113. A company is considering a proposal to invest $73,000 in a project that would provide the following net cash flows:
Year 1
|
$ 5,000
|
Year 2
|
12,000
|
Year 3
|
25,000
|
Year 4
|
29,000
|
Year 5
|
8,000
|
Compute the project's payback period.
114. A company produces two boat models, Montauk and Orient. Both products are being considered for major investment projects next year. Relevant data follow:
|
Montauk
|
Orient
|
New investment
|
$424,000
|
$380,000
|
Expected 3-year net cash flows:
|
|
|
Year 1
|
150,000
|
130,000
|
Year 2
|
160,000
|
130,000
|
Year 3
|
170,000
|
130,000
|
Required:
Use the payback period to evaluate these two investment projects.
115. A company is evaluating the purchase of a machine for $900,000 with a six-year useful life and no salvage value. The company uses straight-line depreciation and it assumes that the annual net cash flow from using the machine will be received uniformly throughout each year. In calculating the accounting rate of return, what is the company's average investment?
116. A company is evaluating the purchase of a machine for $750,000 with a nine-year useful life and no salvage value. The company uses straight-line depreciation and it assumes that the annual net cash flow from using the machine will be received uniformly throughout each year. In calculating the accounting rate of return, what is the company's average investment?
117. A company purchases a machine for $1,000,000. The machine has an expected life of nine years and no salvage value. The company anticipates a yearly net income of $60,000 after taxes of 30% to be received uniformly throughout each year. What is the accounting rate of return?