Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Shelduck Laundromat is trying to enhance the services it provides to customers, mostly college students. It is looking into the purchase of newl smartphone. Shelduck

image text in transcribed
image text in transcribed
image text in transcribed
Shelduck Laundromat is trying to enhance the services it provides to customers, mostly college students. It is looking into the purchase of newl smartphone. Shelduck estimates the cost of the new equipment at $203,000. The equipment has a useful life of 9 years. Shelduck expects cash fi amount of 5% of revenues. Shelduck evaluates investments using a cost of capital of 8%. Present Value of $1 table Present Value of Annuity of S1 table Future Value of $1 table Future Value of Annuity of $1 table Read the requirements Requirement 1. Calculate the payback period and the discounted payback period for this investment, assuming Shelduck expects to generate $165 decimal places.) The payback period in years, for the investment assuming uniform net cash inflows is 2.64 The discounted payback period in years, for the investment assuming uniform net cash inflows is 3.09 Requirement 2. Assume instead that Shelduck expects an uneven stream of incremental cash revenues from installing the new washing machines, for the investment? Start by determining the net initial investment unrecovered amounts at the end of each year by first entering the net cash inflow(outflow) amounts and for net cash outflows and to show negative cumulative net cash flows. Once the net initial investment is fully recovered enter a zero for that year's line column) Cumulative Net Year Intlow (Outflow) Cash Flows Net Cash 0 1 $ 15,000 24,500 2 3 43,500 24 50 Net Cash Cumulative Net Cash Flows Year Inflowl(Outflow) 0 1 $ 15,000 2. 24,500 3 4 5 6 43,500 24,500 81,500 100,500 67,250 38,750 76,750 7 8 CO 9 equirements 1. Calculate the payback period and the discounted payback period for this investment, assuming Shelduck expects to generate $165,000 in incremental revenues every year from the new machines. 2. Assume instead that Shelduck expects an uneven stream of incremental cash revenues from installing the new washing machines. Based on this estimated revenue stream, what are the payback and discounted payback periods for the investment? J 1 Year B D E F H. 1 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 $ 100,000 $ 110,000 $ 130,000 $ 110,000 $ 170,000 $190,000 $155,000 $125,000 $165,000 2 Projected Revenue

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

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

Introduction To AccountingAn Integrated Approach

Authors: Penne Ainsworth, Dan Deines

8th Edition

1119600103, 9781119600107

More Books

Students also viewed these Accounting questions

Question

Discuss how an AC is designed and implemented.

Answered: 1 week ago