Question

In: Finance

Moe's building costs $800,000 and it is expected to make $150,000 per year for the next...

Moe's building costs $800,000 and it is expected to make $150,000 per year for the next 6 years. Given a required rate of return of 12% and maximum required payback period of 4 years, calculate the Payback Period and Discounted Payback Period for this big project and explain whether or not the big project should be accepted under each of those two methods.

Solutions

Expert Solution

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

Your company has fixed costs of $150,000 per year. The variable costs per unit in 2018...
Your company has fixed costs of $150,000 per year. The variable costs per unit in 2018 were $3 per unit, and 30,000 units were produced that year. Your company uses cost-based pricing and has a profit margin of $3 per unit. In 2019, production increased and your team had more experience—variable costs went down to $2 per unit because of your team’s higher skill and 65,000 units were produced that year. What is the change in selling price from 2018...
Dr.Arrowhead will receive $150,000 per year for the next 20 years as an ordinary annuity payment...
Dr.Arrowhead will receive $150,000 per year for the next 20 years as an ordinary annuity payment for a high-tech slingshot weapon he invented. If a 6 percent rate is applied, should he be willing to sell out his future rights now for $2,000,000?
Riley Company promises to pay Janet Anderson or her estate $150,000 per year for the next...
Riley Company promises to pay Janet Anderson or her estate $150,000 per year for the next 10 years, even if she leaves the company or passes away to try to induce her to stay with the company. Riley Company wants to properly record this transaction as deferred compensation but is unsure how to record the cost. In addition, Riley Company purchased a whole life insurance policy for Janet, naming the company as the beneficiary. Riley Company wants to determine if...
Simple Metal​ Works, Inc. will manufacture and sell 150,000 units next year. Fixed costs will total...
Simple Metal​ Works, Inc. will manufacture and sell 150,000 units next year. Fixed costs will total ​$260,000​, and variable costs will be 55 percent of sales. a. The firm wants to achieve a level of earnings before interest and taxes of ​$300,000. What selling price per unit is necessary to achieve this​ result? b. Set up an analytical income statement to verify your solution to part ​(a​).
Earnings per common share of ABC Industries for the next year are expected to be $2.25 and to grow 7.5% per year over the next 4 years.
Earnings per common share of ABC Industries for the next year are expected to be $2.25 and to grow 7.5% per year over the next 4 years. At the end of the 5 years, earnings growth rate is expected to fall to 6.25% and continue at that rate for the foreseeable future. ABC’s dividend payout ratio is 40%. If the expected return on ABC's common shares is 18.5%, calculate the current share price. (Round your answer to the nearest cent.)Current...
ABC Inc. needs 150,000 boxes of parts per year over the next four years, and you...
ABC Inc. needs 150,000 boxes of parts per year over the next four years, and you are deciding on a bid for the contract. The capital equipment will cost $950,000 to install, which will be depreciated straight-line to zero over the life of the project. The equipment can be sold for $250,000 in four years. The equipment will be installed on land the company already owns. The land can be sold for $750,000 after-tax today. The land is expected to...
ABC Inc. needs 150,000 boxes of parts per year over the next four years, and you...
ABC Inc. needs 150,000 boxes of parts per year over the next four years, and you are deciding on a bid for the contract. The capital equipment will cost $950,000 to install, which will be depreciated straight-line to zero over the life of the project. The equipment can be sold for $250,000 in four years. The equipment will be installed on land the company already owns. The land can be sold for $750,000 after-tax today. The land is expected to...
22) ABC Inc. needs 150,000 boxes of parts per year over the next four years, and...
22) ABC Inc. needs 150,000 boxes of parts per year over the next four years, and you are deciding on a bid for the contract. The capital equipment will cost $950,000 to install, whichwill be depreciated straight-line to zero over the life of the project. The equipment can be sold for $250,000 in four years. The fixed production costs are $225,000 per year, and the variable costs are $10.0for each box. An initial investment in net working capital of $65,000...
YMCMB Inc. is evaluating an equipment that costs $60,000. The expected benefits per year are expected...
YMCMB Inc. is evaluating an equipment that costs $60,000. The expected benefits per year are expected to be $19,500 while costs are expected to be $9,500. This equipment should have a useful life of 10 years and the company’s WACC is 7%. Calculate the firm’s NPV and IRR. Should YMCMB buy this equipment? (Hint: find the cash flows first, then calculate the firm’s NPV).
Earnings per common share of ABC Industries for the next year are expected to be $2.25...
Earnings per common share of ABC Industries for the next year are expected to be $2.25 and to grow 7.5% per year over the next 4 years. At the end of the 5 years, earnings growth rate is expected to fall to 6.25% and continue at that rate for the foreseeable future. ABC’s dividend payout ratio is 40%. If the expected return on ABC's common shares is 18.5%, calculate the current share price. (Round your answer to the nearest cent.)...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT