# Question: Each of the following scenarios is independent All cash flows

Each of the following scenarios is independent. All cash flows are after-tax cash flows.

Required:

1. Brad Blaylock has purchased a tractor for $93,750. He expects to receive a net cash flow of $31,250 per year from the investment. What is the payback period for Jim?

2. Bertha Lafferty invested $360,000 in a laundromat. The facility has a 10-year life expectancy with no expected salvage value. The laundromat will produce a net cash flow of $108,000 per year. What is the accounting rate of return?

3. Melannie Bayless has purchased a business building for $336,000. She expects to receive the following cash flows over a 10-year period:

Year 1: $42,000

Year 2: $58,800

Years 3–10: $84,000

What is the payback period for Melannie? What is the accounting rate of return?

Required:

1. Brad Blaylock has purchased a tractor for $93,750. He expects to receive a net cash flow of $31,250 per year from the investment. What is the payback period for Jim?

2. Bertha Lafferty invested $360,000 in a laundromat. The facility has a 10-year life expectancy with no expected salvage value. The laundromat will produce a net cash flow of $108,000 per year. What is the accounting rate of return?

3. Melannie Bayless has purchased a business building for $336,000. She expects to receive the following cash flows over a 10-year period:

Year 1: $42,000

Year 2: $58,800

Years 3–10: $84,000

What is the payback period for Melannie? What is the accounting rate of return?

## Answer to relevant Questions

Emery Manufacturing Company produces component parts for the farm equipment industry and has recently undergone a major computer system conversion. Jake Murray, the controller, has established a troubleshooting team to ...The following cases are each independent of the others. Required: 1. Sam Lilliam places $5,000 in a savings account that pays 3 percent. Suppose Sam leaves the original deposit plus any interest in the account for two years. ...Refer to Exercise 20.10. Assume the economic lot size for small casings is 120,000 and that of the large casings is 40,000. Morrison Manufacturing sells an average of 9,600 small casings per workday and an average of 3,200 ...Sterling Corporation has an EOQ of 5,000 units. The company uses an average of 500 units per day. An order to replenish the part requires a lead time of five days. Required: 1. Calculate the reorder point, using Equation ...Fisher Company produces two types of components for airplanes: A and B, with unit contribution margins of $400 and $600, respectively. The components pass through three sequential processes: cutting, welding, and assembly. ...Post your question