This paper circulates around the core theme of All revenue from the new luggage line and all expenses (except depreciation) will be received or paid in cash in the same period as recognized for accounting purposes. You are to compute the following for the investment in the new equipment to produce the together with its essential aspects. It has been reviewed and purchased by the majority of students thus, this paper is rated 4.8 out of 5 points by the students. In addition to this, the price of this paper commences from £ 99. To get this paper written from the scratch, order this assignment now. 100% confidential, 100% plagiarism-free.
Analyzing a Capital Investment Proposal
Pack & Carry is debating whether to invest in new equipment to manufacture a line of high-quality
luggage. The new equipment would cost $1,728,125, with an estimated five-year life and no salvage value. The estimated annual operating results with the new equipment are as follows:
Revenue from sales of new luggage . . . . . . . . . . . . . . . . . . . . . . . . . . . $800,000
Expenses other than depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $306,250
Depreciation (straight-line basis) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 345,625 651,875
Increase in net income from the new line . . . . . . . . . . . . . . . . . . . . . . . $148,125
All revenue from the new luggage line and all expenses (except depreciation) will be received or paid in cash in the same period as recognized for accounting purposes. You are to compute the following for the investment in the new equipment to produce the new luggage line:
a. Annual cash flows.
b. Payback period.
c. Return on average investment.
d. Total present value of the expected future annual cash inflows, discounted at an annual rate of
10 percent.
e. Net present value of the proposed investment discounted at 10 percent.
