Part I: Market Rate: 10%. Company X will get a machine that costs $4,000 today. Machine...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Part I: Market Rate: 10%. Company X will get a machine that costs $4,000 today. Machine has a lifetime of 4 years and will depreciate straight-line to zero at the end of its life with no salvage value. Tax rate is 20%. The cash flow that the machine will create has the following details: Revenue Per Year = Price*Quantity Cost Per Year = Variable Cost*Quantity + Fixed Cost where Price is equal to 9, Variable Cost is equal to 2, Quantity is equal to 1,600 units, and fixed cost is $500. Company thinks the current Net Working Capital does not need to be increased in the face of the increased activity. What is the payback period and discounted payback period? (Clearly calculate the cash flow corresponding to years 0,1,2,3, and 4. Show your work) Part II: Without solving for the financial break-even quantity, can you tell whether it is greater or less than 1,600? Explain with a few sentences. Part I: Market Rate: 10%. Company X will get a machine that costs $4,000 today. Machine has a lifetime of 4 years and will depreciate straight-line to zero at the end of its life with no salvage value. Tax rate is 20%. The cash flow that the machine will create has the following details: Revenue Per Year = Price*Quantity Cost Per Year = Variable Cost*Quantity + Fixed Cost where Price is equal to 9, Variable Cost is equal to 2, Quantity is equal to 1,600 units, and fixed cost is $500. Company thinks the current Net Working Capital does not need to be increased in the face of the increased activity. What is the payback period and discounted payback period? (Clearly calculate the cash flow corresponding to years 0,1,2,3, and 4. Show your work) Part II: Without solving for the financial break-even quantity, can you tell whether it is greater or less than 1,600? Explain with a few sentences.
Expert Answer:
Related Book For
Statistical Reasoning for Everyday Life
ISBN: 978-0321817624
4th edition
Authors: Jeff Bennett, Bill Briggs, Mario F. Triola
Posted Date:
Students also viewed these accounting questions
-
A firm is considering purchasing a machine that costs $65,000. It will be used for six years, and the salvage value at that time is expected to be zero. The machine will save $35,000 per year in...
-
A corporation is considering purchasing a machine that costs $100,000 and has a $20,000 salvage value . The machine will provide net annual cash inflows of $25,000 per year and has a six year life....
-
The following questions dealing with the time value of money are adapted from questions that previously appeared on Certified Management Accountant (CMA) examinations. The CMA designation sponsored...
-
To be more engaged in your community, think of any issues that the youth today are facing, then find books, or studies that will help you in supporting your topic. Write your own observation/s on the...
-
Use nodal analysis to obtain Vo in the circuit of Fig. 10.67 below. 445 A
-
Tom Russell is a junior in the school of business administration at a large midwestern university. Tom, who is an honor student, hasnt fully decided what his major should be. He has considered...
-
When might the information from numeric information systems such as HR metrics and workforce analytics not generate any return on investment?
-
Baylor University sold 10,000 season football tickets at $80 each for its five-game home schedule. What entries should be made (a) When the tickets were sold, and (b) After each game?
-
Port Company purchased 30,000 of the 100,000 outstanding shares of Sund Company common stock on January 1, 20X2, for $180,000. The purchase price was equal to the book value of the shares purchased....
-
Submersibles with clear plastic hulls have the potential to revolutionize underwater leisure. One small submersible vehicle has a depth-control system as illustrated in Figure E4.9. (a) Determine the...
-
Juan, the new Latin American project manager, was leading a change management project which targeted a new sales approach. When he met his Scandinavian team, he spontaneously decided to introduce...
-
Your heart does work to pump blood through your body. Each minute, 5.0 L of blood travels through your circulatory system. The pressure drops from 16 kPa as it exits the heart to approximately zero...
-
A pork-processing facility is considering installing either a storage facility or a holding pond. A biosystems engineer has been hired to evaluate the economic trade-offs for the two alternatives....
-
A 30 kg male emperor penguin under a clear sky in the Antarctic winter loses very little heat to the environment by convection; its feathers provide very good insulation. It does lose some heat...
-
When you put on the brakes on your bicycle, friction heats the steel rims of your wheels. Could this heating be a problem? Suppose a 65 kg cyclist with a 15 kg bike is descending Trail Ridge Road in...
-
Which of the following is not an approach to replacement analysis? a. Cash flow approach b. Insider viewpoint c. Outsider viewpoint d. Supply chain approach
-
In 2 0 1 8 , YB printed shirts for the World Cup. It was estimated that the expected amount of demand would be 1 2 , 0 0 0 shirts, with a significant amount of uncertainty. Because of this...
-
For the following exercises, write the first four terms of the sequence. a n = 2 n 2
-
Two hundred volunteers are recruited for a study of how Internet shopping affects purchases. Each person is allowed to choose whether to be in the Internet user group or the group that agrees not to...
-
Refer to the combined city-highway fuel economy ratings (mi/gal) for different cars. The old ratings are based on tests used before 2008 and the new ratings are based on tests that went into effect...
-
Different Disney animated children's movies are randomly selected and, for each movie, the amount of time (seconds) showing tobacco use is recorded (based on data from "Tobacco and Alcohol Use in...
-
This exercise considers the data described in the Section 13.2.2 ratemaking classification example using data in Table 13.3 Table 13.3 . a. Fit a gamma regression model using a log-link function with...
-
This exercise considers data from the Medical Expenditure Panel Survey (MEPS) described in Exercise 1.1 and Section 11.4. Our dependent variable consists of the number of outpatient (COUNTOP) visits....
-
Verify that the Tweedie distribution is a member of the linear exponential family of distributions by checking equation (13.9). In particular, provide an expression for \(S(y, \phi)\) (note that...
Study smarter with the SolutionInn App