value of the firm. State some of those arguments do you concur with these arguments or do you disagree?
Models of automatic dishwashers : DeMarcus Industries manufactures a widget used in several models of its automatic dishwashers. Monthly production costs for 5,000 units are:
Which a multi-metaphor analysis of the situation is required : This problem belongs to Business Management and it deals with a managerial situation or problem or event which a multi-metaphor analysis of the situation is required. Metaphors have been part of literature since times immemorial
Calculate the payback period for the proposed investment : Payback, NPV, and IRR Rieger International is attempting to evaluate the feasibility of investing $95,000 in a piece of equipment that has a 5-year life. Calculate the payback period for the proposed investment. Calculate the net present value (NPV) ..
Report on development and management of strategic marketing : Report On Development And Management Of Strategic Marketing Plan
Explain about futures price calculation : Today is 31st May. The yield on T-bills is 3% per annum. The futures price for June 30th delivery of Gold is $1593.60 for December 30th delivery the price is $1600.00.
Calculate the net present value-cost of capital : NPV Calculate the net present value (NPV) for the following 15-year projects. Comment on the acceptability of each. Assume that the firm has a cost of capital of 9%.
Write detailed report on chinas growth in last thirty years : The question is belongs to Economics and the question is about the growth rate achieved by China in the last 30 years beginning from 1978 to 2009.

Reviews

Write a Review

Financial Accounting Questions & Answers

  What might some of the alternative measures of performance

Would Collison's comments provide a justification for moves towards profit measures that incorporate ‘full costs' (considers the externalities of business)?

  Calculation of cost per equivalent unitsduring june the

calculation of cost per equivalent units.during june the varnishing department incurred costs of 80250 for direct

  Would income have been greater or less

Determine the difference in the amount of income that the company would have reported if it had used the FIFO method instead of the LIFO method. Would income have been greater or less?

  What was the actual break even units

Suppose that a company sells its product for $50 per unit. It was believed that the break even units would be 8,500, but an unexpected increase in fixed expenses of $33,878 occurred. The contribution margin per unit is $26 (there was no change in var..

  Cost recovery or tax depreciation is not accurate

Which of the following statements about cost recovery (tax depreciation) is not accurate?

  Basis for determining bad debt expense

Credit Sales, $3,500,000 Sales Returns & Allowances $35,000 Accounts Receivable $200,000 and Allowance for Doubtful Accounts with a debit of $3,500. Prepare the general journal entry to record the end of the year adjusting entry if ABC uses 0.5% of N..

  What amount of gain on the sale of the home-taxable income

Steve and Stephanie Pratt purchased a home in Spokane, Washington, for $542,500. They moved into the home on February 1 of year 1. They lived in the home as their primary residence until June 30 of year 5, when they sold the home for $942,500. What a..

  What amount does company record the building for

company buys building for $173,000 for propety tax purposes in exchange for 10,000 share of $4 par common stock, what amount does the company record the building for?

  What is the amount of contribution margin

What is the amount of contribution margin that will be obtained per machine hour on each product and which product would you recommend that the company work on next week ' the orders for product F, product G or product H? Show your computation

  Prepare abc corporations statement of cash flows

Prepare ABC Corporation's statement of cash flows using the indirect method and include an accompanying schedule of noncash investing and financing activities

  During its first month of operation the rawls repair

during its first month of operation the rawls repair corporation which specializes in bicycle repairs completed the

  Identification of several factors of

identification of several factors of materiality.materialityanbspidentify several factors considered by an accountant

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