Operating and Maintenance Costs $6,000 Reduction in Manual Labour $3,000 If she were to acquire this asset, she would have to take out a $108,000 loan for which 5% interest on principal only will be charged annually. She is wondering the following: Is this a good investment and why or why not? Please discuss quantitative and qualitative factors to consider. (NPV is not required, only a cash-flow analysis in present day dollars). She heard the term 'pay-back period', what does this mean and what would be considered a 'good' payback period for her under her current life circumstances? What accounting entries (Debits and Credits) might she have to book upon purchasing the asset? What accounting entries (Debits and Credits) might she have to book after a full year of using the asset, assuming she elects to use the straight-line depreciation method and has to make annual interest payments on her loan?

Answer rating: 100% (QA)

Evaluating the Asset for the Bakery Owner Cash Flow Analysis Heres a breakdown of the cash flows to consider Initial Investment Loan Amount 108000 Ann... View the full answer