Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Build Corporation wants to purchase a new machine for $378,000. Management predicts that the machine can produce sales of $226,000 each year for the next

Build Corporation wants to purchase a new machine for $378,000. Management predicts that the machine can produce sales of $226,000 each year for the next 5 years. Expenses are expected to include direct materials, direct labor, and factory overhead (excluding depreciation) totaling $76,000 per year. The firm uses straight-line depreciation with no residual value for all depreciable assets. Build's combined income tax rate is 40%. Management requires a minimum after-tax rate of return of 10% on all investments. What is the present value payback period, rounded to one-tenth of a year? (Note: PV factors for 10% are as follows: year 1 = 0.909; year 2 = 0.826; year 3 = 0.751; year 4 = 0.683; year 5

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing A Guide To Principles And Practice

Authors: J H Crowhurst

1st Edition

0304309052, 978-0304309054

More Books

Students also viewed these Accounting questions

Question

5. How would you describe your typical day at work?

Answered: 1 week ago

Question

7. What qualities do you see as necessary for your line of work?

Answered: 1 week ago