Three parts 1 question

1)

Robotics is evaluating a new product line. The CFO asks for an estimate of number of years to recover the initial investment, ignoring the time value of money. You realize that this is the payback period. The estimated cash flows from the new product line appear below. (Answer in years, round to 2 places) Year cash flow = - 90000 Year 1 cash flow = - 41000 Year 2 cash flow = 29000 Year 3 cash flow = 29000 Year 4 cash flow =29,000 Year 5 cash flow =26,000 Year 6 cash flow =42.000 Year 7 cash flow =44,000

Answer:

Spacely Sprockets Inc is a new start-up evaluating a new project. They worry that they don't have all the requisite operating information they will need to estimate Cash Flows From Assets and that they wouldn't be able to evaluate this project based on NPV and IRR (which both use the CFFA's to evaluate)Instead they have decided to use the Average Accounting Return (AAR) rule to evaluate the project. What is the AAR for this project? (Enter your answer as a percentage and Round to 2 decimals) Accounting Info for Spacely Sprockets NetBook Value of Income Assets

Y1 year 79,000 672,000

2 Year 40,000 653,000

3Year 63,000 520,000

Answer:

US Robotics is evaluating a new product line. The CFO asks for an estimate of number of years to recover the initial investment, ignoring the time value of money. You realize that this is the payback period. The estimated cash flows from the new product line appear below. (Answer in years, round to 2 places) Year cash flow = - 82000 Year 1 cash flow = - 37000 Year 2 cash flow = 28000 Year 3 cash flow =36,000 Year 4 cash flow =35,000 Year 5 cash flow =34.000 Year 6 cash flow =44.000 Year 7 cash flow =41,000

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