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A company with a MARR =10% will use a Uniform Cash Flow Analysis to decide which of two machines to install in a plant. Neither machine has a salvage value. The machines have different lives. Like replacement will be assumed, BUT THE PROJECT WILL TERMINATE in 8 years. The cash flow for one cycle of each machine is shown below. МАCHINE B $95,000 $42,000 6 years МАСCHINE A $75,000 $35,000 5 years First Cost Annual Benefits Life When the company performs the EQUIVALENT ANNUAL CASH FLOW ANALYSIS for the 8 years, the EUA(B-C) for MACHINE A will be closest to: O a. $8,240 O b. $10,650 O c. $12,220 d. $15,210

The management of a manufacturing company is planning to buy a new milling machine. The investment cost is $17,613. At the end of its 6-year expected life, the equipment will have a salvage value of $8,000. There is an upgrade cost of $9,572 at the end of year 3. The equipment can save $5,000 per year by increasing productivity. Suppose that ϵ=MARR=18%. Determine the project’s ERR.

Emperor's Clothes Fashions can invest $8 million in a new plant for producing invisible makeup. The plant has an expected life of 5 years, and expected sales are 9 million jars of makeup a year. Fixed costs are $2.9 million a year, and variable costs are $2.10 per jar. The product will be priced at $3.10 per jar. The plant will be depreciated straight-line over 5 years to a salvage value of zero. The opportunity cost of capital is 10%, and the tax rate is 30%. a. What is project NPV under these base-case assumptions? Note: Do not round intermediate calculations. Enter your answer in millions, rounded to 2 decimal places. b. What is NPV if variable costs turn out to be $2.40 per jar? Note: Do not round intermediate calculations. Enter your answer in millions, rounded to 2 decimal places. c. What is NPV if fixed costs turn out to be $2.2 million per year? Note: Do not round intermediate calculations. Enter your answer in millions, rounded to 2 decimal places. d. At what price per jar…

Help Save & Check my work mode : This shows what is correct or incorrect for the work you have completed so far. It does not indicate completion. Retur Better Mousetraps has developed a new trap. It can go into production for an initial investment in equipment of $6.3 million. The equipment will be depreciated straight line over 6 years to a value of zero, but in fact it can be sold after 6 years for $549,000. The firm believes that working capital at each date must be maintained at a level of 10% of next year's forecast sales. The firm estimates production costs equal to $1.60 per trap and believes that the traps can be sold for $6 each. Sales forecasts are given in the following table. The project will come to an end in 6 years, when the trap becomes technologically obsolete. The firm's tax bracket is 35%, and the required rate of return on the project is 10%. Use the MACRS depreciation schedule. Year: 1 2 4 Thereafter Sales (millions of traps) 0.6 0.8 1.0 1.0 0.5 0.3 a. What is…

Salty Nuts, Inc. must buy a new nut-shelling machine. The industrial engineer has collected the following information concerning the apparent best alternative. Calculate the net future worth of the alternative if the MARR is 6%.

5 Dog Up! Franks is looking at a new sausage system with an installed cost of $904,800. This cost will be depreciated straight-line to zero over the project's 3-year life, at the end of which the sausage system can be scrapped for $139,200. The sausage system will save the firm $278,400 per year in pretax operating costs, and the system requires an initial investment in net working capital of $64,960.        If the tax rate is 24 percent and the discount rate is 11 percent, what is the NPV of this project?

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A mining company plans to mine a beach for rutile. To do so will cost $15 million up front and then produce cash flows of $8 million per year for five years. At the end of the sixth year the company will incur shut-down and clean-up costs of $7 million. If the cost of capital is 12%, then what is the MIRR for this project? OA-110% OB. -100% O.C. -70% OD -90%

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20. Blue Run Snowboards makes snowboards. The company wants to add a new machine that would cost $80,000 and have a useful life of 5 years and no residual value. The company expects the machine will generate $24,000 annual cash inflows for 5 years. The discount rate is 10%. What is the net present value of the investment? Present Value of $1 Periods    10%    12%1    0.909    0.8932    0.826    0.7973    0.751    0.7124    0.683    0.6365    0.621    0.567  Present Value of Annuity of $1 Periods    10%    12%1    0.909    0.8932    1.736    1.6903    2.487    2.4024    3.170    3.0375    3.791    3.605 ⦁    $10,984⦁    $  6,520⦁    $14,904⦁    $13,608

