13. An aircraft push truck costs $2,000,000 with an annual operating and maintenance (O&M) cost of $30,000. If the service life of the elevator is 20 years and minimum acceptable rate of return (i) is 10%, then its present worth (cost) will be: a. 2,030,000 b. 2,255,407 c. 2,445,200 d. 2,600,000

13. An aircraft push truck costs $2,000,000 with an annual operating and maintenance (O&M) cost of $30,000. If the service life of the elevator is 20 years and minimum acceptable rate of return (i) is 10%, then its present worth (cost) will be: a. 2,030,000 b. 2,255,407 c. 2,445,200 d. 2,600,000

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

Related questions

Q: 19. A new product requires an initial investment of $4 million and will be depreciated straight-line…

A: Break Even Point :— It is the point of production where total cost is equal to total revenue. At…

Q: A new drill press costs $12,000. It would potentially produce an additional $4,000 of revenue per…

A: Costs = $12,000 Revenue = $4,000 Operating Expenses = $1,200 Time period = 8 years Rate = 10%

Q: A company's current net operating income is $16,800 and its average operating assets are $80,000.…

A: The residual income of the new project is determined by taking the difference between the estimated…

Q: Machine X Machine Y First Cost, S 20,000 14,000 Year 1 AOC, S Year 2 AOC, S 5,000 Year 3 AOC, $…

A: In this problem we need to find present value of machine and hence find annual equivalent worth of…

Q: A new machine that will lead tø savings in labour costs of $16,000 per year can be pur- chased for…

A: Before accepting any capital investment projects, a company should carry out an NPV analysis. Net…

Q: Commodity Copper is considering the installation of a $1,764,000 production conveyor system that…

A: Net Present Value - Net present value, or NPV, is used to compute the current total value of a…

Q: A new production system for a factory is to be purchased and installed for $175,812. This system…

A: Equivalent annual worth The annual cost of owning and sustaining an asset is determined by dividing…

Q: Suppose that you have just completed the mechanical design of an equipment that has an investment…

A: Annual Depreciation (straight line method) = (Cost of the assets - Residual value) / Expected life…

Q: am. 100.

A: The objective of the question is to calculate the net present value (NPV) of the option to purchase…

Q: What is the actual ROR of this investment? MARR is 15%. (HINT: MARR may be a good first guess.)…

A: To determine the rate of returns (ROR) we will need to determine the internal rate of return (IRR)…

Q: A company wants to build a spare parts storage facility. A plant engineer has identified three…

A: According to bartleby guidelines , if question involves multiple sub parts , then 1st sub 3 parts…

Q: A medical device manufacturer is considering three different methods to manufacture the device that…

A: Net Present Value ( NPV ) is Capital Budgeting techniques which help in choose / Starting of the…

Q: 2. Two equipment are to be evaluated. Equipment A cost P500,000 will last for 20 years and have a…

A: Increment cost is 1.8 times and Incremental production rate is 2 times so Equipment B is more…

Q: 4. Machine A costs $800, requires annual maintenance of $150, and will last for 10 years. Machine B…

A: Present worth refers to the current date value of the future cash flows including the initial…

Q: Cost for two machines are given below: Machine A First cost Salvage value Annual operation Annual…

A: A continuous and equal expense made over a predetermined period of time is referred to as a uniform…

Q: You are considering a new product launch. The project will cost $2,050,000, have a 4-year life, and…

A: “Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…

Q: Compute the net present value (NPV) of this investment.

A: Meaning of Net present value It is the difference between present value of cash inflows and present…

Q: new municipal refuse-collection truck can be purchased for $84,000. Its expected useful life is six…

A: The Benefit-Cost Ratio(BCR) shows how the costs and the benefits of the project are related. This…

Q: 6. The production manager of a manufacturing plant figured that by installing four 15- KVAR power…

A: Salvage value is the expected book value of an asset following a depreciation, depending upon how…

Q: ETM Co is considering investing in machinery costing K150,000 payable at the start of first year.…

A: NPV It is a capital budgeting tool. As per NPV rule, the project should be accepted by the company…

Q: project breakeven.

A: Break even production volume = (Fixed costs + Target profit)/Contribution per unit

Q: A machine has an initial investment of $1,300,000, annual revenue will be $500,000 and the annual…

A: Net present value or present worth of a project is the present value of cash inflows less present…

Q: The year-end operating costs of a certain machine are estimated to be 120,000 the first year and to…

A: The question is related to equivalents uniform annual costs. Since the cost of maintainance is…

Q: The Country Garden Company's current net operating income is $15,675 and its average operating…

A: Residual income of the investment means operating income over and above income at minimum required…

Q: 1- BROWN Co. is determining whether they should purchase a new machine. The machine cost is…

A: 1. Solving for Initial Investment: Formula:Initial Investment = Machine Cost + Installation Costs…

Q: You have been asked to evaluate two alternatives, X and Y. that may increase plant capacity for…

A: The present value of a project is the current worth of its future cash flows, discounted at a…

Q: Machinery cost Working capital required Annual net cash receipts Required rate of return Life of the…

A: Net present value(NPV) is the difference between present value of all cash inflows and initial…

Q: You are given the following forecasted data about a project: Project life = 3 years Required…

A: NPV means PV of net benefit which will arises from the project in the coming years. It is equal to…

Q: 3D Systems Corporation was assessing between two natural fibers as a reinforcing fiber to ABS…

Q: A loan of $245,000 is to be repaid in equal quarterly payments over a period of 6 years. If the…

A: According to the time value of money concept, a specific dollar amount available today is worth more…

Q: 1. Device A: Costs $12,000 and saves $3,000 annually. Its salvage value is $1,000 2. Device B: Costs…

A: Internal Rate of Return (IRR) is a capital budgeting technique that equates current cash outflows…

Q: Compute Project A's accounting rate of return.

