Determine the project's payback period. (Round your answer to 2 decimal places.)
Q: ABC Company had the foll une 1 ne 3 ne 8 e 15 Beginning Inventory Purchased Purchased Purchased une…
A: Under FIFO method, inventory purchased first is considered as sold first and newest purchased…
Q: Ronald Roth started his new job as controller with Aerosystems today. Carole, the employee benefits…
A: The personal annual cost is the sum of cost of visiting the office and the cost of prescriptions.…
Q: Cash received from long-term notes payable Purchase of investments Cash dividends paid Interest paid…
A: Cash flow from Financing activities includes the transactions relating to the loan/debt,…
Q: Winter submitted a pay card reflecting the following hours worked at Kicy, Incorporated. Winter…
A: Wage rate is the compensation or remuneration paid to the worker for his work. It is usually paid on…
Q: Camila Company has set the following standard cost per unit for direct materials and direct labor.…
A: Direct costs are the expenses that are directly used for the production of goods and services for…
Q: In 2021, Sheri's only source of income for the year is a salary of $40,025. She is not married and…
A: In the given question, Sheri earned $40,025 as her only income in 2021. She is single and has three…
Q: Pacheo Corporation, which has only one product, has provided the following data concerning its most…
A: The income statement can be prepared using different methods as variable costing and absorption…
Q: P10-10 (Algo) Preparing a Bond Amortization Schedule for a Bond Issued at a Premium LO10-5 [The…
A: Lets understand the basics.Bond can be issued at,(1) Par (2) Premium(3) Discount In each of the…
Q: Whitman Company has just completed its first year of operations. The company's absorption costing…
A: Contribution format income statement using variable costing is a different type of statement that…
Q: 1. Assume the sales volume increases by 4,896 units: a. What is the revised net operating income? b.…
A: Profitability statement can be presented as below - ParticularsAmountSalesxxx(-) Variable…
Q: On January 1, Year 2 Grande Company had a $10,000 balance in the Accounts Receivable account and a…
A: The statement of cash flow records cash inflow and outflow from three main activities operating,…
Q: Tony and Suzie see the need for a rugged all-terrain vehicle to transport participants and supplies.…
A: Rules for EntriesPersonal Account: Related to Person or Firm.Receiver will be debited and Giver will…
Q: Gibson Corporation makes a health beverage named Gibson that is manufactured in a two-stage…
A: The cost of production report includes costs incurred in the relevant period for respective…
Q: The following data pertain to the operations of Deci, Inc. in the most recent month for the…
A: Variable costing is a method of costing under which all variable costs are part of product…
Q: Check No. 12-375 is issued to establish a petty cash fund of $600. The amount of cash in the petty…
A: The objective of the question is to journalize the entries for establishing and replenishing a petty…
Q: On the 1st of January 2014, Peck PLC purchased a building for £2m which at the time of purchase was…
A: Depreciation means the amount of normal wear or tear of the assets due to usage or passage of time.…
Q: TrueNorth Light Bulb Company manufactures light bulbs. The standard direct materials quantity…
A: DIRECT MATERIALS COST VARIANCEDirect materials cost variance is the difference between the actual…
Q: Advanced Computer Parts uses the perpetual inventory system and the net method of recording sales…
A: The objective of the question is to determine the correct journal entry to record the payment…
Q: Dividends per ShareThe following financial data is from Brenner Instruments' financial statements…
A: Based on the financial data provided, Brenner Instruments' dividends paid per share of common stock…
Q: The following is an outline of certain potential benefits as well as costs associated with the…
A: Cross-border listing refers to the process by which a company's shares are listed for trading on a…
Q: Lights, Camera, and More sells filmmaking equipment. The company offers three purchase options: (1)…
A: Present Value means the present worth of money which we are going to pay/receive in the future…
Q: Required information [The following information applies to the questions displayed below.] Sweeten…
A: A plantwide overhead rate is a single predetermined overhead rate that a company uses to allocate…
Q: can someone please help me answer this? thank you!
