User Account

All Pages

Determine the payback period for each machine

Assignment Help Finance Basics
Reference no: EM131108072

Nova Products has a 5-year maximum acceptable payback period. The firm is considering the purchase of a new machine and must choose between two alternative ones. The first machine requires an initial investment of $14,000 and generates annual after-tax cash inflows of $3,000 for each of the next 7 years. The second machine requires an initial investment of $21,000 and provides an annual cash inflow after taxes of $4,000 for 20 years.

a. Determine the payback period for each machine.

b. Comment on the acceptability of the machines, assuming that they are independent projects.

c. Which machine should the firm accept? Why?

d. Do the machines in this problem illustrate any of the weaknesses of using payback? Discuss.

Reference no: EM131108072

Questions Cloud

What are the benefits of marketing through social media : What are the benefits of marketing through social media and what types of businesses or organizations are helped most by this type of marketing? Give an example of a product, service and idea marketed effectively this way.
Determining the current exchange rate : If in?ation in the U.S.A. increases to 3% how does your answer change? What happens to the current exchange rate if U.S.A. interest rates rise to 5% along with in?ation increasing to 3%?
Question regarding the project manager for levin batteries : You are a project manager for Levin Batteries, a company that is considering expanding from their US market to Europe. In order to receive local government tax credits and subsidies, Levin will use only union labor and build their plant in Ireland..
Is there a perception among employees in your organization : Is there a perception among employees in your organization that a disparity of power exists between the "powerful group" and other work groups? How can managers minimize the possibility of negative reactions or conflict between groups if the perc..
Determine the payback period for each machine : Determine the payback period for each machine. Comment on the acceptability of the machines, assuming that they are independent projects. Which machine should the firm accept? Why?
Form of uncompetitive markets : Market failure exists in the form of uncompetitive markets and those which negatively or positively affect people who are not participants as buyers or sellers. Provide an example of such a market and indicate how government policy might correct t..
What criteria must be met to avoid recording expense : The Richardson Company board is also considering an employee share-purchase plan, but the Board does not want to record expense related to the plan. What criteria must be met to avoid recording expense on an employee stock-purchase plan?
Determine the payback period for this project : Determine the payback period for this project. Should the company accept the project? Why or why not?
Briefly discuss the operating performance : Based on this analysis would you make an investment in the company's 5% convertible bonds? Explain.

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd