Question

Quipplex Ltd is a haulage company that is considering an investment in a new truck that...

Quipplex Ltd is a haulage company that is considering an investment in a new truck that will cost £110,000 on 1 January next year ('Year 1'). The truck is expected to be in use for 5 years, and then will be sold for a value estimated at £22,000.
The company depreciates its assets on a straight line basis.As a result of the investment,
QuipplexLtd can expect to increase its profits over the life of the truck by the following predicted amounts:

Year   £


1   27,500
2   10,000
3   41,000
4   45,000
5   28,000
Assuming that annual profit before depreciation is equivalent to the annual cash inflow, calculate the payback period of the investment.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

In case of any issues or doubts, please comment below

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Ennis Ltd is considering the purchase of a machine to produce a new product. The machine...
Ennis Ltd is considering the purchase of a machine to produce a new product. The machine will cost the business £450,000 and has an expected life of five years. Annual operating profits from the machine are expected to be as follows The new machine will be depreciated using the straight-line method and the estimated disposal value at the end of its useful life is £70,000. The business has a target accounting rate of return of 25% for new investment projects....
Vaughn Company is considering a capital investment of $216,000 in additional productive facilities. The new machinery...
Vaughn Company is considering a capital investment of $216,000 in additional productive facilities. The new machinery is expected to have a useful life of 5 years with no salvage value. Depreciation is by the straight-line method. During the life of the investment, annual net income and net annual cash flows are expected to be $18,468 and $45,000, respectively. Vaughn has a 12% cost of capital rate, which is the required rate of return on the investment. Click here to view...
Commercial Decor Pty Ltd is considering investing in a new machine to assemble its furniture. The...
Commercial Decor Pty Ltd is considering investing in a new machine to assemble its furniture. The machine is estimated to cost $150,000 which can last for 5 years before it becomes unreliable and can be sold for scrap at $12,000. The project is estimated to bring in additional $40,000 net cash inflow annually. The net cash flow in year 5 also includes the scrap value. The company uses a 13 per cent discount rate as the required rate of return...
A company is considering a new project. The project will generate $200,000 in revenues and $110,000...
A company is considering a new project. The project will generate $200,000 in revenues and $110,000 in operating costs each year for the next 5 years. It would require an additional investment of $150,000 to be depreciated to a zero book value on a straight line basis over 5 years. The investment has a salvage value of $20,000. The tax rate is 40%. At the end of year 5, there is a $10,000 return of networking capital. Determine the annual...
Most Company has an opportunity to invest in one of two new projects. Project Y requires...
Most Company has an opportunity to invest in one of two new projects. Project Y requires a $320,000 investment for new machinery with a five-year life and no salvage value. Project Z requires a $320,000 investment for new machinery with a four-year life and no salvage value. The two projects yield the following predicted annual results. The company uses straight-line depreciation, and cash flows occur evenly throughout each year. (PV of $1, FV of $1, PVA of $1, and FVA...
Vaughn Corporation is considering purchasing a new delivery truck. The truck has many advantages over the...
Vaughn Corporation is considering purchasing a new delivery truck. The truck has many advantages over the company’s current truck (not the least of which is that it runs). The new truck would cost $55,900. Because of the increased capacity, reduced maintenance costs, and increased fuel economy, the new truck is expected to generate cost savings of $8,600. At the end of 8 years, the company will sell the truck for an estimated $27,000. Traditionally the company has used a rule...
Linkin Corporation is considering purchasing a new delivery truck. The truck has many advantages over the...
Linkin Corporation is considering purchasing a new delivery truck. The truck has many advantages over the company’s current truck (not the least of which is that it runs). The new truck would cost $55,610. Because of the increased capacity, reduced maintenance costs, and increased fuel economy, the new truck is expected to generate cost savings of $8,300. At the end of 8 years, the company will sell the truck for an estimated $27,900. Traditionally the company has used a rule...
1. GTZ Heavy Construction has recently acquired an additional haulage truck as part of an earthmoving...
1. GTZ Heavy Construction has recently acquired an additional haulage truck as part of an earthmoving work on a hydroelectric power dam construction project. The total acquisition cost of the truck is $5 million. If the lifetime of the equipment is 10 years and the salvage value at the end of the lifetime is estimated to be $0.75 million: Calculate the annual depreciation over its lifetime and the book value at the end of each year using the (45 pts)...
Linkin Corporation is considering purchasing a new delivery truck. The truck has many advantages over the...
Linkin Corporation is considering purchasing a new delivery truck. The truck has many advantages over the company’s current truck (not the least of which is that it runs). The new truck would cost $ 56,800. Because of the increased capacity, reduced maintenance costs, and increased fuel economy, the new truck is expected to generate cost savings of $ 8,300. At the end of 8 years the company will sell the truck for an estimated $ 27,200. Traditionally the company has...
Riverbed Corporation is considering purchasing a new delivery truck. The truck has many advantages over the...
Riverbed Corporation is considering purchasing a new delivery truck. The truck has many advantages over the company’s current truck (not the least of which is that it runs). The new truck would cost $55,500. Because of the increased capacity, reduced maintenance costs, and increased fuel economy, the new truck is expected to generate cost savings of $8,400. At the end of 8 years, the company will sell the truck for an estimated $28,200. Traditionally the company has used a rule...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT