Calculate the payback period, Accounting Basics

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Calculate the payback period

Problem:

Corn Doggy Inc. produces and sells corn dogs. The corn dogs are dipped by hand. Austin Beagle, production manager, is considering purchasing a machine that will make the corn dogs. Austin has shopped for machines and found that the machine he wants will cost $262,000. In addition, Austin estimates that the new machine will increase the company's annual net cash inflows by $40,300. The machine will have a 12-year useful life and no salvage value.

Requirement:

Question 1: Calculate the payback period.

Question 2: Calculate the machine's internal rate of return.

Question 3: Calculate the machine's net present value using a discount rate of 10%.

Question 4: Assuming Corn Doggy Inc.'s cost of capital is 10%, is the investment acceptable? Why or why not?

Note: Show all workings.

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Accounting Basics: Calculate the payback period

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Accounting Basics: Calculate the payback period

Reference No:- TGS0885101

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Recent Questions Asked Accounting Basics

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Request for Solution File

Ask an Expert for Answer!!

Accounting Basics: Calculate the payback period

Reference No:- TGS0885101

Recent Questions Asked Accounting Basics

Q : Create a portfolio with an expected return

Q : Find expected profit level of design to get maximum profit

Q : Computing the expected return on the portfolio

Q : Determining the projected net income

Q : Calculate the payback period

Q : Explain best decision based on expected monetary value

Q : How to verify physician credentials for staff privileges

Q : What to do in intolerable pain condition

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