Baldock Inc. is considering the acquisition of a new machine that costs $361,000 and has a useful...
Question:
Baldock Inc. is considering the acquisition of a new machine that costs $361,000 and has a useful life of 5 years with no salvage value. The incremental net operating income and incremental net cash flows that would be produced by the machine are:
| Incremental Net Operating Income | Incremental Net Cash Flows | |
| Year 1 | $68,000 | $151,000 |
| Year 2 | $74,000 | $150,000 |
| Year 3 | $85,000 | $178,000 |
| Year 4 | $48,000 | $150,000 |
| Year 5 | $90,000 | $152,000 |
Assuming cash flows occur uniformly throughout a year, except for the initial investment, what is the payback period of the investment?
Calculate the Payback Period
When companies and management evaluate the viability of capital investments or projects, the accounting department and/or the cost accountant prepare estimates of how much net operating income and net cash flows the project will produce each year of the useful life of the capital asset.
Answer and Explanation: 1
Become a Study.com member to unlock this answer! Create your account
View this answer- Assuming cash flows occur uniformly throughout a year, except for the initial investment, what is the payback period of the investment?
The payback...
See full answer below.
Ask a question
Our experts can answer your tough homework and study questions.
Ask a question Ask a questionSearch Answers
Learn more about this topic:
Get access to this video and our entire Q&A library
How to Calculate Payback Period: Method & Formula
from
Chapter 5 / Lesson 24
247K
Learn the meaning and purpose of the payback period method. Learn how to calculate the payback period, and understand the advantages and limitations of using this method.
Related to this Question
- Baldock Inc. is considering the acquisition of a new machine that costs $435,000 and has a useful life of 5 years with no salvage value. The incremental net operating income and incremental net cash f
- Baldock Inc. is considering the acquisition of a new machine that costs $355,000 and has a useful life of 5 years with no salvage value. The incremental net operating income and incremental net cash f
- Baldock Inc. Is considering the acquisition of a new machine that costs $423,000 and has a useful life of 5 years with no salvage value. The incremental net operating income and incremental net cash
- Baldock Inc. is considering the acquisition of a new machine that costs $364,000 and has a useful life of 5 years with no salvage value. The incremental net operating income and incremental net cash f
- Baldock Inc. is considering the acquisition of a new machine that costs $458,000 and has a useful life of 5 years with no salvage value. The incremental net operating income and incremental net cash flows that would be produced by the machine are: Increme
- Baldock Inc. is considering the acquisition of a new machine that costs $367,000 and has useful life of 5 years with no salvage value. The incremental net operating income and incremental net cash flows that would be produced by the machine are:
- Baldock Inc. is considering the acquisition of a new machine that costs $426,000 and has a useful life of 5 years with no salvage value. The incremental net operating income and
- Baldock Inc. is considering the acquisition of a new machine that costs $370,000 and has a useful life of 5 years with no salvage value. The incremental net oper
- Baldock Inc. is considering the acquisition of a new machine that costs $470,000 and has a useful life of 5 years with no salvage value. The incremental net oper
- Baldock Inc. is considering the acquisition of a new machine that costs $420,000 and has a useful life of 5 years with no salvage value. The incremental net oper
- Baldock Inc. is considering the acquisition of a new machine that costs $358,000 and has a useful life of 5 years with no salvage value. The incremental net oper
- Vandezande Inc. is considering the acquisition of a new machine that costs $458,000 and has a useful life of 5 years with no salvage value. The incremental net operating income and incremental net cash flows that would be produced by the machine are (Igno
- Vandezande Inc. is considering the acquisition of a new machine that costs $370,000 and has a useful life of 5 years with no salvage value. The incremental net operating income and incremental net cas
- (Ignore income taxes in this problem.) Baldock Inc. is considering the acquisition of a new machine that costs $373,000 and has a useful life of 5 years with no salvage value. The incremental net oper
- Gull Inc. is considering the acquisition of equipment that costs $430,000 and has a useful life of 6 years with no salvage value. The incremental net cash flows