Big Bang Ltd is considering to invest in one of the two following projects to buy a new equipment. Each equipment will last 5 years and have no salvage value at the end. The company’s required rate of return for all investment projects is 8%. The cash flows of the projects are provided below.   Equipment 1 Equipment 2 Cost $186,000 $195,000 Future Cash Flows Year 1 Year 2 Year 3 Year 4 Year 5   86 000 93 000 83 000 75 000 55 000   97 000 84 000 86 000 75 000 63 000 Big Bang’s net income in current year is $450,000. The company maintains a capital structure of 55% in equity funding and 45% in debt funding.   Required: Identify which option of equipment should the company accept based on NPV method  (Note: Please round up the result of each calculation of PV to 2 decimal places only for simplification) Identify which option of equipment should the company accept based on Profitability Index method. Which equipment option should the company finally choose if…

Big Bang Ltd is considering to invest in one of the two following projects to buy a new equipment. Each equipment will last 5 years and have no salvage value at the end. The company’s required rate of return for all investment projects is 8%. The cash flows of the projects are provided below.     Equipment 1 Equipment 2 Cost $186,000 $195,000 Future Cash Flows Year 1 Year 2 Year 3 Year 4 Year 5   86 000 93 000 83 000 75 000 55 000   97 000 84 000 86 000 75 000 63 000   Big Bang’s net income in current year is $450,000. The company maintains a capital structure of 55% in equity funding and 45% in debt funding.   Required: Identify which option of equipment should the company accept based on NPV method. (Note: Please round up the result of each calculation of PV to 2 decimal places only for simplification) Identify which option of equipment should the company accept based on Profitability Index method. Which equipment option should the company finally choose…

please answer with full work explanation calculation etc. please answer correctly   KB. Chicago Co. is interested in purchasing a machine that would improve its operational efficiency. The cost is $200,000 with an estimated residual value of $20,000 and a useful life of eight years. Cash inflows are expected to increase by $40,000 a year. The company's minimum rate of return is 10 percent.The net present value of the project is

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Success Ltd is evaluating whether it should invest today in a equipment that cost $250,000. With the new machine, the firm projects it will be able to receive $50,000 at the end of every year for the next 6 years. At the end of the 6 years, the company will scrap the machine and does not expect to receive any salvage value for it. The cost of capital for the firm is 9%. Calculate the internal rate of return (IRR) of this investment. Should the firm purchase the machine? Give your reason(s). You are to provide the full set of workings that is shown in the lecture notes (PowerPoint slides).

Giant Machinery Ltd is considering to invest in one of the two following Projects to buy a new equipment. Each project will last 5 years and have no salvage value at the end. The company’s required rate of return for all investment projects is 9%. The cash flows of the projects are provided below.   Project 1 Project 2 Cost $175,000 $185,000 Future Cash Flows     Year 1Year 2Year 3Year 4 Year 5 76,00083,00067,00065,000 55,000 87,00078,00069,00065,000 57,000 Required:a) Identify which project should the company accept based on NPV method. (Note: Please round up the result of each calculation of PV to 2 decimal places only for simplification)b) Identify which project should the company accept based on simple pay back method if the payback criteria is maximum 2 years. c) Which project Giant Machinery should choose if two methods are in conflict.

3. Dog Up! Franks is looking at a new sausage system with an installed cost of $730,000. This cost will be depreciated straight-line to zero over the project's 7- year life, at the end of which the sausage system can be scrapped for $100,000. The sausage system will save the firm $213,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $65,000. A. What is the aftertax salvage value of the equipment? B. What is the annual operating cash flow? C. If the tax rate is 25 percent and the discount rate is 11 percent, what is the NPV of this project?

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Coronado, Inc. is considering purchasing equipment costing $39000 with a 7-year useful life. The equipment will provide cost savings of $9000 and will be depreciated straight-line over its useful life with no salvage value. Coronado Inc. requires a 11% rate of return. What is the approximate net present value of this investment? Period 7 O $30000 O $4812 O $3408 O $2076 9% 5.033 Present Value of an Annuity of 1 10% 4.868 11% 4.712 12% 4.564 13% 4.423 16% 4.039