Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. gh company has been offered a seven-year contract

GH Company has been offered a seven-year contract to supply a part for the government....

90.2K

Verified Solution

Question

Accounting

image

GH Company has been offered a seven-year contract to supply a part for the government. After careful study, the company has estimated the following data relating to the contract: Cost of Equipment Needed Working Capital Needed Annual Cash Receipts from the Delivery of Parts Annual Cash Operating Costs Salvage Value of Equipment at Termination of the Contract $300,000 50,000 100,000 30,000 5,000 It is not expected that the contract would be extended beyond the initial contract period. The company's discount rate is 10%. (Ignore income taxes in this problem.) Required: 1) Use the net present value method to determine if the contract should be accepted. Round all computations to the nearest dollar Use the payback method to determine if the contract should be accepted. Assume GH Company requires a four-year payback period. Calculate the Accrual Accounting Rate of Return Given your calculations, should GH Company accept the contract? 2) 3) 4)

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

General Management
1.2K views

Is the Right Price a Fair Price? Prices are often set to satisfy demand or to...

Advance Math
1.2K views

Suppose that you work in a shoe company want to compare two materials, A and B,...

Basic Math
1.2K views

Complete the following chart to evaluate Marca s current budget then adjust monthly amounts to...

Basic Math
1.2K views

On average the number of drum sets sold in Texas each year is equivalent to...

Basic Math
1.2K views

Find the indefinite integral. (Note: Solve by the simplest method-not all require integration by parts....

Calculus
1.2K views

Question 5 Consider the following differential equation a Determine the equilibrium solution s of the...

Algebra
1.2K views

Suppose we want to choose 4 letters, without replacement, from 16 distinct letters.(a) If the...

Accounting
1.2K views

Distinguish between selling expenses and general and administrative expenses.

Accounting
1.2K views

Crane Industries Inc. manufactures dorm furniture in separate processes. In each process, materials are entered...

Accounting
1.2K views

"Florida Citrus Inc. (FCI) estimates its taxable income at $7,100,000. The company is considering expanding...

Accounting
1.2K views

14. The corporate charter of Alpaca Co. authorized the issuance of 10 million, $1 par...

Accounting
1.2K views

me month ending March 31 Deposito: 370 Date 3/4 3/11 3/18 3/25 3/26 - 3/31...