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Question
Peng Corporation is considering the purchase of new equipment costing $30,000. The projected annual after-tax net income from the equipment is $1,200, after deducting $10,000 for depreciation. The revenue is to be received at the end of each year. The machine has a useful life of four years and no salvage value. Peng requires a 12% return on its investments. The factors for the present value of $1 for different periods follow:
| Periods | 12 Percent |
| 1 | 8929 |
| 2 | 0.7972 |
| 3 | 0.7118 |
| 4 | 0.6355 |
Calculate the break-even time for this equipment.
A. Break-even time is longer than four years.
B. Break-even time is between three and four years.
C. Break-even time is between two and three years.
D. Break-even time is between one and two years.
E. This project will never break even.
Answer
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Related questions
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Q:
Periods
12 Percent 1
8929 2
1.6901 3
2.4018 4
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A. $78,210
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Scott Corporation is considering the purchase of new equipment costing $30,000. The projected annual after-tax net income from the equipment is $1,200, after deducting $10,000 for depreciation. The revenue is to be received at the end of each year. The machine has a useful life of three years and a $4,000 salvage value. Scott requires a 12% return on its investments. The factors for the present value of $1 for different periods follow: Periods 12 Percent 1 8929 2 0.7972 3 0.7118 4 0.6355 What is the net present value of the machine and what is the maximum Scott would have been willing to pay for it?
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.8264
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What is the difference between an opportunity cost and a sunk cost?
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76 A. Both product A and product B should be processed further.
B. Neither product A nor product B should be processed further.
C. Only product B should be processed further.
D. Only product A should be processed further.
E. A processing further decision cannot be made from the available data.
Q:
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A. Income will decrease by $7 per unit.
B. Income will increase by $7 per unit.
C. Income will increase by $12 per unit.
D. Income will decrease by $12 per unit.
E. Income will increase by $10 per unit.
Q:
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B. $45
C. $27
D. $50
E. $5
Q:
Assume markup percentage equals desired profit divided by total costs. What is the correct calculation to determine the dollar amount of the markup per unit?
A. Total cost times markup percentage.
B. Total cost per unit times markup percentage per unit.
C. Total cost per unit divided by markup percentage per unit.
D. Markup percentage per unit divided by total cost per unit.
E. Markup percentage divided by total cost.
Q:
Capital budgeting decisions are generally based on:
A. Tentative predictions of future outcomes.
B. Perfect predictions of future outcomes.
C. Results from past outcomes only.
D. Results from current outcomes only.
E. Speculation of interest rates and economic performance only.
Q:
If net present values are used to evaluate two investments that have equal costs and equal total cash flows, the one with more cash flows in the early years has the higher net present value.