Denise Seals Problem 13-24

Denise Seals Problem 13-24 - 1 2 3 4 5 6 7 8 9 10 11 12 13...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 A B 13-24 C D E F G H Name: I J K L Enter the appropriate amounts in the shaded (gray) cells or select from the drop-down list. 1. Payback period: Increased Revenues Net of Increased Cash Expenses Payback Amount Payback Years Year 0 1 2 3 4 Balance $16,800 24,000 29,400 29,400 $99,600 $16,800 24,000 29,400 3,800 $74,000 57,200 33,200 3,800 0 1.00 1.00 1.00 0.13 3.13 2. Accounting rate of return using original investment: Average cash flow $99,600 / 4 = Average depreciation Difference Divided by original investment Accounting rate of return Accounting rate of return using average investment: Difference (from above) Divided by average investment Accounting rate of return $24,900 17,000 $7,900 74,000 10.7% $7,900 40,000 19.8% 3. Year 0 1 2 3 4 NPV Cash Flow $(74,000) 16,800 24,000 29,400 35,400 Discount Factor Present Value 1.000 $(74,000) 0.893 15,002 Wrong 0.797 19,128 Wrong 0.712 20,933 Wrong 0.636 22,514 Wrong $3,577 14% Yes IRR (by trial and error) Should the new equipment be purchased (yes or no)? 4. Year 0 1 Cash Flow $(74,000) 11,200 Discount Factor Present Value 1.000 $(74,000) 0.893 10,002 Wrong A 45 46 47 48 49 50 51 52 B C 2 3 4 NPV D E F G 16,000 19,600 25,600 H 0.797 0.712 0.636 I Wrong Wrong Wrong J K 12,752 13,955 16,282 $(21,009) L Given the new information, should the equipment be purchased (yes or no)? No ...
View Full Document

This note was uploaded on 03/25/2010 for the course MBAC 6605 taught by Professor Smith during the Spring '10 term at Baylor.

Page1 / 2

Denise Seals Problem 13-24 - 1 2 3 4 5 6 7 8 9 10 11 12 13...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online