Golden flights inc is considering buying some specialized

Reference no: EM13597284

Golden Flights, Inc., is considering buying some specialized machinery that would enable the company to obtain a six-year government contract for the design and engineering of a futuristic plane. The machinery costs $975,000 and must be destroyed for security reasons at the end of the six-year contract period. The estimated annual operating results of the project are as follows:

Revenue from sales under the contract $975,000
Expenses other than depreciation $560,000
Depreciation 162,500 (722,500)
Increase in net income from government contract $252,500

All revenue from the contract and all expenses (except depreciation) will be received or paid in cash in the same period as recognized for accounting purposes. You are to compute the following three factors for this project:

(a) Payback period: __________ years

(b) Return on average investment: __________%

(c) Net present value of the investment in this machinery, discounted at an annual rate of 12% (an annuity table shows that the present value of $1 received annually for six years discounted at 12% is 4.111): $__

Reference no: EM13597284

Questions Cloud

If the projected benefit obligation pbo for a pension plan : if the projected benefit obligation pbo for a pension plan exceeds the fair value of the plan assets at the time of

In a job order cost system it would be correct in recording : 1.in a job order cost system it would be correct in recording the purchases of raw materials to debit?a.work in process

Radovilsky manufacturing company in hayward california : radovilsky manufacturing company in hayward california makes flashing lights for toys. the company operates its

Many companies now manufacture products that are untouched : 1. proprty taxes on na manufacturing plant are an element of aproduct cost period cost1. yes no2. yes yes3. no yes4. no

Golden flights inc is considering buying some specialized : golden flights inc. is considering buying some specialized machinery that would enable the company to obtain a six-year

Abstract corporation uses demand explicitly in its : abstract corporation uses demand explicitly in its cost-volume-profit model. it has determined that the demand it faces

Luna lighting a retail firm has experienced modest sales : luna lighting a retail firm has experienced modest sales growth over the past three years but has had difficulty

Mystic laboratories reported total assets of 112000000 : mystic laboratories reported total assets of 112000000 and noncurrent assets of 1480000. the company also reported a

While congress believed that sarbanes-oxley would improve : 1. while congress believed that sarbanes-oxley would improve corporate corruption and prevent future corporate scandals

User Account

All Pages