Fred is considering an investment in new equipment for his small business. He already determined the...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Fred is considering an investment in new equipment for his small business. He already determined the relevant cash flows and calculated a number of metrics related to the investment: NPV is small, but positive, at $5,000; IRR is 8%, while his minimum required return is 7%; and the payback period is 4.5 years, compared to a useful life of 5 years. (a1) Should Fred move forward with this investment based on the metrics he calculated regarding this investment? Fred is considering an investment in new equipment for his small business. He already determined the relevant cash flows and calculated a number of metrics related to the investment: NPV is small, but positive, at $5,000; IRR is 8%, while his minimum required return is 7%; and the payback period is 4.5 years, compared to a useful life of 5 years. (a1) Should Fred move forward with this investment based on the metrics he calculated regarding this investment?
Expert Answer:
Answer rating: 100% (QA)
Based on the metrics that Fred has calculated it appears that the investment is worth considering bu... View the full answer
Related Book For
Accounting What the Numbers Mean
ISBN: 978-0073527062
9th Edition
Authors: David H. Marshall, Wayne W. McManus, Daniel F. Viele,
Posted Date:
Students also viewed these finance questions
-
Origami Company is a price-taker and uses target pricing. Please refer to the following information: How much is the target full cost in total for the year? A) $1,440,000 B) $10,500,000 C)...
-
A Bitcoin mining firm, Quantum Leap SE, is considering an investment in new mining technology. The new investment would require initial funding of 40 million today and further expenditure on Nvidia...
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
Determine the degrees of freedom under the following conditions: (a) Tl-20 wt% Pb at 325 C and 400 C; (b) Tl-40 wt% Pb at 325 C and 400 C; (c) Tl-90 wt% Pb at 325 C and 400 C. Refer to the phase...
-
Three-lens systems. In Figure, stick figure O (the object) stands on the common central axis of three thin, symmetric lenses, which are mounted in the boxed regions. Lens 1 is mounted within the...
-
Consider the circle r(t) = (a cos t, a sin t), for 0 t 2, where a is a positive real number. Compute r' and show that it is orthogonal to r for all t.
-
An auditor is performing an attribute estimation sampling plan. The risk of assessing control risk too low is .05 and sample size is 80. Assuming one deviation is detected, what is the auditor's...
-
Today's Electronics specializes in manufacturing modern electronic components. It also builds the equipment that produces the components. Phyllis Weinberger, who is responsible for advising the...
-
7 Subtract 9 35
-
A slab of polymer 1.6 cm thick, originally at 30C, is heated between steel plates with a surface temperature of 70C. The density of the solid is 950 kg/m 3 , its thermal conductivity is 0.12 W/m K,...
-
Hank rented a new ground-floor condominium for four months before the owner offered to sell it to him. Hank accepted the offer. After Hank became the owner, he built a small patio off the living...
-
Explain the concept of a control variable and the assumption necessary for a control variable to be effective.
-
Find point and interval estimates and test hypotheses for marginal effects in polynomial regressions and models with interaction variables.
-
Recognize a multiple regression model and be able to interpret the coefficients in that model.
-
Suppose a much smaller rider (total mass of rider plus pogo of \(40 \mathrm{~kg}\) ) mechanically stretched the elastic bands of the pogo by \(0.40 \mathrm{~m}\), then got on the pogo and released...
-
Explain the issues that need to be considered when choosing a regression model.
-
Maxine sold shares of stock she acquired by exercising options granted to her under an employee stock purchase plan (ESPP). Her employer did not offer the shares at a discount, so the price she paid...
-
The graph of an equation is given. (a) Find the intercepts. (b) Indicate whether the graph is symmetric with respect to the x-axis, the y-axis, or the origin. -3 6 -6 3 x
-
Qamar, Inc., did not pay dividends in 2009 or 2010, even though 50,000 shares of its 6.5%, $50 par value cumulative preferred stock were outstanding during those years. The company has 800,000 shares...
-
For each of the following expenditures, indicate the type of account (asset or expense) in which the expenditure should be recorded. Explain your answers. a. $15,000 annual cost of routine repair and...
-
Lake Regional Hospital is considering the acquisition of a new diagnostic scanning machine. The investment required to get the machine operational will be $2,082,560. The machine will be capable of...
-
A car rental agency uses 96 boxes of staples a year. The boxes cost \($4\) each. It costs \($10\) to order staples, and it costs \($0.80\) to hold a box of staples in inventory for 1 year. Using the...
-
Is the critical path the shortest or longest path through a project network?
-
PERT assumes that path lengths through a network can be modeled with what type of probability distribution?
Study smarter with the SolutionInn App