Question
The Road Runner Delivery Company is considering two different machines for use in its sorting facility and the companys management put together the following cash
The Road Runner Delivery Company is considering two different machines for use in its sorting facility and the companys management put together the following cash flow estimates: a. What is the cash payback period on each model (rounded to two decimal places)? b. Assuming an interest rate of 8 percent, what is the NPV of each model? c. Which model should the company invest in?
Model DQT Model MK6
Purchase cost. 17,000 10,000 Estimated net cash inflows: Year 1: 12,000 8,000 Year 2: 6,000 4,000 Year 3: 4,000 2,000
2. The Jackson Company borrowed $30,000 from a local bank on January 1, 2018 at an interest rate of 8 percent; the loan will be repaid in full at the end of the two-year term. Prepare an accounting framework and record all of the transactions related to the loan. a. How much interest expense should they record in 2018? b. How much interest expense should they record in 2019?
3. You recently received a birthday gift of $400 and you decide to save it for later use. If you deposit it into an investment account that pays 6% interest, how much will be in the account in 3 years?
4. You have recently opened a retirement account and decided to deposit $3,000 per year in the account. If you want to retire in 45 years and the account earns 8 percent interest, how much will you have in your account when you retire?
5. You recently purchased a new home for $325,000 by agreeing to make annual payments for 30 years; if the interest rate on your loan is 4 percent, what is the total amount of interest you will pay over the life of the loan?
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