Payback period of the proposed acquisition and interpret

Assignment Help Financial Accounting
Reference no: EM13917960

The new Big Electical Warehouse, Inc., is thinking of buy a new machine on January 1, 2016 for $100,000 and have an estimated salvage value at the end of its estimated 5-year estimated life of $15,000

 

2016

2017

2018

2019

2020

Net income

$ 7,000

$8,000

$9,000

$9,500

$9,500

Operating cash flows

20,000

21,000

21,000

19,000

19,500

The company's required rate of return is 6% and its cost of capital is 5%. The income tax rate is 30%.

Determine the payback period of the proposed acquisition and interpret your answer.

What are the problems with payback period?

Reference no: EM13917960

Questions Cloud

Calculate the terminal wealth and annualized yield : Face value =$1,000, coupon rate = .06, maturity = 11 yrs, market yield = 0.074, duration = 8.0 yrs. Suppose that immediately after you purchase the bond, all interest rates decline from .074 to .064 and remain at .064 thereafter (remember that bond y..
What would the company basic earnings per share be for 2011 : What would the company's basic earnings per share be for 2011? Show calculations.
What is a tribe : What is a Tribe? Please watch the video and see link to TRIBE diagram in announcements. How does a Tribe affect culture
Justify budgeting so much money for philanthropy : As a publicly traded corporation, how can Home Depot justify budgeting so much money for philanthropy? What areas other than the environment, disaster relief, and affordable housing might be appropriate for strategic philanthropy by Home Depot?
Payback period of the proposed acquisition and interpret : Determine the payback period of the proposed acquisition and interpret your answer.What are the problems with payback period?
Determine the cost of the equipment that was sold : On January 1, 2013, Sanita Company had a balance of $76,300 in its Office Equipment account. During 2013, Sanita purchased office equipment that cost $30,300.
What are the sources of competitive advantage : Select a manufacturing business that creates a real product and write an overview. I need to see how this is done. The overview should include the context and your organization Articulate the vision, mission, and strategy of your organization
Quantity of workers available for work : 1) What is human capital, and how is it different from strictly the quantity of workers available for work? Name three ways to increase a nation's human capital. Is an increase in the size of the labor force also an increase in the human capital? ..
Prepare statements of cash flows : Prepare Statements of Cash Flows for each of the following firms and assess the cash issues facing each firm:

Reviews

Write a Review

Financial Accounting Questions & Answers

  Assumption of the dividend growth model

Which one of the following is an underlying assumption of the dividend growth model?

  Debate about a national health care plan

Burt is the custodian at Quaker Inn, an S corporation that has paid him bonuses over the years in the form of shares in the corporation. Burt now holds 276 shares in Quaker Inn.

  Purpose an income statement showing the byproduct

Purpose an income statement showing the byproduct (1) as a cost reduction during production, and (2) as a revenue item when sold.

  Determine the tax rate for quiet city

Assume the amount of property taxes needed to be collected to support the operation of Quiet City for fiscal year 2015 is $ 3,550,000 . Quiet City expects 4% of property taxes levied will be uncollectible. Assume total assessed value of property is $..

  Compute the taxpayers taxable income

Compute the taxpayer’s taxable income. You must clearly identify (label) each component in order to receive credit. Compute the taxpayer’s tax liability. Be sure to provide supporting calculations for your tax determination.

  Record income tax expense and income tax payable

Assuming that the carry back provision is used, prepare all the necessary journal entries for each year 2008-2011 to record income tax expense (benefit) and income tax payable (refundable), and the tax effects of the loss carry back and loss carry fo..

  Decide whether to continue operating this store or to lease

The company can lease the building to a large flower shop for $4,000 per month. Decide whether to continue operating this store or to lease, using.

  Lease renting or purchase of machine decision making based

lease renting or purchase of machine decision making based on present value at a given discount rate of maintenance

  Variable and fixed cost per unit amounted

A review of Parrish Corporation's accounting records found that at a volume of 118,000 units, the variable and fixed cost per unit amounted to $8 and $3, respectively. On the basis of this information, what amount of total cost would Parrish anticipa..

  Determine total overhead cost that would be assigned

Determine the total overhead cost that would be assigned to each of the products.

  Costs incurred to advertise goods held for resale

Presented below is a list of items that may or may not be reported as inventory in a company’s December 31 balance sheet. Indicate which of these items would typically be reported as inventory in the financial statements. If an item should not be rep..

  Which of the following best describes the production budget

061683RR - PLANNING, PERFORMANCE. Last year, the House of Orange had sales of $826,650, net operating income of $81,000, and operating assets of $84,000 at the beginning of the year and $90,000 at the end of the year. What was the company's turnov..

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