A: You may determine the yearly lease payments by using the present value of an annuity calculation. To…
Q: Nash Company is constructing a building. Construction began on February 1 and was completed on…
A: Notes payable are those financial instrument that facilitates the company to borrow the loan or the…
Q: A company uses straight-line depreciation. It purchased a truck for $40,000. The truck's salvage…
A: An asset's cost can be distributed evenly throughout the course of its useful life using the…
Q: Required information [The following information applies to the questions displayed below.] Cane…
A: Traceable fixed manufacturing overhead is related to that particular product so that is avoidable in…
Q: During the year, Wright Company sells 525 remote-control airplanes for $110 each. The company has…
A: Inventory valuation is referred to as that method which helps in assigning a monetary value to the…
Q: Required information Skip to question [The following information applies to the questions displayed…
A: The objective of the question is to prepare the necessary journal entries for the years 2024, 2025,…
Q: Materials costs of $1200000 and conversion costs of $1402500 were charged to a processing department…
A: WEIGHTED AVERAGE METHOD :— Under this method, equivalent units are calculated by adding equivalent…
Q: Required information [The following information applies to the questions displayed below.] Data…
A: The costs of service departments are allocated to the operating departments because they exist to…
Q: Emma Williams received the items and amounts of income (see Table 6) during 2014. Use colons for…
A: Tax liability is the total amount of taxes that an individual, company, or other entity owes the…
Q: The Converting Department of Toren Company had 560 units in work in process at the beginning of the…
A: EQUIVALENT UNITS OF PRODUCTION Equivalent Production is represents the production of a process in…
Q: answer in text form with explanation , computation , narration for each and every step clearly
A: The journal entries are prepared to record the transactions on a regular basis. The sales discount…
Q: es During Heaton Company's first two years of operations, it reported absorption costing net…
A: ABSORPTION COSTINGAbsorption Costing is a Cost Management Accounting method in which all costs…
Q: In 2023, HD had reported a deferred tax asset of $226 million with no valuation allowance. At…
A: Income tax refers to the charge that is levied on the income or earnings of an individual or a…
Q: Preble Company manufactures one product. Its variable manufacturing overhead is applied to…
A: Answer:- The variance is used to control costs. Variance arises when the planned or budgeted costs…
Q: Espresso Express operates a number of espresso coffee stands in busy suburban malls. The fixed…
A: Total cost is the aggregate of Total variable cost and total fixed cost. Fixed cost is the cost that…
Q: 1. What are the major characteristics of plant assets? 2. Mickelson Inc. owns land that it purchased…
A: The answers to the questions are given below
Q: Required information Exercise 5A-5 (Algo) Least-Squares Regression [LO5-11] George Caloz & Frères,…
A: Least squares regression analysis or linear regression method is deemed to be the most accurate and…
Q: Jayzene Griffiths is the newly appointed manager for a fashionable shoe store. Her marketing ideas…
A: Break even point is the level of sales at which a company is able to recover all its cost. At this…
Q: Caspar Company reported the following balances at December 31, 20X1: Common Stock ($1 par) Paid-in…
A: DECLARATION OF DIVIDENDSDividend is the amount paid by the Corporation its shareholders in return…
Q: ces The table below contains selected information from recent financial statements of The Tool…
A: DAYS SALES IN INVENTORYDays Sales in Inventory is the ratio between 365 Days & Inventory…
Q: Bhil Give me correct answer with explanation
A: The objective of the question is to calculate the ending inventory and the cost of goods sold (COGS)…
Q: George Caloz & Frères, located in Grenchen, Switzerland, makes luxury custom watches in small lots.…
A: Cost Management:It also correlates to life-cycle budgeting as it associated with cost management…
Q: On March 2, Riverbed Company sold $832,000 of merchandise on account to Swifty Corporation, terms…
A: Journal Entry:— It is an act of recording transactions in books of account when transaction…
Q: Question 3: The shops branch out into record players. You are trying to determine the…
A: The objective of the question is to determine the profit-maximising price for a turntable given the…
Q: Swifty Corporation purchased 400 shares of Sherman Inc. common stock for $14,100 (Swifty does not…
A: A transaction or occurrence is recorded as a journal entry in an accounting system. It typically…