- Gull Inc. is considering the acquisition of equipment that costs $560,000 and has a useful life of 6 years with no salvage value. The incremental net cash flows that would be generated by the equipmen
- Gull Inc. is considering the acquisition of equipment that costs $520,000 and has a useful life of 6 years with no salvage value. The incremental net cash flows that would be generated by the equipmen
- Gull Inc. is considering the acquisition of equipment that costs $480,000 and has a useful life of 6 years with no salvage value. The incremental net cash flows that would be generated by the equipmen
- Gull Inc. is considering the acquisition of equipment that costs $570,000 and has a useful life of 6 years with no salvage value. The incremental net cash flows that would be generated by the equipmen
- A large, profitable corporation with net income exceed $20 million is considering the installation of a new machine that cost $100,000 with the expected salvage value of $20,000 after 4 years of usefu
- Hull Inc. is considering the acquisition of equipment that costs $200,000 and has a useful life of 6 years with no salvage value. The incremental net cash flows that would be generated by the equipment are as follows. Year 1 = $77,000 Year 2 = $67,000 Yea
- Acme Company is considering investing in a new machine that costs $62,260 and that has a useful life of 12 years with no salvage value. The machine will generate $11,000 annually in net cash inflows.
- Acme Company is considering investing in a new machine that costs $54,878 and that has a useful life of 9 years with no salvage value. The machine will generate $11,500 annually in net cash inflows. T
- Tippet Inc. is considering the purchase of a new machine, which costs $350,000. The machine is expected to be depreciated on a straight line basis over the useful life of 5 years with no residual valu
- A firm is considering the purchase of one of two new machines. The data on each are as follows: Initial cost $3,400 $6,500 Service life 3 Years 6 Years Salvage Value $100 $500 Net operating cost after
- Yarrow Co. is considering the purchase of a new machine that costs $450,000. The new machine will generate net cash flow of $150,000 per year and net income of $100,000 per year for five years. Yarrow's desired rate of return is 6%. The present value fact
- A machine can be purchased for $236,000 and used for five years, yielding the following net income. In projecting net incomes double-declining depreciation is applied using a five-year life and a zero-salvage value. Year 1 Year 2 Year 3 Year 4 Year 5 Net
- A machine can be purchased for $110,000 and used for five years, yielding the following net incomes. In projecting net incomes, straight-line depreciation is applied, using a five-year life and a zero salvage value. [TABLE] Compute the machine's payback p
- A company is considering the purchase of new equipment for $66,000. The projected annual net cash flows are $26,700. The machine has a useful life of 3 years and no salvage value. Management of the co
- A machine can be purchased for $190,000 and used for five years, yielding the following net incomes. In projecting net incomes, straight-line depreciation is applied, using a five-year life and a zero salvage value. | |Year 1 | Year 2 | Year 3 | Year 4 |
- (Ignore income taxes in this problem.) Gull Inc. is considering the acquisition of equipment that costs $650,000 and has a useful life of 6 years with no salvage value. The incremental net cash flows
- O'Hara Co. is interested in acquiring a new machine that costs $92,000. The machine will last 6 years and provide a cost savings of $23,000 a year. The salvage value of the machine is $10,000. The required rate of return is 12%. Compute the project's net
- MC QU. 92 (Ignore income taxes in this problem.)Gull Inc. is considering the acquisition of equipment that costs $430,000 and has a useful life of 6 years with no salvage value. The incremental net c
- Heidi Company is considering the acquisition of a machine that costs $420,000. The machine is expected to have a useful life of 6 years, a negligible residual value, an annual net cash flow of $120,00
- Bark Company is considering buying a machine for $120,000 with an estimated life of ten years and no salvage value. The straight-line method of depreciation will be used. The machine is expected to generate net income of $8,000 each year. The cash payback
- Anglemenesis Company is planning to spend $84,000 for a new machine that is to be depreciated on a straight-line basis over 10 years with no salvage value. The related cash flows, net of taxes, are ex
- Renfroe Corporation is considering the purchase of a machine that would cost $22,712 and would have a useful life of 5 years. The machine would generate $6,300 of net annual cash inflows per year for
