Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $265,000. Project 2 requires an initial investment of $189,000. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery Selling, general, and administrative expenses Income Required A Required B Compute each project's annual net cash flow. (a) Compute each project's annual net cash flow. (b) Compute payback period for each investment. Complete this question by entering your answers in the tabs below. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery Selling, general, and administrative expenses Income Net cash flow S $ Income Project 1 152,000 $ < Required A 78,000 33,000 21,000 20,000 Project 1 $ 152,000 $ 78,000 33,000 21,000 $ 20,000 Cash Flow 20,000 $ 28,000 Project 2 $ 132,000 $ (8,000) Required B > 45,000 31,000 33,000 $ 23,000 Income Project 2 Cash Flow 132,000 $ 23,000 45,000 31,000 33,000 23,000 $ 23,000
Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $265,000. Project 2 requires an initial investment of $189,000. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery Selling, general, and administrative expenses Income Required A Required B Compute each project's annual net cash flow. (a) Compute each project's annual net cash flow. (b) Compute payback period for each investment. Complete this question by entering your answers in the tabs below. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery Selling, general, and administrative expenses Income Net cash flow S $ Income Project 1 152,000 $ < Required A 78,000 33,000 21,000 20,000 Project 1 $ 152,000 $ 78,000 33,000 21,000 $ 20,000 Cash Flow 20,000 $ 28,000 Project 2 $ 132,000 $ (8,000) Required B > 45,000 31,000 33,000 $ 23,000 Income Project 2 Cash Flow 132,000 $ 23,000 45,000 31,000 33,000 23,000 $ 23,000
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter19: Capital Investment
Section: Chapter Questions
Problem 17E: Postman Company is considering two independent projects. One project involves a new product line,...
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