Determine the approximate internal rate of return

Assignment Help Accounting Basics
Reference no: EM133189100

Question - Carla Vista Inc. wants to purchase a new machine for $40,110, excluding $1,200 of installation costs. The old machine was purchased 5 years ago and had an expected economic life of 10 years with no salvage value. The old machine has a book value of $2,000, and Carla Vista Inc. expects to sell it for that amount. The new machine will decrease operating costs by $8,500 each year of its economic life. The straight-line depreciation method will be used for the new machine for a 6-year period with no salvage value.

Required -

(a) Determine the cash payback period.

(b) Determine the approximate internal rate of return.

(c) Assuming the company has a required rate of return of 7%, determine whether the new machine should be purchased.

Reference no: EM133189100

Questions Cloud

How many customers are needed to make system profitable : If the average customer payment in this region is $2,900, how many customers each day, on average, are needed to make the system profitable for Cow Chips
Compute the labor rate and labor efficiency variances : Actual labor costs were $100,440 for 8,370 hours. Compute the labor rate and labor efficiency variances for the month of June
What is the carrying value of the note at December : The present value of 1 at 10% for 4 periods is 0.68301. What is the carrying value of the note at December 31, 2018
What are 2 myths instructor might hold about mental illness : What are two myths the instructor might hold about mental illness, Correct these myths with a fact
Determine the approximate internal rate of return : Carla Vista Inc. wants to purchase a new machine for $40,110, excluding $1,200 of installation costs. Determine the approximate internal rate of return
What is the amount of the discount : Question - Jenna purchased a 52-week, $1,000 T-bill issued by the U.S. Treasury. The purchase price was $964. What is the amount of the discount
Provide the journal entry to record the payroll tax : The payroll register of Castilla Heritage Co Indicates $1,404 of social security withheld. Provide the journal entry to record the payroll tax
Prepare the adjusting journal entries for sales returns : The Cost of goods sold for 2022 was $250,000. Carter estimates 10% of the sales will be returned. Prepare adjusting journal entries for sales returns payable
What was total owners equity on December : Sold merchandise for $433,771 on account and $277,329 for cash; the merchandise cost $383,994. What was total owners equity on December

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