Pack amp carry is debating whether to invest in new

Assignment Help Accounting Basics

Reference no: EM13581888

Pack & Carry is debating whether to invest in new equipment to manufacture a line of high-quality luggage.The new equipment would cost $900,000,with an estimated four-year life and no salvage value.The estimated annual operating results with the new equipment are as follows:


Revenue from sales of new luggage			$	957,000
Expenses other than depreciation	$	675,000
Depreciation (straight-line basis)		225,000		(900,000	)

Increase in net income from the new line			$	57,000

All revenue from the new luggage line and all expenses (except depreciation) will be received or paid in cash in the same period as recognized for accounting purposes.

a.	Compute the annual cash flows for the investment in the new equipment to produce the new luggage line to produce the new luggage line.

Annual cash flows

b.	Compute the payback period for the investment in the new equipment to produce the new luggage line.

Payback period

years

c.	Compute the return on average investment for the investment in the new equipment to produce the new luggage line.

Return on average investment

d.	Compute the total present value of the expected future annual cash inflows, discounted at an annual rate of 10 percent for the investment in the new equipment to produce the new luggage line.

Total present value

e.	Compute the net present value of the proposed investment discounted at 10 percent for the investment in the new equipment to produce the new luggage line.

Net present value

Reference no: EM13581888

Questions Cloud

White star flour company manufactures flour by a series of : white star flour company manufactures flour by a series of three processes beginning with wheat grain being introduced

Draw a principal-ray diagram showing the formation of the : an object 9mm tall is placed 12cm to the left of the vertex of a convex spherical mirror whose radius of curvature has

Youre an astrononomer studying the origin of the solar : youre an astrononomer studying the origin of the solar system and youre evaluationg a hypothesis that sufficiently

Because of the rising crime rate and the nations tougher : because of the rising crime rate and the nations tougher stance on crime many states have enacted legislation that

Pack amp carry is debating whether to invest in new : pack amp carry is debating whether to invest in new equipment to manufacture a line of high-quality luggage.the new

Electrelane company showed the following balances at the : electrelane company showed the following balances at the end of its first

Two dice are rolled and the two resulting values are : two dice are rolled and the two resulting values are multiplied together to form the quantity z. what are the expected

Describe the two sampling risks for test of controls and : 1.explain audit risk and auditors responsibility to handle the risk?2.what is pcaob interpretation of federal

At what angle theta must the 400 n force be applied in : at what angle theta must the 400 n force be applied in order to that the resultant r of the two forces will have

User Account

All Pages