Question
In: Accounting
Question #1) Cash Payback Period A project has estimated annual net cash flows of $28,000. It...
Question #1)
Cash Payback Period
A project has estimated annual net cash flows of $28,000. It is estimated to cost $165,200.
Determine the cash payback period. Round your answer to
one decimal place.
years
Question #2)
Average Rate of Return
Determine the average rate of return for a project that is
estimated to yield total income of $773,760 over six years, has a
cost of $748,800, and has a $83,200 residual value. Round to the
nearest whole number.
%
Solutions
Expert Solution
| 1 | Cash payback period | = | 5.9 | Years |
| Workings: | ||||
| Cash payback period | = | Total Cost / Net Annual Cash flows | ||
| = | $165200 / $28000 | |||
| = | 5.9 | Years | ||
| 2 | Annual rate of return | = | 31% | |
| Workings: | ||||
| Annual rate of return | = | Average Annual Income / Average Investment | ||
| = | $128960/ $416000 | |||
| = | 31% | |||
| Net Annual Income | ||||
| Annual Revenues | = | $ 7,73,760 | ||
| Number of years | = | 6 | ||
| Average annual Income | = | $ 1,28,960 | ||
| Average Investment | ||||
| Factory Equipment | = | $ 7,48,800 | ||
| Estimated salvage Value | = | $ 83,200 | ||
| (i) | Total | = | $ 8,32,000 | |
| (i) / 2 | Average Investment | = | $ 4,16,000 |
ekkarill92 answered 2 years agoRelated Solutions
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