1)- Acme Molding is examining five alternatives for a piece of material handling equipment. Each has an expected life of 8 years with no salvage value, and Acme's MARR is 16%. Using an incremental analysis, which material handling alternative should be chosen? The table below includes initial investment, net annual income, and IRR for each alternative. Alternative A B C E Capital investment -$10,000 -$10,600 -$14,000 -$16,300 -$19,000 Net annual income $2,500 $2,600 $2,900 $3,500 $4,800 IRR 18.62% 18.01% 12.83% 13.88% 18.97%

1)- Acme Molding is examining five alternatives for a piece of material handling equipment. Each has an expected life of 8 years with no salvage value, and Acme's MARR is 16%. Using an incremental analysis, which material handling alternative should be chosen? The table below includes initial investment, net annual income, and IRR for each alternative. Alternative A B C E Capital investment -$10,000 -$10,600 -$14,000 -$16,300 -$19,000 Net annual income $2,500 $2,600 $2,900 $3,500 $4,800 IRR 18.62% 18.01% 12.83% 13.88% 18.97%

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

See similar textbooks

Similar questions

Do not use Excel.
Given the following project alternatives, determine the most economical investment given an MARR of 10% using IRR method. Project A B C D 6.12% -2.8067% -3.394% 2699% Investment 13.69% $ 100,000 $ Annual Profit Useful Life Salvage Value $ 140,500 $ 148,200 $ 27,500 38,600 38,500 $ 98,000 $ 22,100 What is the incremental IRR of the second comparison? 5 5 5 5 $ 10,000 $ $ 14,000 25,600 14,000
A project with a life of 9 has an initial fixed asset investment of $24,780, an initial NWC investment of $2,360, and an annual OCF of -$37,760. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required return is 13 percent, what is the project's equivalent annual cost, or EAC? Multiple Choice O $-40,750.87 O о о $ 45,040.43 $-42,895.65 $-36,461,30 $-24,458,41
A manufacturing company is planning to install an equipment having a first cost of $90Kand a salvage value, after 15 years, of $10,520. The company uses an interest rate of 10%.Find the PW of the depreciation deductions for straight-line, SOYD, double-decliningbalance. Rank the strategies in order of their attractiveness. Identify/determine the bestmethod.
Solve in excel in both FW and AW analysis. I ll rate
Given the following data of equipment A and B. A First Cost P 50 000 P 150 000 2000 Salvage Value Annual Maintenance 6000 Economic life 6000 3000 5 15 The MARR is 12%. Use sinking fund depreciation. What is the rate of return for the additional initial investment on equipment B?
Required Information [The following information applies to the questions displayed below.] Project A requires a $365,000 initial investment for new machinery with a five-year life and a salvage value of $42,000. The company uses straight-line depreciation. Project A is expected to yield annual net income of $25,300 per year for the next five years. Compute Project A's payback period. Choose Numerator: Payback Period 7 Choose Denominator: = Payback Period Payback period =
Iggy Company is considering three capital expenditure projects. Relevant data for the projects are as follows. Project Investment AnnualIncome Life ofProject 22A $243,600 $17,130 6 years 23A 271,500 20,700 9 years 24A 280,600 15,700 7 years Annual income is constant over the life of the project. Each project is expected to have zero salvage value at the end of the project. Iggy Company uses the straight-line method of depreciation.(a) Determine the internal rate of return for each project. (Round answers 0 decimal places, e.g. 13%. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Project Internal Rate ofReturn 22A % 23A % 24A % If Iggy Company’s required rate of return is 11%, which projects are acceptable?
determine the most economic alternative using AW analysis at 12% per year. Give an explanation and draw the results.
Bridgeport Company is considering two capital expenditures. Relevant data for the projects are as follows: Project Initial investment Annual cash inflow Life of project Salvage value A $260,084 $46,590 Project A 7 years $0 Project B Click here to view the factor table. Bridgeport Company uses the straight-line method to depreciate its assets. B $278,237 Calculate the internal rate of return for each project. (For calculation purposes, use 5 decimal places as displayed in the factor table provided, e.g. 1.25125. Round answers to O decimal places, e.g. 15%.) $44,540 9 years $0 Internal rate of return % %
An engineer must choose between two technically equivalent alternatives, A and B. Based upon the data in the table below over the 12year analysis period and an interest rate of 9%, the PW of machine A is: A B First Cost $3,000 $6,000 Annual Maintenance $500 $300 End of Useful Life Salvage Value $700 $1,000 Useful Life 5 years |15 уears O PWA=-3000-3000(P/F,9%,5)-3000(P/F,9%,10)-500(P/A,9%,15)+700(P/F,9%,5)+700(P/F,9%,10)+700(P/F,9%,15) O PWA=-3000-3000(P/F,9%,10)-500(P/A,9%,15)+700(P/F,9%,5)+700(P/F,9%,10)+700(P/F,9%,15) O PWA=-3000-3000(P/F,9%,5)-3000(P/F,9%,10)-500(P/F,9%,15)+700(P/F,9%,5)+700(P/F,9%,10)+ 700(P/F,9%,15) O PWA=-3000-3000(P/F,9%,5)-3000(P/F,9%,10)-500(P/A,9%,10)+700(P/F,9%,5)+700(P/F,9%,10)+ 700(P/F,9%,15)
For the below ME alternatives, which machine should be selected based on the AW analysis. MARR=10% First cost, $ Annual cost, $/year Salvage value, $ Life, years Machine A 15000 B- AW for machine B= 8,342 4,000 Answer the below questions : Machine B 6 20,447 6,000 5,000 Machine C 10000 4,000 1,000

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS