Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Harwell Printing Co. is considering the purchase of new electronic printing equipment. It would allow Harwell to increase its net Income by $61,288 per year.

image text in transcribed
image text in transcribed
image text in transcribed
Harwell Printing Co. is considering the purchase of new electronic printing equipment. It would allow Harwell to increase its net Income by $61,288 per year. Other information about this proposed project follows: Initial investment Useful life Salvage value $326,000 6 years $ 98,000 Assume straight line depreciation method is used. Required: 1. Calculate the accounting rate of return for Harwell (Round your percentage answer to 1 decimal place.) 2. Calculate the payback period for Harwell. (Round your answer to 2 decimal places.) 1. Accounting Rate of Retum Payback Period % years Balloons By Sunset (BBS) is considering the purchase of two new hot air balloons so that it can expand its desert sunset tours. Various Information about the proposed investment follows: (Future Value of $1. Present Value of $1. Future Value Annulty of S1. Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided.) Initial investment (for tvo hot air balloons) Vaeful life Salvage value Annual net income generated 33' cost of capital $ 338,000 8 years $ 58,000 31, 434 89 Assume straight line depreciation method is used. Required: Help Bes evaluate this project by calculating each of the following: 1. Accounting rate of return. (Round your answer to 2 decimal places.) 2. Payback period (Round your answer to 2 decimal places.) 3. Net present value (NPV). (Do not round Intermediate calculations. Negative amount should be indicated by a minus sign. Round the final answer to nearest whole dollar) 4. Recalculate the NPV assuming B85's cost of capital is 11 percent (Do not round Intermediate calculations. Negative amount should be indicated by a minus sign. Round the final answer to nearest whole dollar.) % 1. Accounting rate of retum 2. Payback period 3. Net present value 4. Net present value assuming 11% cost of capital years Bartlett Car Wash Co. is considering the purchase of a new facility. It would allow Bartlett to increase its net Income by $72,617 per year. Other information about this proposed project follows: Initial investment Useful life Salvage value $336,190 6 years $ 55,000 Assume straight line depreciation method is used. Required: 1. Calculate the accounting rate of return for Bartlett (Round your percentage answer to 2 decimal places.) 2. Calculate the payback period for Bartlett. (Round your answer to 2 decimal places.) % 1. Accounting Rate of Return 2. Payback Period years

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_2

Step: 3

blur-text-image_3

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

Accounting Cases In Hong Kong The First Hksa Case Competition

Authors: HKSA Case, Monograph Work GP

1st Edition

9629370883, 978-9629370886

More Books

Students also viewed these Accounting questions

Question

Describe the career and accomplishments of Francis Sumner.

Answered: 1 week ago

Question

Distinguish between poor and good positive and neutral messages.

Answered: 1 week ago

Question

Describe the four specific guidelines for using the direct plan.

Answered: 1 week ago