Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A machine can be purchased for $150,000 and used for five years, yielding the following income. This income computation includes annual depreciation expense of $30,000.

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed

A machine can be purchased for $150,000 and used for five years, yielding the following income. This income computation includes annual depreciation expense of $30,000. Year 1 $10,000 Year 2 $25,000 Year 3 $50,000 Year 4 $37,500 Year 5 $100,000 Income Compute the machine's payback period. (Round payback period answer to 2 decimal places.) Year Net Income Depreciation Net Cash Flow Cumulative Cash Flow $ (150,000) Initial invest $ (150,000) 1 $ 10,000 25,000 2 3 50,000 4 37.500 0 5 100,000 0 Payback period = B2B Company is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment costs $360,000 and has a 12-year life and no salvage value. The expected annual income for each year from this equipment follows. $ 225,000 Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Equipment Selling, general, and administrative expenses Income 120,000 30,000 38,250 $ 36,750 (a) Compute the annual net cash flow. (b) Compute the payback period. (c) Compute the accounting rate of return for this equipment. Complete this question by entering your answers in the tabs below. Required A Required B Required C Compute the annual net cash flow. Annual Results from Investment Income Cash Flow $ 225,000 Sales of new product Expenses Materials, labor, and overhead (except depreciation) DepreciationEquipment Selling, general, and administrative expenses 120,000 30,000 38,250 Income $ 36,750 Net cash flow $ 0 Complete this question by entering your answers in the tabs below. Required A Required B Required C Compute the accounting rate of return for this equipment. Accounting Rate of Return Denominator: Numerator: 1 / = Accounting rate of return 0

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_2

Step: 3

blur-text-image_3

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 Financial Accounting

Authors: Anne Marie Ward, Andrew Thomas

7th edition

77138449, 978-0077132682, 77132688, 978-0077138448

More Books

Students also viewed these Accounting questions

Question

What is the work environment like? Friendly/collegial?

Answered: 1 week ago