Beyer Company is considering buying an asset for $400,000. It is expected to produce the following net cash flows.
able[[,Year 1,Year 2,Year 3,Year 4,Year 5],[Net cash flows,$80,000,$80,000,$70,000,$200,000,$15,000
PLEASE FILL IN TABLES SHOWN
Beyer Company is considering buying an asset for $400,000.It is expected to produce the following net cash flows.
Year 1 $80,000
Year 2 $80,000
Year 3 $70,000
Year 4 $200,000
Year 5 $15,000
Net cash flows
Compute the payback period for this investment.(Cumulative net cash outflows must be entered with a minus sign.Round you Payback Period answer to 2 decimal places.)
Year
Cumulative Cash Net Cash Flows Flows
Initial investment Year 1 Year 2 Year3
$
400,000 80,000 80,000 70,000
Year 4 Year5
200,000 15,000
Total
Payback period=
Information for two alternative projects involving machinery investments follows:
Project 1 $123,000) 0 14,145
Project 2 $(93,000) 13,000 12,720
Initial investment Salvage value Annual income
a.Compute accounting rate of return for each project b. Based on accounting rate of return, which project is preferred?
Compute accounting rate of return for each project.
Accounting Rate of Return
Numerator: Annual income $ 14,145 $ 12,720
Denominator: Average investment
=
Accounting rate of return
Project 1 Project 2
0 0
