PLEASE SHOW YOUR WORK FOR PARTIAL CREDIT.

A. calculate the simple payback period for the purchase of equipment.

Investment $ 120,000 cash income per year $ 30,000.

Payback period? __________________________

B. calculate the payback period for a stream of unequal cash flows for an investment of $ 175,000 and cash flows as follows:

Year 0 cash investment (175,000)

Year 1 cash income 75,000

Year 2 cash income 50,000

Year 3 cash income 40,000

Year 4 cash income 10,000

Payback period? ____________________________

c. Calculate the net present value of an investment of $ 150,000

Year Cash flows net present value factor net present value

0 (150,000) 1.000

1 70,000 .909

2 60,000 .826

3 30,000 .751

4. 25,000 .683

Net present value? ______________________ accept or reject the project ?_______________

Name: _______________________________

Classify each item below as cash flow operations, cash flow from investments, cash flow from financing and whether cash flow increases or decreases cash.

Cash flow increase or decrease cash

Acquisition of equipment for cash

Borrowed with long term note

Accounts receivables increased

Inventory decrease

Accounts payables decreased

Prepare a cash flow from operations section of the cash flow statement.

net income $225,000; depreciation $ 75,000, gain on the sale of equipment $ 25,000; increase in current assets $ 76,000 and decrease in current liabilities $ 25,000.

Calculate return on investment and residual income for Question B for the following.

Investment $ 450,000, income from the investment $ 150,000.

ROI __________________

Calculate residual income from the investment of $ 600,000, income from the investment of $ 180,000 and a company requirement of returns of 20%.

RESIDUAL INCOME _________________