Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Calculate and report the economic justification measures, present worth, return on sales, return on investment, and payback, shown in Chapter 9 example 9.4 for the
Calculate and report the economic justification measures, present worth, return on sales, return on investment, and payback, shown in Chapter 9 example 9.4 for the investment cash flows shown below. The new method will cost $14,800 with no salvage planned. Use an interest rate of 10%. Note the payback measure asked in this question is calculated differently than the example 9.4 calculation. Year Sales Increase $ Production Cost $ 1 8,500 4,100 2 11,200 7,100 3 19,400 12,700 4 12,400 7,900 5 9,200 5,500 6 6,300 4,900 7 4,200 2,900 a. What is the net present value? Note that initial investment has to be subtracted to find the net. b. What is the return on investment? c. What is the return on sales? d. What is the payback, the year that the end of year cash flow turns positive including recovery of the original investment and stays positive thereafter?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started