Railways 3
Railway Corporation wants to purchase a new machine for $360,000. Management predicts that the machine can produce sales of $220,000 yearly for the next five years. Expenses are expected to include direct materials, direct labor, and factory overhead (excluding depreciation), totaling $78,000 per year. The firm uses straight-line depreciation with no residual value for all depreciable assets. Railway's combined income tax rate is 40%. Management requires a minimum after-tax return of 10% on all investments.
What is the present value payback period, rounded to one-tenth of a year?
Note: PV factors for 10% are as follows: year 1 = 0.909; year 2 = 0.826; year 3 = 0.751; year 4 = 0.683; year 5 = 0.621; the PV annuity factor for 10%, 5 years = 3.791. Assume that annual after-tax cash inflows occur at year-end.
What is the present value payback period, rounded to one-tenth of a year?
Note: PV factors for 10% are as follows: year 1 = 0.909; year 2 = 0.826; year 3 = 0.751; year 4 = 0.683; year 5 = 0.621; the PV annuity factor for 10%, 5 years = 3.791. Assume that annual after-tax cash inflows occur at year-end.
Correct answer:
Tips for related online calculators
Our percentage calculator will help you quickly and easily solve a variety of common percentage-related problems.
Do you want to convert time units like minutes to seconds?
Do you want to convert time units like minutes to seconds?
You need to know the following knowledge to solve this word math problem:
Units of physical quantities:
Grade of the word problem:
Related math problems and questions:
- Straight-line depreciation
Olsen Inc. Purchased a $580,000 machine to manufacture a specialty tap for electrical equipment. The tap is in high demand, and Olsen can sell all it can manufacture for the next ten years. To encourage capital investments, the government exempts taxes on - Retirement annuity
How much will it cost to purchase a two-level retirement annuity that will pay $2000 at the end of every month for the first ten years and $3000 per month for the next 15 years? Assume that the payment represents a rate of return to the person receiving t - The machine
The annual depreciation of the machine is 10%. After eight years, the machine is worth 697 euros. What was the price of this machine at the time of purchase? - Savings
The depositor regularly wants to invest the same amount of money in the financial institution at the beginning of the year and wants to save 10,000 euros at the end of the tenth year. What amount should he deposit if the annual interest rate for the annua
- VAT lottery
Father earns 809 euro a month, mother 480 euro per month. Calculate what amount they paid as value-added tax (VAT) to the government if the VAT rate is 20%. Assume that the family will spend their entire monthly income. - Publishing company
Suppose you work for a publishing company, and before launching a new magazine targeting fashion-oriented consumers, your boss wants to hold a meeting with prospective advertisers. Assume that annual expenditures on magazine ads in this genre are normally - Shooters
In the army, regiments are six shooters. The first shooter target hit with a probability of 49%, next with 75%, 41%, 20%, 34%, 63%. Calculate the probability of target hit when shooting all at once.
