Question

The New Watch Times is considering a new printing press to increase its productive capacity. If...

The New Watch Times is considering a new printing press to increase its productive capacity. If the cost of the press is $500,000 and the relevant cash flows from the project are $75,000 per year over the next ten years, what is the payback period?

Homework Answers

Answer #1

ANSWER IN THE IMAGE ((YELLOW HIGHLIGHTED). FEEL FREE TO ASK ANY DOUBTS. THUMBS UP PLEASE. THUMBS UP PLEASE.

Payback Period= 6.67 years

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
PRESTON PRINTING is considering a four-year project to improve its production efficiency. Buying a new press...
PRESTON PRINTING is considering a four-year project to improve its production efficiency. Buying a new press for $535,000 is estimated to result in $219,000 in annual pretax cost savings. The press falls in the MACRS 5-year class, and it will have a salvage value at the end of the project of $89,000. The MACRS rates are 0.2, 0.32, 0.192, 0.1152, 0.1152, and 0.0576 for Years 1 to 6, respectively. The press also requires an incremental $4,600 in inventory for each...
Pete's Precision Presses is considering purchasing a new press for $200,000. The press will save the...
Pete's Precision Presses is considering purchasing a new press for $200,000. The press will save the company $60,000 per year in production costs for 7 years. After 7 years the press will have a value of $50,000. Depreciation is calculated over 7 years using straight-line. 1. Calculate the Payback Period Should the company buy the press if its minimum ARR is 20%? 3. Calculate the Net Present Value (NPV) of the press using 15% interest. Should the company buy the...
To increase productive capacity, a company is considering a proposed new plant. Which of the following...
To increase productive capacity, a company is considering a proposed new plant. Which of the following statements is CORRECT? a. Capital budgeting decisions should be based on before-tax cash flows. b. When estimating the project's operating cash flows, it is important to include both opportunity costs and sunk costs, but the firm should ignore the cash flow effects of externalities since they are accounted for in the discounting process. c. In calculating the project's operating cash flows, the firm should...
You are considering a new project that will cost $750,000. The project is expected to generate...
You are considering a new project that will cost $750,000. The project is expected to generate positive cash flows over the next four years in the amounts of $350,000 in year one, $325,000 in year two, $250,000 in year three, and $280,000 in year four. Your required rate of return is 8%. What is the discounted payback period of the project?
A company is considering a new project that will cost $750,000. The project is expected to...
A company is considering a new project that will cost $750,000. The project is expected to generate positive cash flows over the next four years in the amounts of $300,000 in year one, $325,000 in year two, $150,000 in year three, and $180,000 in year four. The required rate of return is 8%. What is the project’s payback period? 2.60 years 2.83 years 2.63 years 2.33 years 2.50 years
(IRR, payback, and calculating a missing cash flow) Mode Publishing is considering building a new printing...
(IRR, payback, and calculating a missing cash flow) Mode Publishing is considering building a new printing facility that will involve a large initial outlay and then result in a series of positive cash flows for 4 years. The estimated cash flows associated with this project are: Year Project Cash Flow 0 ? 1 800 Million 2 400 Million 3 500 Million 4 100 Million If you know that the project has a regular payback of 2.8 years, what is the...
James Construction Co. is considering a new inventory system that will cost $1,050,000. The system is...
James Construction Co. is considering a new inventory system that will cost $1,050,000. The system is expected to generate positive cash flows over the next four years in the amounts of $350,000 in year one, $350,000 in year two, $150,000 in year three, and $250,000 in year four. The required rate of return is 8%. What is the Payback Period of this project?
Orange Ltd. is considering purchasing a new manufacturing plant that costs $500,000. The manufacturing plant will...
Orange Ltd. is considering purchasing a new manufacturing plant that costs $500,000. The manufacturing plant will generate revenues of $150,000 per year for ten years. The operating costs needed to generate these revenues will total $75,000 per year. The manufacturing plant will be depreciated on a straight-line basis over ten years to zero. Orange Ltd.’s tax rate is 30 percent, and its cost of capital is 10 percent. (a) What is the net present value of this project? (b) Should...
Henry Press is considering purchasing a printing machine for £10,000 on 31 December 2021, on the...
Henry Press is considering purchasing a printing machine for £10,000 on 31 December 2021, on the last day of its financial year end. The machine generates cash flows of £7,000 per annum and will be sold for £2,000 on 31 December 2023. The company pays tax at 17% and capital allowances are available at 18% per annum on a reducing balance basis. The expected returns on the stock market are 12% and the Bank of England base rate is 200...
Lila Limited is considering the purchase of a new machine for its manufacturing facilities. The purchase...
Lila Limited is considering the purchase of a new machine for its manufacturing facilities. The purchase of the machine is expected to reduce operating costs. Presented below is the relevant cost and operating information relating to the new machine: Initial Cost $240262 Installation Costs $22052 Useful Life 11 years Expected annual cash operating savings – years 1-11 $56092 Additional annual cash fixed costs $12802 Assuming Lila Limited uses the payback method to evaluate capital expenditures, what is the payback period...