Rozzis Construction is analyzing its capital expenditure proposals for the purchase of equipment in the coming...
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Rozzis Construction is analyzing its capital expenditure proposals for the purchase of equipment in the coming year. The capital budget is limited to $12,000,000 for the year. Linda Bentley, staff analyst at Rozzis, is preparing an analysis of the three projects under consideration by Caden Rozzis, the company's owner. (Click the icon to view the data for the three projects.) (Click the icon to view the Future Value of $1 factors.) (Click the icon to view the Future Value of Annuity of $1 factors.) (Click the icon to view the Present Value of Annuity of $1 factors.) (Click the icon to view the Present Value of $1 factors.) Read the requirements. Requirement 1. Because the company's cash is limited, Rozzis thinks the payback method should be used to choose between the capital budgeting projects. Calculate the payback period for each of the three projects. Ignore income taxes. (Round your answers to two decimal places.) Project A years Project B Project C years years Using the payback method, which project(s) should Rozzis choose? Data Table - Project A Project B Project C Projected cash outflow Net initial investment $ 6,000,000 $ 4,000,000 $8,000,000 Projected cash inflows Year 1 Year 2 Year 3 Year 4 Enter any number in the edit fields and then continue to the next question. $ 2,050,000 $ 1,100,000 $ 4,700,000 2,050,000 2,300,000 4,700,000 2,050,000 700,000 2,050,000 50,000 25,000 Required rate of return 10% 10% 10% Rozzis Construction is analyzing its capital expenditure proposals for the purchase of equipment in the coming year. The capital budget is limited to $12,000,000 for the year. Linda Bentley, staff analyst at Rozzis, is preparing an analysis of the three projects under consideration by Caden Rozzis, the company's owner. (Click the icon to view the data for the three projects.) (Click the icon to view the Future Value of $1 factors.) (Click the icon to view the Future Value of Annuity of $1 factors.) (Click the icon to view the Present Value of Annuity of $1 factors.) (Click the icon to view the Present Value of $1 factors.) Read the requirements. Requirement 1. Because the company's cash is limited, Rozzis thinks the payback method should be used to choose between the capital budgeting projects. Calculate the payback period for each of the three projects. Ignore income taxes. (Round your answers to two decimal places.) Project A years Project B Project C years years Using the payback method, which project(s) should Rozzis choose? Data Table - Project A Project B Project C Projected cash outflow Net initial investment $ 6,000,000 $ 4,000,000 $8,000,000 Projected cash inflows Year 1 Year 2 Year 3 Year 4 Enter any number in the edit fields and then continue to the next question. $ 2,050,000 $ 1,100,000 $ 4,700,000 2,050,000 2,300,000 4,700,000 2,050,000 700,000 2,050,000 50,000 25,000 Required rate of return 10% 10% 10%
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Answer rating: 100% (QA)
Payback Period for Rozzis Construction Projects Project A Calculate the cumulative cash inflows for each year Year 12050000 Year 22050000 Year 1 20500... View the full answer
Related Book For
Horngrens Cost Accounting A Managerial Emphasis
ISBN: 978-0134475585
16th edition
Authors: Srikant M. Datar, Madhav V. Rajan
Posted Date:
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