Should be treated as a reduction in the required cash outflow in period 0. Should be treated as an immediate cash outflow that is later recovered when it is no longer needed. UNIT 4 QUIZ
Question 13. Question: Pique Corporation wants to purchase a new machine for $ 300,000.
Management predicts that the machine can produce sales of
$ 200,000 each year for the next 5 years. Expenses are expected to
include direct materials, direct labor, and factory overhead
( excluding depreciation) totaling $ 80,000 per year. The firm uses
straight-line depreciation with no residual value for all depreciable
assets. Pique ' s combined income tax rate is 40 %. Management requires a minimum after-tax rate of return of 10 % on all investments.
What is the present value payback period, rounded to one-tenth of
Should be treated as a reduction in the required cash outflow in period 0. Should be treated as an immediate cash outflow that is later recovered when it is no longer needed. UNIT 4 QUIZ
Question 13. Question: Pique Corporation wants to purchase a new machine for $ 300,000.
Management predicts that the machine can produce sales of
$ 200,000 each year for the next 5 years. Expenses are expected to
include direct materials, direct labor, and factory overhead
( excluding depreciation) totaling $ 80,000 per year. The firm uses
straight-line depreciation with no residual value for all depreciable
assets. Pique ' s combined income tax rate is 40 %. Management requires a minimum after-tax rate of return of 10 % on all investments.
What is the present value payback period, rounded to one-tenth of