Johnson Company completes and transfers 9,000 units. Additionally, there are 4,0

Question

Johnson Company completes and transfers 9,000 units. Additionally, there are 4,000 units 16 company? 17 internal rate of return? 18 c. Payback Period d. All of these use present value 19 this cash flow, discounted at 7%? that are 20% complete as to conversion. How many equivalent units were completed by the Sally pays $2542.07 to receive one lump sum cash flow in 4 years of $4,000. What is Sally's Which capital budgeting technique does not use cash flows in its calculation? A. NPV b. IRR Smith Company will receive a lump sum of $20,000 in 4 years. What is the present value of

Explanation / Answer

16.Equivalent units = completed units + part completed units are recognised which would have been generated if units were completed

Hence, Equivalent Units = 9000 + 4000*20% = 9,800 units

17.Payment = $2542.07

Receipt = $4,000

Time = 4 years

IRR is the rate at which NPV = 0

i.e. 2542.07 = 4000*PVF(r%,4 years)

PVF(r%, 4 years) = 0.6355

By looking into Present Value factor table, we get r = 12%

Therefore, IRR = 12%

18.c Payback Period

Both NPV and IRR are present value based methods, while payback period does not take into account time value of money

19.Present Value = 20,000*PVF(7%, 4 years)

=20,000*0.7629

=$15,258

Please use Present value table for getting present value factors

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