Paulsen Inc

question 95

Essay

Paulsen Inc. is considering the purchase of a $700,000 machine to manufacture a specialty tap for electrical equipment. The tap is in high demand and Paulsen is expected to be able to sell all that it can manufacture for the next five years. The government exempted taxes on profits from new investments to encourage capital investments. This legislation is not expected to be altered in the foreseeable future. The equipment is expected to have five years of useful life with no salvage value. The company employs straight-line depreciation. The net cash inflows are expected to be $180,000 each year for five years. Olsen uses a rate of 9% in evaluating its capital investment projects.
Required:
Round all answers to 2 decimal places (e.g., 0.12338 = 12.34%; 0.12333 = 12.33%).
1. Calculate the estimated payback period for this proposed investment. (Assume that cash inflows occur evenly throughout the year.)
2. Calculate the project's accounting rate of return (ARR) based on the initial investment.
3. Calculate the accounting rate of return (ARR) based on average investment, where the latter is defined as a simple average of beginning-of-project net book value and end-of-project net book value.
4. Calculate the internal rate of return (IRR) of this proposed investment. (Note: To answer this question, students need access either to Appendix C, Table 2 or to Excel.)

Understand sleep cycles and the behavior of animals during sleep.

Differentiate between major sleep disorders and their characteristics.

Recognize the impact of external pressures on sleep patterns and disorders.

Appreciate the importance of sleep for physical and psychological health.

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Definitions:

Social Security

A government program providing economic assistance to persons with inadequate or no income, funded by taxes on workers and employers.

Medicare Benefits

Medicare benefits refer to the health care services covered under Medicare, a United States federal health insurance program for people who are 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant).

FICA Tax

Federal Insurance Contributions Act tax used to finance federal programs for old-age and disability benefits (social security) and health insurance for the aged (Medicare).

Payroll Tax

Taxes imposed on employers or employees, and are usually calculated as a percentage of the salaries that employers pay their staff.