- A machine shop has the opportunity to purchase a new machine for $20,000. After carefully studying projected costs and revenues, the company estimates that the new machine will produce a net cash flow of $2,600 annually and will last for ten years. At the
- Horowitz Company is evaluating the purchase of a rebuilt spot-welding machine to be used in the manufacture of a new product. The machine will cost $176,000, has an estimated useful life of 7 years, a salvage value of zero, and will increase net annual ca
- Mcclam, Inc., is considering the purchase of a machine that would cost $100,000 and would last for 9 years. At the end of 9 years, the machine would have a salvage value of $23,000. The machine would
- Win Inc. is considering disposing of a machine with a book value of $23,321.00 and an estimated remaining life of three years. The old machine can be sold for $5,976.00. A new machine with a purchase
- Win Inc. is considering disposing of a machine with a book value of $24,949.00 and an estimated remaining life of three years. The old machine can be sold for %5,628.00. A new machine with a purchase
- Hayden Company is considering the acquisition of a machine that costs $675,000. The machine is expected to have a useful life of 6 years, a negligible residual value, an annual net cash flow of $150,000, and annual operating income of $87,500. What is the
- Hayden Company is considering the acquisition of a machine that costs $579,000. The machine is expected to have a useful life of 6 years, a negligible residual value, an annual net cash flow of $100,000, and an annual operating income of $85,000. What is
- Burtle Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $488,000 cost with an expected four-year life and a $15,200 salvage value. All sales are for cash, and all costs are out
- A new operating system for an existing machine is expected to cost $760,000 and have a useful life of six years. The system yields an incremental after-tax inc
- A company is considering the purchase of new equipment for $90,000. The projected annual net cash flows are $35,500. The machine has a useful life of 3 years and no salvage value. Management of the company requires a 12% return on investment. The present
- A machine can be purchased for $300,000 and used for 5 years, yielding the following net incomes. In projecting net incomes, double-declining balance depreciation is applied, using a 5-year life and a $50,000 salvage value. Year 1 Year 2 Year 3 Year 4 Yea
- Millco Inc., acquired a machine that cost $1,200,000 early in 2016. The machine is expected to last for eight years, and its estimated salvage value at the end of its life is $180,000. Using straight-line depreciation, calculate the depreciation expense
- Millco, Inc., acquired a machine that cost $450,000 early in 2016. The machine is expected to last for ten years, and its estimated salvage value at the end of its life is $65,000. a. Using straight-line depreciation, calculate the depreciation expense
- Millco, Inc., acquired a machine that cost $240,000 early in 2010. The machine is expected to last for eight years, and its estimated salvage value at the end of its life is $24,000. a. Using straight-line depreciation, calculate the depreciation expense
- A machine can be purchased for $70,000 and used for five years, yielding the following net incomes. In projecting not incomes, straight-line depreciation is applied, using a five-year life and a zero-salvage value. Year 1 Year 2 Year 3 Year 4 Year 5 Net i
- Paragas, Inc., is considering the purchase of a machine that would cost $370,000 and would last for 8 years. At the end of 8 years, the machine would have a salvage value of $52,000. The machine would
- Sloman Company is considering purchasing a machine that would cost $436,800 and have a useful life of 5 years. The machine would reduce cash operating costs by $132,364 per year. The machine would have no salvage value. a. Compute the payback period for
- Arnold Inc. is considering the purchase of a machine that costs $100,000, has a useful life of 18 years, and no salvage value. The company's discount rate is 12%. If the machine's net present value is $5,850, then the annual cash inflows associated with t
- A new operating system for an existing machine is expected to cost $270,000 and have a useful life of five years. The system yields an incremental after-tax income of $77,884 each year after deducting its straight-line depreciation. The predicted salvage
- A new operating system for an existing machine is expected to cost $770,000 and have a useful life of six years. The system yields an incremental after-tax income of $295,000 each year after deducting its straight-line depreciation. The predicted salvage
- A new operating system for an existing machine is expected to cost $750,000 and have a useful life of six years. The system yields an incremental after-tax income of $160,000 each year after deducting its straight-line depreciation. The predicted salvage