Q: Advanced Computer Parts uses the perpetual inventory system and the net method of recording sales…
A: The objective of the question is to determine the correct journal entry to record the payment…
Q: Please do not give solution in image format thanku
A: >FIFO method used in Process Costing does not consider Beginning WIP cost in calculation of Cost…
Q: On November 1, 2022, Gordon Company collected $9,660 in cash from its tenant as an advance rent…
A: Adjusting Entries are the entries that make the accrual principle work for the organization. These…
Step by step
Solved in 3 steps
- Friedman Company is considering installing a new IT system. The cost of the new system is estimated to be 2,250,000, but it would produce after-tax savings of 450,000 per year in labor costs. The estimated life of the new system is 10 years, with no salvage value expected. Intrigued by the possibility of saving 450,000 per year and having a more reliable information system, the president of Friedman has asked for an analysis of the projects economic viability. All capital projects are required to earn at least the firms cost of capital, which is 12 percent. Required: 1. Calculate the projects internal rate of return. Should the company acquire the new IT system? 2. Suppose that savings are less than claimed. Calculate the minimum annual cash savings that must be realized for the project to earn a rate equal to the firms cost of capital. Comment on the safety margin that exists, if any. 3. Suppose that the life of the IT system is overestimated by two years. Repeat Requirements 1 and 2 under this assumption. Comment on the usefulness of this information.Caduceus Company is considering the purchase of a new piece of factory equipment that will cost $565,000 and will generate $135,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return In Excel, see Appendix C.Gina Ripley, president of Dearing Company, is considering the purchase of a computer-aided manufacturing system. The annual net cash benefits and savings associated with the system are described as follows: The system will cost 9,000,000 and last 10 years. The companys cost of capital is 12 percent. Required: 1. Calculate the payback period for the system. Assume that the company has a policy of only accepting projects with a payback of five years or less. Would the system be acquired? 2. Calculate the NPV and IRR for the project. Should the system be purchasedeven if it does not meet the payback criterion? 3. The project manager reviewed the projected cash flows and pointed out that two items had been missed. First, the system would have a salvage value, net of any tax effects, of 1,000,000 at the end of 10 years. Second, the increased quality and delivery performance would allow the company to increase its market share by 20 percent. This would produce an additional annual net benefit of 300,000. Recalculate the payback period, NPV, and IRR given this new information. (For the IRR computation, initially ignore salvage value.) Does the decision change? Suppose that the salvage value is only half what is projected. Does this make a difference in the outcome? Does salvage value have any real bearing on the companys decision?
- Gardner Denver Company is considering the purchase of a new piece of factory equipment that will cost $420,000 and will generate $95,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further Instructions on internal rate of return in Excel, see Appendix C.Talbot Industries is considering launching a new product. The new manufacturing equipment will cost $17 million, and production and sales will require an initial $5 million investment in net operating working capital. The company’s tax rate is 25%. What is the initial investment outlay? The company spent and expensed $150,000 on research related to the new product last year. What is the initial investment outlay? Rather than build a new manufacturing facility, the company plans to install the equipment in a building it owns but is not now using. The building could be sold for $1.5 million after taxes and real estate commissions. What is the initial investment outlay?Dauten is offered a replacement machine which has a cost of 8,000, an estimated useful life of 6 years, and an estimated salvage value of 800. The replacement machine is eligible for 100% bonus depreciation at the time of purchase- The replacement machine would permit an output expansion, so sales would rise by 1,000 per year; even so, the new machines much greater efficiency would cause operating expenses to decline by 1,500 per year The new machine would require that inventories be increased by 2,000, but accounts payable would simultaneously increase by 500. Dautens marginal federal-plus-state tax rate is 25%, and its WACC is 11%. Should it replace the old machine?
