03 Aug Analyze and compute the payback period, a
Analyze and compute the payback period, accounting rate of return, and net present value, based on information provided in the template.
Introduction
Note: Accounting requires specific steps that need to be executed in a sequence. The assessments in this course are presented in sequence and must be completed in order.
Flexible budgets, variance analysis, and standard costs are procedures used to assist managers with the control and monitoring of business activities.
Instructions
Note: Accounting requires specific steps that need to be executed in a sequence. The assessments in this course are presented in sequence and must be completed in order.
Use the Making the Right Decision Template [XLSX] to complete this assessment. Based on the data provided in the template, analyze and compute the payback period, accounting rate of return, and net present value.
Competencies Measured
By successfully completing this assessment, you will demonstrate your proficiency in the course competencies through the following assessment scoring guide criteria:
- Competency 3: Apply time value of money concepts.
- Compute an accounting rate of return.
- Calculate the net present value.
- Competency 4: Analyze financial statements.
- Compute annual expected net cash flows.
- Compute a payback period.
- Competency 5: Communicate in a manner that is professional and consistent with expectations for professionals in the field of accounting.
- Communicate quantitative information accurately and effectively.
Problems 1–4
| BUS-FPX4061 – Managerial Accounting Principles | ||||||||||||||||||||||||
| Assessment 9: Making the Right Decision Worksheet | ||||||||||||||||||||||||
| Problems 1–4 | ||||||||||||||||||||||||
| Input values | ||||||||||||||||||||||||
| Complete problems 1–4 based on the following scenario. | ||||||||||||||||||||||||
| Crouch Corp. needs to decide which of two new projects to invest in. | Company name | Crouch Corp. | ||||||||||||||||||||||
| · | Project A is an investment in new machinery that will cost $264,000 | Tax rate | 20% | |||||||||||||||||||||
| and has a four-year life with no salvage value. | Discount rate | 6% | ||||||||||||||||||||||
| · | Project B is an investment in new machinery that will cost $264,000 | Project A | Project B | |||||||||||||||||||||
| and has a three-year life with no salvage value. | Investment | $ 264,000 | $ 264,000 | |||||||||||||||||||||
| Using straight-line depreciation, Crouch Corp. predicts that the two projects | Life of machinery (in years) | 4 | 3 | |||||||||||||||||||||
| will yield the following annual results, with cash flows occurring evenly | four | three | ||||||||||||||||||||||
| throughout the year. | Salvage value | $0 | $0 | |||||||||||||||||||||
| Predicted Annual Results | Predicted Annual Results | |||||||||||||||||||||||
| Project A ($) | Project B ($) | Project A ($) | Project B ($) | |||||||||||||||||||||
| Sales | 275,000 | 220,000 | Sales | 275,000 | 220,000 | |||||||||||||||||||
| Expenses: | Direct materials | 38,500 | 27,500 | Expenses: | Direct materials | 38,500 | 27,500 | |||||||||||||||||
| Direct labor | 55,000 | 33,000 | Direct labor | 55,000 | 33,000 | |||||||||||||||||||
| Overhead including depreciation | 99,000 | 99,000 | Overhead including depreciation | 99,000 | 99,000 | |||||||||||||||||||
| Selling and administrative expenses | 19,800 | 19,800 | Selling and administrative expenses | 19,800 | 19,800 | |||||||||||||||||||
| Total expenses | 212,300 | 179,300 | Total expenses | 212,300 | 179,300 | |||||||||||||||||||
| Pretax income | 62,700 | 40,700 | Pretax income | 62,700 | 40,700 | |||||||||||||||||||
| Income taxes (20%) | 12,540 | 8,140 | Income taxes (20%) | 12,540 | 8,140 | |||||||||||||||||||
| Net income | 50,160 | 32,560 | Net income | 50,160 | 32,560 | |||||||||||||||||||
| Complete the problems below. Add answers in this template and show your work. | Present value of $1 at 6% annuity for 4 years | 3.4651 | ||||||||||||||||||||||
| Present value of $1 at 6% annuity for 3 years | 2.6730 | |||||||||||||||||||||||
| Problem 1 | Compute the annual expected net cash flows for each project. | |||||||||||||||||||||||
| Problem 2 | Determine the payback period for each project. | |||||||||||||||||||||||
| Problem 3 | Compute the accounting rate of return for each project. | |||||||||||||||||||||||
| Problem 4 | Determine the net present value using 6% as the discount rate. | |||||||||||||||||||||||
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteEdu. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.
Do you need help with this question?
Get assignment help from WriteEdu.com Paper Writing Website and forget about your problems.
WriteEdu provides custom & cheap essay writing 100% original, plagiarism free essays, assignments & dissertations.
With an exceptional team of professional academic experts in a wide range of subjects, we can guarantee you an unrivaled quality of custom-written papers.
Chat with us today! We are always waiting to answer all your questions.