Accounting

Description

3. Suppose that two projects each cost $12,000. The first project returns $4,000 per year for 6 years. The second project returns $6,000 per year for 2 years. Which has the better payback period? Are there any issues with this method of analysis? 5. How much will $6,000 invested at 5% simple interest be worth in 3 years? What will it be worth if the interest rate is 7%? 6. How much will $5,000 invested at 3% interest be worth in 4 years if it is compounded annually? Quarterly? How much if the interest rate is 6%? 9. Community Health Center (CHC) is considering spending $50,000 on a blood analyzer. The annual cash profits from the machine will be $7,000 for each of the 7 years of its useful life. The board of directors wants to pursue this investment, because they think the $49,000 CHC will receive is close to the $50,000 cost. What is wrong with the board’s logic? What is the IRR on the investment? 7. Should an organization take a discount of 1.5/10 N/30 on a $9,000 invoice or simply pay the bill when due?