- Talbot Industries is considering launching a new product. The new manufacturing equipment will cost 17 million, and production and sales will require an initial 5 million investment in net operating working capital. The companys tax rate is 40%. a. What is the initial investment outlay? b. The company spent and expensed 150,000 on research related to the new product last year. Would this change your answer? Explain. c. Rather than build a new manufacturing facility, the company plans to install the equipment in a building it owns but is not now using. The building could be sold for 1.5 million after taxes and real estate commissions. How would this affect your answer?The Rodriguez Company is considering an average-risk investment in a mineral water spring project that has an initial after-tax cost of 170,000. The project will produce 1,000 cases of mineral water per year indefinitely, starting at Year 1. The Year-1 sales price will be 138 per case, and the Year-1 cost per case will be 105. The firm is taxed at a rate of 25%. Both prices and costs are expected to rise after Year 1 at a rate of 6% per year due to inflation. The firm uses only equity, and it has a cost of capital of 15%. Assume that cash flows consist only of after-tax profits because the spring has an indefinite life and will not be depreciated. a. What is the present value of future cash flows? (Hint: The project is a growing perpetuity, so you must use the constant growth formula to find its NPV.) What is the NPV? b. Suppose that the company had forgotten to include future inflation. What would they have incorrectly calculated as the projects NPV?Roberts Company is considering an investment in equipment that is capable of producing more efficiently than the current technology. The outlay required is 2,293,200. The equipment is expected to last five years and will have no salvage value. The expected cash flows associated with the project are as follows: Required: 1. Compute the projects payback period. 2. Compute the projects accounting rate of return. 3. Compute the projects net present value, assuming a required rate of return of 10 percent. 4. Compute the projects internal rate of return.
- Flanders Manufacturing is considering purchasing a new machine that will reduce variable costs per part produced by $0.15. The machine will increase fixed costs by $18,250 per year. The information they will use to consider these changes is shown here.Mallette Manufacturing, Inc., produces washing machines, dryers, and dishwashers. Because of increasing competition, Mallette is considering investing in an automated manufacturing system. Since competition is most keen for dishwashers, the production process for this line has been selected for initial evaluation. The automated system for the dishwasher line would replace an existing system (purchased one year ago for 6 million). Although the existing system will be fully depreciated in nine years, it is expected to last another 10 years. The automated system would also have a useful life of 10 years. The existing system is capable of producing 100,000 dishwashers per year. Sales and production data using the existing system are provided by the Accounting Department: All cash expenses with the exception of depreciation, which is 6 per unit. The existing equipment is being depreciated using straight-line with no salvage value considered. The automated system will cost 34 million to purchase, plus an estimated 20 million in software and implementation. (Assume that all investment outlays occur at the beginning of the first year.) If the automated equipment is purchased, the old equipment can be sold for 3 million. The automated system will require fewer parts for production and will produce with less waste. Because of this, the direct material cost per unit will be reduced by 25 percent. Automation will also require fewer support activities, and as a consequence, volume-related overhead will be reduced by 4 per unit and direct fixed overhead (other than depreciation) by 17 per unit. Direct labor is reduced by 60 percent. Assume, for simplicity, that the new investment will be depreciated on a pure straight-line basis for tax purposes with no salvage value. Ignore the half-life convention. The firms cost of capital is 12 percent, but management chooses to use 20 percent as the required rate of return for evaluation of investments. The combined federal and state tax rate is 40 percent. Required: 1. Compute the net present value for the old system and the automated system. Which system would the company choose? 2. Repeat the net present value analysis of Requirement 1, using 12 percent as the discount rate. 3. Upon seeing the projected sales for the old system, the marketing manager commented: Sales of 100,000 units per year cannot be maintained in the current competitive environment for more than one year unless we buy the automated system. The automated system will allow us to compete on the basis of quality and lead time. If we keep the old system, our sales will drop by 10,000 units per year. Repeat the net present value analysis, using this new information and a 12 percent discount rate. 4. An industrial engineer for Mallette noticed that salvage value for the automated equipment had not been included in the analysis. He estimated that the equipment could be sold for 4 million at the end of 10 years. He also estimated that the equipment of the old system would have no salvage value at the end of 10 years. Repeat the net present value analysis using this information, the information in Requirement 3, and a 12 percent discount rate. 5. Given the outcomes of the previous four requirements, comment on the importance of providing accurate inputs for assessing investments in automated manufacturing systems.Home Garden Inc. is considering the construction of a distribution warehouse in West Virginia to service its east coast stores based on the following estimates: a. Determine the net present value of building the warehouse, assuming a construction cost of 20,000,000, an annual net cost savings of 4,000,000, and a desired rate of return of 14%. Use the present value tables provided in Appendix A. b. Determine the net present value of building the warehouse, assuming a construction cost of 25,000,000, an annual net cost savings of 2,500,000, and a desired rate of return of 14%. Use the present value tables provided in Appendix A. c. Interpret the results of parts (a) and (b).