Nova Products has a 5-year maximum acceptable payback period.
The firm is considering the purchase of...
Nova Products has a 5-year maximum acceptable payback period.
The firm is considering the purchase of a new machine and must
choose between two alternatives. The first machine requires an
initial investment of $8,000 and generates annual after-tax cash
inflows of $2,000 for each of the next 11 years. The second machine
requires an initial investment of $19 ,000 and provides an annual
cash inflow after taxes of $4 000 for 26 years.
. a. Determine the payback period for...
Payback comparisons Nova Products has a 4-year maximum
acceptable payback period. The firm is considering the...
Payback comparisons Nova Products has a 4-year maximum
acceptable payback period. The firm is considering the purchase of
a new machine and must choose between two alternatives. The first
machine requires an initial investment of $9,000 and generates
annual after-tax cash inflows of $3,000 for each of the next 10
years. The second machine requires an initial investment of
$33,000 and provides an annual cash inflow after taxes of $8,000
for 22 years. a. Determine the payback period for each...
Payback period
Smith Inc. is considering a capital expenditure that requires an
initial investment of $35,000...
Payback period
Smith Inc. is considering a capital expenditure that requires an
initial investment of $35,000 and returns after-tax cash inflows of
$6,000 per year for 8 years. The firm has a maximum acceptable
payback period of 6 years. a. Determine the payback period for this
project. b. Should the company accept or reject the project?
Why?
Aurora Playground Equipment Inc is considering the purchase of a
new machine. The firm requires 14.00%...
Aurora Playground Equipment Inc is considering the purchase of a
new machine. The firm requires 14.00% return on the investment and
payback within 3 years. The machine is expected to provide cash
flows as follows:
$11000
$5,500
$6,000
$1,000
$1,000
Year 0
1
2
3
4
Determine the Pay pack Period for the Machine and whether it
should be acceptable for investment.
Payback Period?______
Determine the Internal Rate of Return (IRR) of the
Machine_______?
Simple Rate of Return/Payback Period
Lugano’s Pizza Parlor is considering the purchase of a large
oven...
Simple Rate of Return/Payback Period
Lugano’s Pizza Parlor is considering the purchase of a large
oven and related equipment for mixing and baking “crazy bread.” The
oven and equipment would cost $289,000 delivered and installed. It
would be usable for about 15 years, after which it would have a 10%
scrap value. The pizza parlor uses straight-line depreciation on
all assets.
Annual incremental revenue and cash inflows for the “crazy
bread” would be $144,000 and annual incremental costs and cash...
Is the overhaul costs
suppose to be accounted for when calculating the payback
period???
Alternative A...
Is the overhaul costs
suppose to be accounted for when calculating the payback
period???
Alternative A
Alternative B
Alternative C
Cost
$1,000,000
$1,250,000
$2,000,000
Setup Costs
$0
$50,000
$50,000
Training costs
$10,000
$25,000
$35,000
Annual maintence
costs
$10,000
$15,000
$16,000
Anticipated annual
savings
$125,000
$190,000
$225,000
Annual labor savings
$25,000
$0
$40,000
Expected useful life in
years
8
9
7
Overhaul costs in year
4
$45,000
$50,000
$35,000
Step-1: Calculation of payback period:
Particulars
Alternative-A (in $)
Alternative-B (in $)...
Walton Airline Company is considering expanding its territory.
The company has the opportunity to purchase one...
Walton Airline Company is considering expanding its territory.
The company has the opportunity to purchase one of two different
used airplanes. The first airplane is expected to cost $18,090,000;
it will enable the company to increase its annual cash inflow by
$6,700,000 per year. The plane is expected to have a useful life of
five years and no salvage value. The second plane costs
$41,580,000; it will enable the company to increase annual cash
flow by $9,900,000 per year. This...
Fanning Airline Company is considering expanding its territory.
The company has the opportunity to purchase one...
Fanning Airline Company is considering expanding its territory.
The company has the opportunity to purchase one of two different
used airplanes. The first airplane is expected to cost $24,500,000;
it will enable the company to increase its annual cash inflow by
$7,000,000 per year. The plane is expected to have a useful life of
five years and no salvage value. The second plane costs
$37,260,000; it will enable the company to increase annual cash
flow by $8,100,000 per year. This...
1. Big Steve's, makers of swizzle sticks, is considering the
purchase of a new plastic stamping...
1. Big Steve's, makers of swizzle sticks, is considering the
purchase of a new plastic stamping machine. This investment
requires an initial outlay of $95,000 and will generate net cash
inflows of $19,000 per year for 9 years.
a. What is the project's NPV using a discount rate of 8
percent? Should the project be accepted? Why or why not?
b. What is the project's NPV using a discount rate of 13
percent? Should the project be accepted? Why or...