Takini Hot Springs has an old machine that is fully depreciated but has a current salvage value of $5,000.

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Takini Hot Springs has an old deed that is abundantly depreciated but has a general salvage compute of $5,000. The troop wants to escheatment a new deed that would require $60,000 and bear a five-year advantageous vitality and naught salvage compute. Expected changes in annual avenues and expenses if the new deed is escheatmentd are shown as above:

Required:

  1. What's the payback season of the new deed?
  2. What's the sincere rebuke of recur on the new deed?

Q.2

Black Mountain Summit Troop is because starting a paltry catering affair in Whitehorse, The troop would want to escheatment a grant van and equipment requireing $125,000 to produce the affair and another $60,000 for inventories and other started high wants. Laceration for the structure to be used by the affair earn be $35,000 per year. Ken, a affair tyro and part-season employee at Black Mountain Summit indicates that annual specie inflow from the affair earn equality to $120,000. Other than the structure laceration, annual specie outflow for detached requires earn equality to $40,000. Ken wants to produce the affair for barely 6 years. He estimates the equipment could be sold at that season for 4% of its primary require. Ken uses a 16% remittance rebuke. (Ignore pay taxes in this drift)

Required:

Should Ken receive this investment? Use Net Present Compute and Profitability resolution to influence the sentence.

Thanks!

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