Nowadays manufacturing is considering an investment

Assignment Help Accounting Basics

Reference no: EM13485902

Nowadays Manufacturing is considering an investment proposal with the following information:

Cost $450,000

Useful life 6 years (straight-line depreciation)

Annual Cash inflows $100,000 (estimated per year for 8 years)

Residual value $ 20,000

Required rate of return 10%

Answer the following questions concerning this proposal. Show your work.

a. What is the payback period of this project?

b. What is the NPV of this project?

c. Is the IRR greater or less than 10%? Explain your answer

d. Should the project be accepted based on your NPV analysis? Why or why not?

Reference no: EM13485902

Questions Cloud

What is impairment of operational assets how do we : what is impairment of operational assets? how do we determine whether an impairment exists? how do we calculate the

What are the merits and demerits of investment on the : what are the merits and demerits of investment on the financial market via different types of mutual

Define cost allocation for operational assets what are the : define cost allocation for operational assets. what are the various time based and activity- based methods used to

What is the total amount of amortization expense that would : in early january burger mania acquired 100 of the common stock of the crispy taco restaurant chain. the purchase price

Nowadays manufacturing is considering an investment : nowadays manufacturing is considering an investment proposal with the following informationcost 450000useful life 6

You are given the following information stockholders equity : you are given the following information stockholders equity 3.75 billion priceearnings ratio 3.5 common shares

Idicate whether the amortization schedule is based on the : the following amortization and interest schedule reflects the issuance of 10-year bonds by capulet corporation on

Graser trucking 12 billion in assets and its tax rate is : graser trucking 12 billion in assets and its tax rate is 40. its basic earning power bep ratio is 15 and its return on

What are the differences between common stock and preferred : what are the differences between common stock and preferred stock? in which situations do corporations use each kind of

User Account

All Pages