Helicopter Gear is planning to expand its product line, which requires an investment of $478,800 in special-purpose
Question:
Helicopter Gear is planning to expand its product line, which requires an investment of $478,800 in special-purpose machinery. The machinery has a useful life of six years and no salvage value. The estimated annual results of offering the new products are as follows:
Revenue | $ | 531,000 | |
Expenses (Including straight-line depreciation) | (504,000 | ) | |
Increase in net income | $ | 27,000 | |
All revenue from the new products and all expenses (except depreciation) will be received or paid in cash in the same period as recognized for accounting purposes.rev: 08_09_2012
The payback period for this proposed investment is:
The return on average investment for this proposed investment is closest to:
Compute the net present value of this proposed investment, using a discount rate of 10%. (An annuity table shows that the present value of $1 received annually for six years, discounted at 10%, is 4.355.)
Government and Not for Profit Accounting Concepts and Practices
ISBN: 978-1118155974
6th edition
Authors: Michael H. Granof, Saleha B. Khumawala