- A new operating system for an existing machine is expected to cost $300,000 and have a useful life of six years. The system yields an incremental after-tax income of $86,538 each year after deducting its straight-line depreciation. The predicted salvage
- A new operating system for an existing machine is expected to cost $780,000 and have a useful life of six years. The system yields an incremental after-tax income of $225,000 each year after deducting its straight-line depreciation. The predicted salvage
- A new operating system for an existing machine is expected to cost $260,000 and have a useful life of five years. The system yields an incremental after-tax income of $75,000 each year after deducting its straight-line depreciation. The predicted salvage
- A new operating system for an existing machine is expected to cost $520,000 and have a useful life of six years. The system yields an incremental after-tax income of $150,000 each year after deducting its straight-line depreciation. The predicted salvage
- A company can buy a machine that is expected to have a three-year life and a $23,000 salvage value. The machine will cost $1,772,000 and is expected to produce a $193,000 after-tax net income to be re
- A company can buy a machine that is expected to have a three-year life and a $31,000 salvage value. The machine will cost $1,804,000 and is expected to produce a $201,000 after-tax net income to be re
- A company can buy a machine that is expected to have a three-year life and a $25,000 salvage value. The machine will cost $1,780,000 and is expected to produce a $195,000 after-tax net income to be re
- A company can buy a machine that is expected to have a three-year life and $30,000 salvage value. The machine will cost $1,800,000 and is expected to produce a $200,000 after-tax net income to be rece
- A company can buy a machine that is expected to have a three-year life and a $36,000 salvage value. The machine will cost $1,824,000 and is expected to produce a $206,000 after-tax net income to be re
- A company can buy a machine that is expected to have a three-year life and a $33,000 salvage value. The machine will cost $1,812,000 and is expected to produce a $203,000 after-tax net income to be re
- Krauth Company purchased a machine for $117,000. The machine has a life of seven years with no salvage value. It is expected that the machine will generate annual net cash inflows of $26,000 per year over its useful life. Assume Krauth Company employs a c
- A company is considering the purchase of new equipment for $45,000. The projected annual net cash flows are $19,000. The machine has a useful life
- The management of Kountz Corporation is considering the purchase of a machine that would cost $74,520 and would have a useful life of 8 years. The machine would have no salvage value. The machine would reduce labor and other operating costs by $20,000 per
- Concorde Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $100,000 cost with an expected five-year life and a $25,000 salvage value. All sales are for cash and all costs are out
- A company's old machine, which cost $30,000 and had accumulated depreciation of $21,000, was traded in on a new machine of like purpose having an estimated 20-year life with an invoice price of $40,000. The company also paid $33,000 cash, along with its o
- Gravina Company is planning to spend $8,000 for a machine that it will depreciate on a straight-line basis over 10 years with no salvage value. The machine will generate additional cash revenues of $1
- A machine can be purchased for $150,000 and used for 5 years, yielding the following net incomes. In projecting net incomes, straight line depreciation is applied, using a 5-year life and a zero salva
- Parkways Inc. is considering the purchase of a new machine. The machine will cost $60,000 to purchase and will generate $15,000 of cash revenues per year for the next 8 years. The machine will cost $1,000 per year to operate & maintain. At the end of its
- Krauth Company purchased a machine for Dollar 117,000. The machine has a life of seven years with no salvage value. It is expected that the machine will generate annual net cash inflows of Dollar 26,000 per year over its useful life. Assume Krauth Company
- A machine that cost $40,000 and had accumulated depreciation of $30,000 was traded in on a new machine, which had an estimated 20-year life and a cash price of $50,000. If a $7,000 trade-in allowance was received on the old machine, the new machine should
- Bi-Coastal Railroad Inc. is considering acquiring equipment at a cost of $520,000. The equipment has an estimated life of eight years and no residual value. It is expected to provide yearly net cash f
