Question

Ramson Corporation is considering purchasing a machine that would cost $283,850 and have a useful life of 5 years. The machine would reduce cash operating costs by $81,100 per year. The machine would have a salvage value of $107,100 at the end of the project. (Ignore income taxes.)

**Required:**

a. Compute the payback period for the machine. **(Round
your answer to 2 decimal places.)**

b. Compute the simple rate of return for the machine.
**(Round your intermediate calculations to the nearest whole
dollar and your final answer to 2 decimal places.)**

Answer #1

1) | payback period | |||||||

initial investment/annual net cash flow | ||||||||

283,850/81100 | ||||||||

3.5 | years | |||||||

2) | simple rate of return | |||||||

Annual incremental net operating income/initial investment | ||||||||

45,750/283850 | ||||||||

16.12% | ||||||||

Annual incremental cost savings | 81,100 | |||||||

annual depreciation | (283850-107100)/5= | 35350 | ||||||

Annual incremental net operating income | 45,750 | |||||||

Ramson Corporation is considering purchasing a machine that
would cost $454,140 and have a useful life of 8 years. The machine
would reduce cash operating costs by $84,100 per year. The machine
would have a salvage value of $107,130 at the end of the project.
(Ignore income taxes.)
Required:
a. Compute the payback period for the machine. (Round
your answer to 2 decimal places.)
b. Compute the simple rate of return for the machine.
(Round your intermediate calculations to nearest...

30.
Ramson Corporation is considering purchasing a machine that
would cost $633,080 and have a useful life of 9 years. The machine
would reduce cash operating costs by $93,100 per year. The machine
would have a salvage value of $107,220 at the end of the project.
(Ignore income taxes.)
Required:
a. Compute the payback period for the machine. (Round
your answer to 2 decimal places.)
b. Compute the simple rate of return for the machine.
(Round your intermediary answers to...

Jark Corporation has invested in a machine that cost $66,000,
that has a useful life of twelve years, and that has no salvage
value at the end of its useful life. The machine is being
depreciated by the straight-line method, based on its useful life.
It will have a payback period of five years. Given these data, the
simple rate of return on the machine is closest to (Ignore income
taxes.): (Round your answer to 1 decimal place.) Garrison 16e...

Jark Corporation has invested in a machine that cost $75,000,
that has a useful life of four years, and that has no salvage value
at the end of its useful life. The machine is being depreciated by
the straight-line method, based on its useful life. It will have a
payback period of two years. Given these data, the simple rate of
return on the machine is closest to (Ignore income taxes.):
(Round your answer to 1 decimal place.)
Garrison 16e...

The management of Penfold Corporation is considering the
purchase of a machine that would cost $300,000, would last for 5
years, and would have no salvage value. The machine would reduce
labor and other costs by $70,000 per year. The company requires a
minimum pretax return of 12% on all investment projects.
Click here to view Exhibit 13B-1 and Exhibit 13B-2 to determine
the appropriate discount factor(s) using the tables provided.
The net present value of the proposed project is...

Ursus, Inc., is considering a project that would have a
five-year life and would require a $775,000 investment in
equipment. At the end of five years, the project would terminate
and the equipment would have no salvage value. The project would
provide net operating income each year as follows (Ignore income
taxes.): Sales $ 1,900,000 Variable expenses 1,300,000 Contribution
margin 600,000 Fixed expenses: Fixed out-of-pocket cash expenses $
350,000 Depreciation 155,000 505,000 Net operating income $ 95,000
Click here to...

Ursus, Inc., is considering a project that would have a
eleven-year life and would require a $1,848,000 investment in
equipment. At the end of eleven years, the project would terminate
and the equipment would have no salvage value. The project would
provide net operating income each year as follows (Ignore income
taxes.):
Sales
$
2,100,000
Variable expenses
1,400,000
Contribution margin
700,000
Fixed expenses:
Fixed out-of-pocket cash
expenses
$
370,000
Depreciation
168,000
538,000
Net operating income
$
162,000
Click here to...

HI Corporation is considering the purchase of a machine that
promises to reduce operating costs by the same amount for every
year of its 7-year useful life. The machine will cost $213,980 and
has no salvage value. The machine has a 14% internal rate of
return. (Ignore income taxes.)
Click here to view Exhibit 13B-1 and Exhibit 13B-2 to determine
the appropriate discount factor(s) using the tables provided.
What are the annual cost savings promised by the machine?
(Round your...

The management of Nixon Corporation is investigating purchasing
equipment that would cost $524,000 and have a 7 year life with no
salvage value. The equipment would allow an expansion of capacity
that would increase sales revenues by $367,000 per year and cash
operating expenses by $212,500 per year. (Ignore income taxes.)
Required: Determine the simple rate of return on the investment.
(Round your answer to 1 decimal place.)

The management of Nixon Corporation is investigating purchasing
equipment that would cost $542,000 and have a 7 year life with no
salvage value. The equipment would allow an expansion of capacity
that would increase sales revenues by $376,000 per year and cash
operating expenses by $217,000 per year. (Ignore income taxes.)
Required:
Determine the simple rate of return on the investment.
(Round your answer to 1 decimal place.)

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 1 minute ago

asked 4 minutes ago

asked 7 minutes ago

asked 10 minutes ago

asked 19 minutes ago

asked 29 minutes ago

asked 35 minutes ago

asked 35 minutes ago

asked 40 minutes ago

asked 46 minutes ago

asked 57 minutes ago

asked 50 minutes ago