//edugen wileyplus.com/edugen/student/mainfr.uni Weygandt, Financial & Manageria
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//edugen wileyplus.com/edugen/student/mainfr.uni Weygandt, Financial & Managerial Accounting, 2e Financial and Managerial Accounting (ACCTG 10 a Assignment Gradebook ORION Downloadable eTextbook 5P/Ramalbingi 133 min. Question 1 cash inflows YearAA acturing Company is considering three new projects, each requiring an equioment invwestment of $22,000. Each prolect wil last for 3 years and produce the following 1 $7,000 $9,500 $11,000 29,000 9,500 10,000 3 15,000 9,500 9,000 Total $31,000 $28,500 $30,000 the euioment's salvage value is zero. Cepeda uses straight line depreciatlion. Cepeda wll not accept any project with a pyback perisd ovwer 2 vears. Cepeda's minimum recuired rate TABLE 3 Present Value of 1 of return is 12% (re) Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 15% 96154 95238 94340 0.93458 92593 91743 900990090 89286 86957 92456 90703 89000 0.87344 85734 84168 82645 81162 79719 75614 .88900 .86384 .839620.81630 .79383 ,772 i 8 .75 i 32-73 i 19 .71178 .65752 85480 82270 79209 0.76290 73503 70843 68301 65873 63552 57175 82 193 .78353 .74726 0.7 1299 .68058 64003 .62092 5934S S6743 4978 79031 74622 .70496 0.66634 .63017 .59627 . S6447 .53464 .50663 .41233 75992 .7 1068 .66506 0.62275 ·58349 .54703 .51316 ,48 166 .45235 .37504 73069 .67684 .62741 0.58201 .54027 .50187 .4665 i 43393 .40388 .32000 70259 64461 59190 0.54393 50025460434241039092 36061 28426Explanation / Answer
Payback period calculation is the simple calcualtion for checking the return of our Basis investment in year CACULATION OF SIMPLE PPAYBACK PERIOD OFPROJECT AA Answer =1 Period Particulars Inflow (Outflow) PVF @ 12% Present Value Discounted Cumulative Value 0 Outflow $ -22,000.00 1.0000 $ -22,000.00 $ -22,000.00 1 Inflow $ 7,000.00 0.8929 $ 6,250.00 $ -15,750.00 2 Inflow $ 9,000.00 0.7972 $ 7,174.74 $ -8,575.26 3 Inflow $ 15,000.00 0.7118 $ 10,676.70 $ 2,101.45 In the 3rd year we recover our all money , but full 3rd year is not required for this so we can caluclate the exact period of payback Period required In the 3rd years = $ 8,575.26 Payback Period = 2 Years + $ 8,575.26 "/ " By $ 10,676.70 Payback Period = 2 Years + 0.80 Years Payback Period = 2.80 Years CACULATION OF SIMPLE PPAYBACK PERIOD OFPROJECT BB Period Particulars Inflow (Outflow) PVF @ 12% Present Value Discounted Cumulative Value 0 Outflow $ -22,000.00 1.0000 $ -22,000.00 $ -22,000.00 1 Inflow $ 9,500.00 0.8929 $ 8,482.14 $ -13,517.86 2 Inflow $ 9,500.00 0.7972 $ 7,573.34 $ -5,944.52 3 Inflow $ 9,500.00 0.7118 $ 6,761.91 $ 817.40 In the 3rd year we recover our all money , but full 3rd year is not required for this so we can caluclate the exact period of payback Period required In the 3rd years = $ 5,944.52 Payback Period = 2 Years + $ 5,944.52 "/ " By $ 6,761.91 Payback Period = 2 Years + 0.88 Years Payback Period = 2.88 Years CACULATION OF SIMPLE PPAYBACK PERIOD OFPROJECT CC Period Particulars Inflow (Outflow) PVF @ 12% Present Value Discounted Cumulative Value 0 Outflow $ -22,000.00 1.0000 $ -22,000.00 $ -22,000.00 1 Inflow $ 11,000.00 0.8929 $ 9,821.43 $ -12,178.57 2 Inflow $ 10,000.00 0.7972 $ 7,971.94 $ -4,206.63 3 Inflow $ 9,000.00 0.7118 $ 6,406.02 $ 2,199.39 In the 3rd year we recover our all money , but full 3rd year is not required for this so we can caluclate the exact period of payback Period required In the 3rd years = $ 4,206.63 Payback Period = 2 Years + $ 4,206.63 "/ " By $ 6,406.02 Payback Period = 2 Years + 0.66 Years Payback Period = 2.66 Years Answer = (A) (1) AA BB CC Payback Period = 2..80 2.88 2.66 Answer = A (2) Most Desirable Project is = Project CC Least Desirable Project is = Project BB
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