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ACC 212 homework 8

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Exercise 25-1 Payback period computation, uneven cash flows LO P1;Beyer Company is considering the purchase of an asset for $360,000. It is expected to produce the following net cash flows. The cash flows occur evenly throughout each year.;Year 1;Year 2;Year 3;Year 4;Year 5;Total;Net cash flows;$;80,000;$;50,000;$;70,000;$;250,000;$;13,000;$;463,000;Compute the payback period for this investment. (Cumulative net cash outflows must be entered with a minus sign. Round your answers to 2 decimal places.);A machine can be purchased for $210,000 and used for 5 years, yielding the following net incomes. In projecting net incomes, double-declining balance depreciation is applied, using a 5-year life and a zero salvage value.;Year 1;Year 2;Year 3;Year 4;Year 5;Net incomes;$;13,000;$;28,000;$;53,000;$;40,500;$;103,000;Compute the machine?s payback period (ignore taxes). (Round your intermediate calculations to 3 decimal places and payback period answer to 3 decimal places.);Exercise 25-3 Payback period computation, even cash flows LO P1;Compute the payback period for each of these two separate investments;a.;A new operating system for an existing machine is expected to cost $240,000 and have a useful life of four years. The system yields an incremental after-tax income of $69,230 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $9,000.;b.;A machine costs $180,000, has a $13,000 salvage value, is expected to last seven years, and will generate an after-tax income of $38,000 per year after straight-line depreciation.;Exercise 25-4 Accounting rate of return LO P2;A machine costs $300,000 and is expected to yield an after-tax net income of $9,000 each year. Management predicts this machine has a 9-year service life and a $60,000 salvage value, and it uses straight-line depreciation. Compute this machine?s accounting rate of return. (Round your answer to 2 decimal places.);Exercise 25-5 Payback period and accounting rate of return on investment LO P1, P2;B2B Co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is expected to cost $480,000 with a 12-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 192,000 units of the equipment?s product each year. The expected annual income related to this equipment follows.;Sales;$;300,000;Costs;Materials, labor, and overhead (except depreciation);160,000;Depreciation on new equipment;40,000;Selling and administrative expenses;30,000;Total costs and expenses;230,000;Pretax income;70,000;Income taxes (30%);21,000;Net income;$;49,000;Exercise 25-6 Computing net present value LO P3;B2B Co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is expected to cost $368,000 with a 4-year life and no salvage value. It will be depreciated on a straight-line basis. K2B Co. concludes that it must earn at least a 8% return on this investment. The company expects to sell 147,200 units of the equipment?s product each year. The expected annual income related to this equipment follows. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.);Sales;$;230,000;Costs;Materials, labor, and overhead (except depreciation);81,000;Depreciation on new equipment;92,000;Selling and administrative expenses;23,000;Total costs and expenses;196,000;Pretax income;34,000;Income taxes (30%);10,200;Net income;$;23,800;Compute the net present value of this investment. (Round "PV Factor" to 4 decimal places. Round your intermediate calculations and final answer to the nearest dollar amount.);Exercise 25-8 NPV and profitability index LO P3

 

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