Gates Supply is considering purchasing some new equipment at a cost of $163,000. The equipment has a
Question:
Gates Supply is considering purchasing some new equipment at a cost of $163,000. The equipment has a 3-year life and is expected to produce cash inflows of $46,000 in year 1, $87,000 in year 2, and $123,000 in year 3. The equipment will be depreciated using straight-line depreciation to a zero book value over the life of the project. What is the payback period?
a. 2.06 years
b. 2.24 years
c. 2.67 years
d. 3.11 years
Score: 0/10
Step by Step Answer:
tr msoheightsourceauto col msowidthsourceauto br msodataplacementsamecell style43 msonumberformat 000 000 00220022 msostylenameComma msostyleid3 style45 msonumberformat00220022 00000220022 ...View the full answer
Related Video
In accounting terms, depreciation is defined as the reduction of the recorded cost of a fixed asset in a systematic manner until the value of the asset becomes zero or negligible. An example of fixed assets are buildings, furniture, office equipment, machinery, etc. The land is the only exception that cannot be depreciated as the value of land appreciates with time. Depreciation allows a portion of the cost of a fixed asset to be the revenue generated by the fixed asset. This is mandatory under the matching principle as revenues are recorded with their associated expenses in the accounting period when the asset is in use. This helps in getting a complete picture of the revenue
Students also viewed these Accounting questions
-
Equipment acquired on January 3, 2007, at a cost of $265,500, has an estimated useful life of eight years and an estimated residual value of $31,500. (a) What was the annual amount of depreciation...
-
Equipment acquired on January 3, 2007, at a cost of $504,000, has an estimated useful life of 12 years, has an estimated residual value of $42,000, and is depreciated by the straight-line method. a....
-
Equipment acquired on January 4, 2009, at a cost of $425,000, has an estimated useful life of nine years and an estimated residual value of $65,000. a. What was the annual amount of depreciation for...
-
East Corp is a mature company and expects its sales and operating costs to be fixed (or unchanged) in perpetuity. It has sales of $524,000 and operating costs of $272,480. The firm has a tax rate of...
-
The questions in this exercise are based on Dell, Inc. To answer the questions, you will need to download Dell's 2005 Form 10-K by going to www.sec.gov/edgar/searchedgar/companysearch.html. Input CIK...
-
The company's consolidated statement of income is provided below: (in millions of dollars) Revenues Sales by company-operated restaurant stores Revenue from franchised stores Total revenues Years...
-
Survival times (days) of fuel rods in a nuclear reactor are as follows: Test at the 0.01 level of significance whether these data are consistent with the assumption of a log-normal distribution of...
-
Craft Ltd. held 80% of the outstanding ordinary shares of Delta Corp. as at December 31, Year 12. In order to establish a closer relationship with Nonaffiliated Corporation, a major supplier to both...
-
Discuss the principles and applications of supercritical fluid extraction (SFE), focusing on the advantages of using supercritical fluids over traditional solvents, and the optimization of extraction...
-
This and similar cases in later chapters focus on the financial statements of a real company Target Corporation, a discount merchandiser that sells a wide assortment of general merchandise and food....
-
A year ago, you invested $10,000 in a saving account that pays an annual interest rate of 3%. What is your approximate annual real rate of return if the rate of inflation was 4% over the year?
-
Otis Thorpe Corporation has 10,000 shares of $100 par value, 8%, preferred stock and 50,000 shares of $10 par value common stock outstanding at December 31, 2007. Instructions Answer the questions in...
-
The management of Shatner Manufacturing Company is trying to decide whether to continue manufacturing a part or to buy it from an outside supplier. The part, called CISCO, is a component of the...
-
Majesty Company uses target costing to ensure that its products are profitable. Assume Majesty is planning to introduce a new product with the following estimates: Estimated market price $ Annual...
-
Big D Incorporated has a business opportunity to provide two different types of information to a new client. As the business analyst, you are tasked to assess the financial feasibility of this...
-
Discuss the risk management failures that led to the collapse of Northern Rock Bank at the beginning of 2007/2009 Financial Crisis. What could have been done to avoid the collapse?
-
What are The three different meanings of the term common law ? What are the three elements of common law?
-
A manual backup timer is set for 0.5 second. If a technique calls for an exposure of 100 mAs at 500 mA, would the radiograph be over-, under-, or correctly exposed? Why? Describe the structure of an...
-
Select a GPO. Identify its locations, services, facilities, and sites, and determine the criteria for membership.
-
Extend Algorithms 3.4 and 3.5 to include as output the first and second derivatives of the spline at the nodes.
-
A flow of arrivals N t is a non-homogeneous Poisson process with the periodical intensity (t) = | sin t|. The unit of time is a day. (a) What is the intensity of arrivals at the end and at the...
-
What is the difference between an accrual and a deferral?
-
What is the difference between an accrual and a deferral?
-
Which type of adjustment will? (a) Increase both assets and revenues, (b) Increase revenues and decrease liabilities, (c) Increase expenses and decrease assets, (d) Increase both expenses and...
-
What are some features of Cross Laminated Timber?
-
The 201 1 price implied by PPP for the Billy bookcase in the United Kingdom was 137.49, but the actual price at that time was $29.90. What are possible reasons why the price was relatively low?
-
Within the intricate tapestry of advanced organizational ecosystems, characterized by their emphasis on continuous learning and adaptive capabilities, what strategies can organizational leaders...
Study smarter with the SolutionInn App