Compute the pay-back period

Assignment Help Accounting Basics
Reference no: EM131028253

ASD Ltd is considering the purchase of a new machine. Two options have been suggested, each costing $400,000. Earnings after taxation but before depreciation are expected to be as follows: Year Machine X $ Machine Y $ 1 2 3 4 5 40,000 120,000 160,000 240,000 160,000 120,000 160,000 200,000 120,000 80,000 On this base, you are required:

a) Compute the Pay-back Period and

b) The Company has a target rate of return on capital @10%. Calculate NPV.

c) To compare profitability index of the machines and state which option you consider financially favourable

Reference no: EM131028253

Questions Cloud

We are exposed to good habits involving ethics and fraud : The more we are exposed to good habits involving ethics and fraud, the better the chance that we will share our knowledge with others. How can the government help to instill these values into organizations?
What investment is the best choice in terms of the risk : Standard deviation and expected return information for four investments selling for the same price is as follows: What investment is the best choice in terms of the risk/return relationship?
How your life has been influenced by language : How your life has been influenced by at least five of the following aspects of diversity: Race, Gender, Age,  Abilities and disabilities and Language, Social class, including status and economic level
Productivity between prior to and after buying new equipment : A Company that makes shopping carts for supermarkets and other stores recently purchased some new equipment that reduces the labor content of the jobs needed to produce the shopping carts. Compute the multifactor productivity (MFP) (labor plus equipm..
Compute the pay-back period : Compute the Pay-back Period and The Company has a target rate of return on capital @10%. Calculate NPV.
What is the p-value required to reject the null hypothesis : Determine the null and alternative hypotheses for the test described. A two-tailed test is conducted at the 5% significance level. What is the P-value required to reject the null hypothesis?
Determine the average current : Consider the battery charging circuit shown in Figure. The ac source has a peak value of 24 V and a frequency of 60 Hz. The resistance is 2 Ω, the diode is ideal, and VB = 12 V. Determine the average current.
Check that their identity elements have the same order : Do I need to list all the members and check or is it enough to know that Z[2]xZ[12] has the same order. And then check that their identity elements have the same order?
What is the wacc for the last dollar : What is the WACC for the last dollar raised to complete the expansion?

Reviews

Write a Review

Accounting Basics Questions & Answers

  Determine the amount to be paid within the discount period

determine the amount to be paid within the discount period for purchase with an invoice price of 7745 subject to credit

  Only half of the inventory from the intra-entity trasaction

What if only half of the inventory from the intra-entity transaction remain with company B at the end of 2013?

  What are the three categories of cash flows reported

What are the three categories of cash flows reported on the cash flow statement? Discuss each and give an example of an inflow and an outflow for each category.

  Comet company began operations in 2010 and adopted the fifo

comet company began operations in 2010 and adopted the fifo method of inventory pricing. during 2012 comet company

  Net present value of the investment of machine

The company's required rate of return is 13%. (Ignore income taxes.)What is the net present value of the investment of the machine?

  Using your accounting knowledge

Using your accounting knowledge, fill in the blanks in the following separate income statements a through e.

  Record the first semiannual interest payment

Prepare journal entreis to record the first semiannual interest payment, assuming it uses the straight-line method of amortization

  Calculate the cost recovery deduction

Sam has, however, made an election to not have the uniform capitalization rules apply to the farming business. Sam does elect not to take additional first-year depreciation. Determine the cost recovery deduction for 2009.

  Describe costing methods for inventory control

Describe costing methods for inventory control, denominator-level capacity concepts and cost capacity analysis?

  Computer village sells computer equipment and home office

computer village sells computer equipment and home office furniture. currently the furniture product line takes up

  Problem respect to the capitalized lease

Penn accordingly accounted for this lease transaction as a capital lease. The lease payments were determined to have a present value of $671,008 at an effective interest rate of 8%. With respect to this capitalized lease, Penn should record for 20..

  Foster which uses the high-low method reported an average

foster which uses the high-low method reported an average cost of 24 per unit at its lowest activity level when

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