- Miracle Inc. acquired a machine that cost $50,000 early in 1999. The machine is expected to last for 10 years, and its estimated salvage value at the end of its life is $5,000. Using straight-line depreciation, calculate the depreciation expense to be rec
- Richol Corp. is considering an investment in new equipment costing $180,000. The equipment will be depreciated on a straight-line basis over 5-year life and is expected to generate net cash inflows of $45,000 the first year, $65,000 the second year, and $
- Great Plains Railroad Inc. is considering acquiring equipment at a cost of $450,000. The equipment has an estimated life of 10 years and no residual value. It is expected to provide yearly net cash fl
- A machine can be purchased for $ 280,000 and used for five years, yielding the following net incomes double-declining depreciation is applied, using a five-year life and a zero salvage value. Year 1 Y
- Alesi Corporation is considering purchasing a machine that would cost $457,050 and have a useful life of 7 years. The machine would reduce cash operating costs by $83,100 per year. The machine would have a salvage value of $107,120 at the end of the proje
- Dunken, Inc., is considering the purchase of a machine that would cost $110,000 and would last for 4 years. At the end of 4 years, the machine would have a salvage value of $18,000. The machine would
- Riveros, Inc. is considering the purchase of a machine that would cost $120,000 and would last for 5 years. At the end of 5 years, the machine would have a salvage value of $29,000. The machine would
- Riveros, Inc., Is considering the purchase of a machine that would cost $136,000 and would last for 8 years. At the end of 8 years, the machine would have a salvage value of $37,000. The machine would
- Riveros, Inc., is considering the purchase of a machine that would cost $120,000 and would last for 8 years. At the end of 8 years, the machine would have a salvage value of $29,000. The machine would
- Dukes Company is considering the acquisition of a machine that costs $334,355.00. The machine is expected to have a useful life of 6 years, a negligible residual value, an annual cash flow of $77,756.98, and an annual operating income of $85,787.00. Dete
- Reece Corporation is considering the purchase of a machine that would cost $24,388 and would have a useful life of 6 years. The machine would generate $5,600 of net annual cash inflows per year for ea
- Bonka, Inc., is considering a robot that will cost $5,000 to purchase. At the end of its 8 year life, its salvage value will be $1,000. The robot will need to be overhauled in year 4 at a cost of $2,0
- The management of Boie Corporation is considering the purchase of a machine that would cost $330,980 and would have a useful life of 6 years. The machine would have no salvage value. The machine would reduce labor and other operating costs by $76,000 per
- A company can buy a machine that is expected to have a three-year life and a $21,000 salvage value. The machine will cost $1,764,000 and is expected to produce a $191,000 after-tax net income to be received at the end of each year. If a table of present v
- A company can buy a machine that is expected to have a three-year life and a $29,000 salvage value. The machine will cost $1,796,000 and is expected to produce a $199,000 after-tax net income to be received at the end of each year. If a table of present v
- A machine can be purchased for $150,000 and used for five years, yielding the following net incomes. In projecting net income, double-declining depreciation is applied, using a five-year life and a ze
- The management of Boie Corporation is considering the purchase of a machine that would cost $340,980 and would have a useful life of 6 years. The machine would have no salvage value. The machine would reduce labor and other operating costs by $86,000 per
- A machine can be purchased for $160,000 and used for five years, yielding the following net incomes. In projecting net incomes, straight-line depreciation is applied, using a five-year life and a zero
- A machine can be purchased for $120,000 and used for five years, yielding the following net incomes. In projecting net incomes, straight-line depreciation is applied, using a five-year life and a zero
- A machine can be purchased for $90,000 and used for five years, yielding the following net incomes. In projecting net incomes, straight-line depreciation is applied, using a five-year life and a zero
- A company buys a machine for $76,000 that has an expected life of 6 years and no salvage value. The company anticipates a yearly after-tax net income of $1,805. What is the accounting rate of return? a) 2.85%. b) 4.75%. c) 6.65%. d) 9.50%. e) 42.75%.
Explore our homework questions and answers library
Browse
by subject