Question
In: Accounting
Cash Payback Period, Net Present Value Analysis, and Qualitative Considerations The plant manager of Shenzhen Electronics...
Cash Payback Period, Net Present Value Analysis, and Qualitative Considerations
The plant manager of Shenzhen Electronics Company is considering the purchase of new automated assembly equipment. The new equipment will cost $207,000. The manager believes that the new investment will result in direct labor savings of $69,000 per year for 10 years.
| Present Value of an Annuity of $1 at Compound Interest | |||||
| Year | 6% | 10% | 12% | 15% | 20% |
| 1 | 0.943 | 0.909 | 0.893 | 0.870 | 0.833 |
| 2 | 1.833 | 1.736 | 1.690 | 1.626 | 1.528 |
| 3 | 2.673 | 2.487 | 2.402 | 2.283 | 2.106 |
| 4 | 3.465 | 3.170 | 3.037 | 2.855 | 2.589 |
| 5 | 4.212 | 3.791 | 3.605 | 3.353 | 2.991 |
| 6 | 4.917 | 4.355 | 4.111 | 3.785 | 3.326 |
| 7 | 5.582 | 4.868 | 4.564 | 4.160 | 3.605 |
| 8 | 6.210 | 5.335 | 4.968 | 4.487 | 3.837 |
| 9 | 6.802 | 5.759 | 5.328 | 4.772 | 4.031 |
| 10 | 7.360 | 6.145 | 5.650 | 5.019 | 4.192 |
a. What is the payback period on this
project?
years
b. What is the net present value, assuming a 12% rate of return? Use the table provided above. Round to the nearest whole dollar.
| Net present value | $ |
c. What else should the manager consider in the
analysis?
Solutions
ekkarill92 answered 2 years agoRelated Solutions
Determine the Payback Period, the Discounted Payback Period, and the Net Present Value for the following...
Determine the Payback Period, the Discounted Payback Period, and
the Net Present Value for the following after-tax cash flow
projections. Also tell me whether the IRR is greater or less then
the RRR.
A. Year ATCF
0 $(60,000)
1 21,000
2 27,000
3 24,000
4 16,000
Assume a 16% required rate of return
Determine the Payback Period, the Discounted Payback Period, and the Net Present Value for the following...
Determine the Payback Period, the Discounted Payback Period, and
the Net Present Value for the following after-tax cash flow
projections. Also tell me whether the IRR is greater or less then
the RRR
B. Year ATCF
0 (100,000)
1 (320,000)
2 130,000
3 185,000
4 200,000
5 195,000
6 150,000
Assume a 20% required rate of return
Cash Payback Period, Net Present Value Method, and Analysis Elite Apparel Inc. is considering two investment...
Cash Payback Period, Net Present Value Method, and Analysis
Elite Apparel Inc. is considering two investment projects. The
estimated net cash flows from each project are as follows:
Year
Plant Expansion
Retail Store Expansion
1
$101,000
$85,000
2
83,000
99,000
3
71,000
68,000
4
65,000
48,000
5
20,000
40,000
Total
$340,000
$340,000
Each project requires an investment of $184,000. A rate of 12%
has been selected for the net present value analysis.
Present Value of $1 at Compound
Interest
Year...
Cash Payback Period, Net Present Value Method, and Analysis Elite Apparel Inc. is considering two investment...
Cash Payback Period, Net Present Value Method, and Analysis
Elite Apparel Inc. is considering two investment projects. The
estimated net cash flows from each project are as follows:
Year
Plant Expansion
Retail Store Expansion
1
$175,000
$146,000
2
143,000
172,000
3
123,000
118,000
4
112,000
82,000
5
35,000
70,000
Total
$588,000
$588,000
Each project requires an investment of $318,000. A rate of 6%
has been selected for the net present value analysis.
Present Value of $1 at Compound
Interest
Year...
Cash Payback Period, Net Present Value Method, and Analysis Elite Apparel Inc. is considering two investment...
Cash Payback Period, Net Present Value Method, and Analysis
Elite Apparel Inc. is considering two investment projects. The
estimated net cash flows from each project are as follows:
Year
Plant Expansion
Retail Store Expansion
1
$111,000
$93,000
2
91,000
109,000
3
79,000
75,000
4
71,000
52,000
5
22,000
45,000
Total
$374,000
$374,000
Each project requires an investment of $202,000. A rate of 15%
has been selected for the net present value analysis.
Present Value of $1 at Compound
Interest
Year...
Cash Payback Period, Net Present Value Method, and Analysis Elite Apparel Inc. is considering two investment...
Cash Payback Period, Net Present Value Method, and Analysis
Elite Apparel Inc. is considering two investment projects. The
estimated net cash flows from each project are as follows:
Year
Plant Expansion
Retail Store Expansion
1
$144,000
$121,000
2
118,000
141,000
3
102,000
97,000
4
92,000
68,000
5
29,000
58,000
Total
$485,000
$485,000
Each project requires an investment of $262,000. A rate of 12%
has been selected for the net present value analysis.
Present Value of $1 at Compound
Interest
Year...
Cash Payback Period, Net Present Value Method, and Analysis Elite Apparel Inc. is considering two investment...
Cash Payback Period, Net Present Value Method, and Analysis
Elite Apparel Inc. is considering two investment projects. The
estimated net cash flows from each project are as follows:
Year
Plant Expansion
Retail Store Expansion
1
$173,000
$144,000
2
141,000
170,000
3
122,000
116,000
4
110,000
81,000
5
35,000
70,000
Total
$581,000
$581,000
Each project requires an investment of $314,000. A rate of 15%
has been selected for the net present value analysis.
Present Value of $1 at Compound
Interest
Year...
Cash Payback Period, Net Present Value Method, and Analysis McMorris Publications Inc. is considering two new...
Cash Payback Period, Net Present Value Method, and Analysis
McMorris Publications Inc. is considering two new magazine
products. The estimated net cash flows from each product are as
follows:
Year
Canadian Cycling
European Hiking
1
$155,000
$129,000
2
126,000
152,000
3
109,000
104,000
4
99,000
73,000
5
31,000
62,000
Total
$520,000
$520,000
Present Value of $1 at Compound
Interest
Year
6%
10%
12%
15%
20%
1
0.943
0.909
0.893
0.870
0.833
2
0.890
0.826
0.797
0.756
0.694
3
0.840
0.751...
Cash Payback Period, Net Present Value Method, and Analysis McMorris Publications Inc. is considering two new...
Cash Payback Period, Net Present Value Method, and Analysis
McMorris Publications Inc. is considering two new magazine
products. The estimated net cash flows from each product are as
follows:
Year
Canadian Cycling
European Hiking
1
$120,000
$101,000
2
99,000
118,000
3
85,000
81,000
4
77,000
57,000
5
24,000
48,000
Total
$405,000
$405,000
Present Value of $1 at Compound
Interest
Year
6%
10%
12%
15%
20%
1
0.943
0.909
0.893
0.870
0.833
2
0.890
0.826
0.797
0.756
0.694
3
0.840
0.751...
Cash Payback Period, Net Present Value Method, and Analysis Elite Apparel Inc. is considering two investment...
Cash Payback Period, Net Present Value Method, and Analysis
Elite Apparel Inc. is considering two investment projects. The
estimated net cash flows from each project are as follows: Year
Plant Expansion Retail Store Expansion 1 $143,000 $120,000 2
117,000 140,000 3 101,000 96,000 4 91,000 67,000 5 29,000 58,000
Total $481,000 $481,000 Each project requires an investment of
$260,000. A rate of 10% has been selected for the net present value
analysis. Present Value of $1 at Compound Interest Year...
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