Smarter Bowling is buying a new polishing machine to replace the old, worn - out one. Compute
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Smarter Bowling is buying a new polishing machine to replace the old, wornout one. Compute the profitability index, rounded to two decimal places.
Optional
Compu
Compute the payback period, accounting rate of return, and net present value.
Hurdle rate
Useful project life
Residual value
Investment
Net cash inflows
Cash Flow Year
Cash Flow Year
Cash Flow Year
Cash Flow Year
Cash Flow Year
EVERYTHING BELOW THIS LINE SHOULD BE FORMULAS
Compute the payback Amount Years
Initial investment
Cash flow year use the formula MINDD which indicates to use the lesser of the unrecaptured investment or the cash flow
Amount left to recapture
Cash flow year use the formula MINDD which indicates to use the lesser of the unrecaptured investment or the cash flow
Amount left to recapture
Cash flow year use the formula MINDD which indicates to use the lesser of the unrecaptured investment or the cash flow
Amount left to recapture
Cash flow year use the formula MINDD which indicates to use the lesser of the unrecaptured investment or the cash flow
Amount left to recapture
Cash flow year use the formula MINDD which indicates to use the lesser of the unrecaptured investment or the cash flow
Amount left to recapture
Payback years
Compute the Accounting Rate of Return
a compute average annual accounting income
Annual net operating cash flows does not include original investment or residual value
Depreciation
Net accounting income
Divided by project life
Average annual accounting income
b compute average amount invested
Beginning investment book value cost
Ending investment book value cost total depreciation
Divided by
Average amount invested
c compute ARR
Average annual accounting income Average amount invested Accounting Rate of Return ARR
round to nearest tenth of a percent
Compute the net present value of the investment Present value of $
N
Period Cash Flows Discount Factor Discounted cash flow N
N
N
N
N
N
Present value of net cash flows N
Cost of Asset N
Net Present Value @ N
Factors are rounded to the nearest thousandth
Compute the profitability index, rounded to two decimal places.
Present value of net cash flows
Divided by cost of asset
Profitability index
Would you recommend this investment? Why or why not?
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Related Book For
Accounting For Cambridge International AS And A Level
ISBN: 9780198399711
1st Edition
Authors: Jacqueline Halls Bryan, Peter Hailstone
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