Answered step by step
Verified Expert Solution
Link Copied!

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

blur-text-image

Get Instant Access with AI-Powered 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

Financial and Managerial Accounting Using Excel for Success

Authors: James Reeve, Carl S. Warren, Jonathan Duchac

1st edition

978-1111993979

Students also viewed these Finance questions

Question

What are three sources of database design and implementation.

Answered: 1 week ago