This is my third attempt at posting this. I have yet to get the correct help. I

Question

This is my third attempt at posting this. I have yet to get the correct help. I am having trouble with this problem. I have included the reference tables that we are required to use. I will also include notes from the book. There may be many ways to figure out the answers but the book requires us to use their methods. Two tutors have tried to help me prior but they were unsuccessful. I am using the textbook: Kimmel, Accounting: Tools for Decision Making, 5e. This is a problem from Chapter 24 Planning Capital Investments. It is Problem 24-1A. Please note the text in red. The question is asking for the CASH PAYBACK PERIOD for the three projects rounded to 2 decimal places (EX: 10.50 years).

QUESTION:

NOTES:

TABLES:

Explanation / Answer

1)

Year       Profit Before Depreciation  *    Factor 15% + Depreciation     =Total      = Cumulative CFAT

1               $ 13650        *    0.8696         +      $32,550          =$44,420.04

2                    $ 13650     * 0.7561          +        $32,550   =$42,870.77=$$87,290.81

3                   $ 13650      *   0.6575       +          $32,550          =41,524.88 =$128,815.69

4                   $ 13650     *   0.5718     +          $32,550          =$40,355.07 =$169,170.76

5       $ 13650       * 0.4972      +            $32,550         =$39,336.78=$208,507.54

=3 years +2months

$162,750- $169,170.76=$6,420.76/$40,355.07*12=2months

Depreciation =$162,750/ 5=$32,550

______________________________________________________________

2

Year     Profit Before Depreciation *    Factor 15% + Depreciation     =Total     = Cumulative CFAT

1 $18,375 *0.8696=$15,979+$34,650=$50,629

2 $17,325   *0.7561 + $34,650=$51,975.75=$102,604.75

3$16,275 *0.6575+ $34,650=$45,350.81=$147,955.56

$12,075*0.5718+$34,650==$41,554.49=$189,150.15

$8,925* 0.4972+$34,650==$39,087.51=$228,597.66

Payback period = 3years +5 months

( $15,900.15/ $41,554.49*12= 5 months

(173,250 -$189,150.15=$15,900.15)

Depreciation =173,250 /5=$34,650

________________________________________________________________________

Year     Profit Before Depreciation *    Factor 15% + Depreciation     =Total     = Cumulative CFAT

1    $28,875 *0.8696 =$25,110+$42,900=$68,010

2    $23,625 *0.7561=$17,862.86+$42,900=$60,762.86=$128,772.86

3    $22,575*0.6575=$14,843.06+$42,900=$57,743.06=$186,515.92

4    $14,175*0.5718=$8105.27+$42,900=$51,005.27=$237,521.19

5    $13,125** 0.4972=$6525.75+$42,900=$49,425.75=$286,946.94

=3 years + 5 months

$237,521.19- $214,500 -$23021.19=$23021.19/$51,005.27*12=5 momths

Depreciation =$214,500/ 5=$42,900

____________________________________________________________

kilo=3 years +2months

lima=3years +5 months

oscar=3 years + 5 months

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