Question
A company is considering purchasing a machine for $27,500. The machine will generate an after-tax net income of $3,300 per year. Annual depreciation expense would
| A company is considering purchasing a machine for $27,500. The machine will generate an after-tax net income of $3,300 per year. Annual depreciation expense would be $2,800. What is the payback period for the new machine? |
8.33 years.
8.64 years.
8.64 years.
9.82 years.
4.51 years.
| A company is considering the purchase of a new piece of equipment for $102,000. Predicted annual cash inflows from this investment are $40,800 (year 1); $34,000 (year 2); $20,400 (year 3); $14,400 (year 4); and $7,200 (year 5). The payback period is: |
rev: 12_24_2013_QC_42995
3.00 years.
3.61 years.
2.47 years.
4.47 years.
3.47 years
| A company is considering the purchase of a new machine for $30,400. Management predicts that the machine can produce sales of $13,600 each year for the next 10 years. Expenses are expected to include direct materials, direct labor, and factory overhead totaling $7,200 per year plus depreciation of $3,600 per year. The company's tax rate is 40%. What is the approximate accounting rate of return for the machine? |
2.2%
35.5%
11.1%
9.2%
18.4%
| A company is considering the purchase of a new machine for $160,000. Management predicts that the machine can produce sales of $29,500 each year for the next eight years. Expenses are expected to include direct materials, direct labor, and factory overhead totaling $8,000 per year plus depreciation of $16,200 per year. The company's tax rate is 40%. What is the payback period for the new machine? |
50.31 years
7.44 years
5.42 years
30.19 years
8.26 years
| A company is planning to purchase a machine that will cost $102,000, have a six-year life, and be depreciated using the straight-line method with no salvage value. The company expects to sell the machine's output of 3,000 units evenly throughout each year. A projected income statement for each year of the asset's life appears below. |
|
|
| Sales |
| $168,000 |
| Costs: |
|
|
| Manufacturing | $71,500 |
|
| Depreciation on machine | 17,000 |
|
| Selling and administrative expenses | 49,500 | (138,000) |
| Income before taxes |
| $ 30,000 |
| Income tax (50%) |
| ( 15,000) |
| Net income |
| $ 15,000 |
| What is the accounting rate of return for this machine? |
4%
33.30%
50.00%
14.71%
29.41%
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Accounts Book Self Employed Simple Bookkeeping Record Book For Sole Trader And Small Businesses
Authors: Meskin Logs
B0CFCQ1K17
