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Payback Period and Discounted Payback Period

Calculating Returns: Calculate the average return for Treasury bills and the average annual inflation rate (consumer price index) for this period. Calculate the standard deviation of Treasury bill returns and inflation over this period. Calculate the average real return for Treasury bills over this period.

Calculating Returns Refer to the following table: Year T-Bill Return Inflation 1973 0.0729 0.0871 1974 0.0799 0.1234 1975 0.0587 0.0694 1976 0.0507 0.0486 1977 0.0545 0.0670 1978 0.0764 0.0902 1979 0.1056 0.1329 1980 0.1210 0.1252 Requirement 1: Calculate the average return for Treasury bills and the

Simple Rate of Return and Payback Analysis of Two Machines

Simple Rate of Return and Payback Analysis of Two Machines (LO3, LO4) Blue Ridge Furniture is considering the purchase of two different items of equipment, as described below: 1. Machine A. A compacting machine has just come onto the market that would permit Blue Ridge Furniture to compress sawdust into various shelving p

Classify each cost as either a product cost or a period cost.

The following is a list of costs that were incurred in the production and sale of boats: a. Cost of metal hardware for boats, such as ornaments and tie-down grasps. b. Power used by sanding equipment. c. Yearly cost of maintenance contract for robotic equipment. d. Premiums on business interruption insurance in case of

Micro Chip's Consolidation Statement of Operations

Consider micro chip's consolidation statement of operations for the year ended Sept. 25, 2004 and answer questions 1 and 2. 1. Use the percentage sales method and a 20% increase in sales to forecast micro chip's consolidated statement of operations for the period Sept. 26, 2004- Sept. 25, 2005. Assume a 15% tax rate for the

Problem set

Q#2)A Assuming the at the end of the accounting period there are credit balances of $3,400 in Patient Services Revenues and $1,800 in Laboratory Fees Revenue. Prepare the required closing entry in journal form. The accounting period ends December 31. #B Assume that debit balances at the end of the accounting period are

Pay back

Your company is considering two mutually exclusive investment options. Each involves an initial investment of $250,000. Option A is a bit more risky than option, therefore the discount rate for Option A is 15% and the discount rate for Option B is 12%. The cash flows are as follows: Year Option A Option B 1 $50,000 $75,00

Solution with excel calibration

On average, Microlimp's accounts receivables total $40,000,000 on annual sales of $400 million. What is Microlimp's average collection period?

Calculating Payback

8-1. Calculating Payback. What is the payback period for the following set of cash flows? Year Cash Flow 0 -$2,500 1 400 2 1,300 3 700 4 600

Payback Period; Rate of Return; Return on Investment

Use the following to answer questions 44-45. Mackenzie Corporation is evaluating a proposal to invest in a machine costing $60,000. The machine has an estimated useful life of ten years, and an estimated salvage value of $10,000. The machine will increase the company's net income by approximately $7,000 per year. All revenue an

Average Carrying Value/ Investment; Salvage Value; Payback Period, etc.

0. The average carrying value (or average investment) of an asset with no salvage value is equal to: a. The original cost of the asset divided by its estimated useful life. b. The original cost of the asset divided by two. c. The average annual net cash flow of the asset multiplied by the asset's estimated useful life. d. Th

Payback period

Flash Company wants to purchase a new computer that will allow the company to do in-house printing rather than sub-contract the work out to a printer. The machine will cost $45,000. FLash also believes there will be substantial savings on printing costs over the five-year life of the machine. Savings are anticipated at:


Payback is considered an unsophisticated budgeting techique, and as such ______. gives no consideration to timing of cash flows and therefore the time value of money, gives no consideration to risk exposure, does consider the timing of cash flows and therefore gives explicit consideration to the time value of money, or g

Calculating the payback period

3. I have a project that will cost $150,000 to start (implementation costs) and there is no terminal cash flow. The operating cash flows over the next 5 years are as follows: Revenue Operating Costs Year 1 $25,000 $35,000 Year 2 55,000 30,000 Year 3 85,000 35,000 Year 4 100