Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. the senior management of a textile industrial comp

The senior management of a textile industrial company wishes to purchase a modern and advanced...

90.2K

Verified Solution

Question

Accounting

The senior management of a textile industrial company wishes to purchase a modern and advanced machine. After placing the bid, the company received two offers from some international companies specialized in this field. The presentations included the following information:

Presentation (A) Presentation (B) Information Initial investment cost 3000 5000 The value of the replacement at the end of its productive life is 800 1000 Productive life in the year 4 5 Annual cash flow before depreciation and tax 1000 1500

If you know that: The company adopts the straight-line method in calculating the annual depreciation share (ie, capital consumption). The income tax is estimated at 20% of the annual revenue. The discount rate used is 10%.

The following is required: 1. Determine which of the two alternatives is the best, using: a. Payback period according to the cumulative sum of current cash flows method. b. Payback period according to the mean method of current cash flows. c. Net Present Value (NPV) Net Present Value d. Profitability Index e. Cost-benefit analysis f. Internal Rate of Return (IRR)

2. Which of the two alternatives is economically acceptable to this company according to the previous criteria, and why.

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

Physics
1.2K views

Find the singular value decomposition of A = [ (3 2 2), (2 3 2) ]...

Biology
1.2K views

describe lysogenic conversion and its significance [10]

Physics
1.2K views

A 500 Kg crocodile rests on flat ground. The contact area between its body and...

Geometry
1.2K views

1 point Which diagram shows a pair of angles measures that show a b a...

Statistics
1.2K views

Solve the following problems involving complex numbers Show all work Put your final answer on...

Calculus
1.2K views

Let f(x)= x(x ? 4)^8/(x + 2)^6Use logarithmic differentiation to determine the derivative.f'(x) =

Accounting
1.2K views

The following transactions are July activates of extreme Bowing, Inc., which operates several bowling centers....

Accounting
1.2K views

Sources of repayment for a loan include all of the following EXCEPT: A. Sale of...

Accounting
1.2K views

In 2018, Rosalva sold stock considered short-term for a gain of $1,060 and stock considered...

Accounting
1.2K views

Required information [The following information applies to the questions displayed below.] Simon...

Accounting
1.2K views

Question The beginning inventory for Dunne Co. and data on purchases and sales for a...

Accounting
1.2K views

MCO Leather Goods manufactures leather purses. Each purse requires 3 pounds of direct materials at...