A: The accounting rate of return (ARR) formula is helpful in determining the annual percentage rate of…

Q: A truck can be purchased for $55,000. Annual O&M costs are expected to increase by $1,800 every…

A: It is the optimal maintenance interval or replacement strategy used to determine the best timing for…

Q: Required: What is the present value of the project's annual net cash inflows? (Round discount…

A: Net Present Value (NPV) is a financial concept widely used in investment analysis and capital…

Q: 30. KTC Toy Co. is at present spending P400 000.00 annually for the manual operation of its assembly…

A: The comparable uniform yearly value of all expected revenues (income) and disbursements (costs) over…

Q: (a) Kiwk Berhad projects unit sales for a new fitness equipment as follows: Year 1 2 3 Unit Sales…

A: Net Present Value: It is a method used to determine the present value of all future cash flows…

Q: A project requires a $2,880,000 initial investment for new machinery with a five-year life and a…

A: Accounting rate of return The method used in capital budgeting to measure the profitability of an…

Q: Larch Company has provided the following information for a proposed investment project: Discount…

A: Npv is also known as Net Present Value. It is a capital budgeting techniques which help in decision…

Q: The accounting rate of return for the first year of using the new machine is:

A: The annual rate of return measures the profit or loss on investment over a one year period.Which…

Q: You expect to receive the following: $4,398 at the end of each year for 12 years $22,256 today…

A: The present value of future cash flow will be the value today without interest and also considering…

Q: As an engineer, you have been asked to recommend a new cooling system for a large warehouse. You…

Question

100%

13.
An aircraft push truck costs $2,000,000 with an annual operating and maintenance
(O&M) cost of $30,000. If the service life of the elevator is 20 years and minimum
acceptable rate of return (i) is 10%, then its present worth (cost) will be:
a. 2,030,000
b. 2,255,407
c. 2,445,200
d. 2,600,000

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

6. A company is considering two alternatives for manufacturing a certain part. Method R will have a first cost of $40,000, and annual operating cost of $25,000, and a $10,000 salvage value after its five-year life. Method S will have an initial cost of $100,00, an annual operating cost of $15,000 and a $12,000 salvage value after its 10-year life. At an interest rate of 12% per yr, the present worth values of the alternatives are closest to;
21. Consider a project that costs $250 now and is expected to generate $98 in net revenues at the end of each of the next three years. If the MARR is 5%, the future worth of this project is __________. A. $18.24 B. $19.54 C. $22.33 D. $18.29 23. Machine X has an initial cost of $12,000 and annual maintenance of $700 per year. It has a useful life of four years and no salvage value at the end of that time. Machine Y costs $22,000 initially and has no maintenance costs during the first year. Maintenance is $200 at the end of the second year and increases by $200 per year thereafter. Machine Y has a useful life of eight years and an anticipated salvage value of $5,000 at the end of its useful life. If the MARR is 6%, what is the approximate Net Present Worth (NPW) of machine X? A. -$28,563 B. -$25,852 C. -$32,085 D. -$22,318
The following three alternatives have been developed and costed to improve the efficiency of aircraft engines. Compare the alternatives using capitalized cost and a MARR of 10% per year compounded annually. Alternative Alternative Alternative G First Cost, $ -1,000,000 -3,000,000 -5,000,000 Net income $ per year 325 000 400,000 600,000 Salvage value, S 50,000 70,000 Life, years 4 8.
pm.3
Compare the machines below using present worth analysis at i10% per year and find which one should be selected Machine Y First Cost Operating Cost Savage Lfe cycle Machine X 20.000 3.000 3.000 3years Firat Cost 30.000 .000 Annuel Operating Cost Salvage Life cycle 3.000 6 yoars
A machine costs $25,000; it is expected to generate annual cash revenues of $8,000 and annual cash expenses of $2,000 for five years. The required rate of return is 12%. The net present value of the machine is: Select one: a. $(3,840). b. $(3,370). c. $0. d. $21,630. e. $28,840.
You are considering the following project. What is the NPV of the project? WACC of the project: 0.10 Revenue growth rate: 0.05 Tax rate: 0.40 Revenue for year 1: 13,000 Fixed costs for year 1: 3,000 variable costs (% of revenue): 0.30 project life: 3 years Economic life of equipment: 3 years Cost of equipment: 20,000 Salvage value of equipment: 4,000 Initial investment in net working capital: 2,000
Is the return on this investment proposal exactly 14%, more than 14%, or less than 14%? Explain. The Net Present Value Method-An Extended Example
N6
Consider the relative costs of a timber pedestrian bridge and a steel one; their initial capital costs, annual OMR costs and useful lives are given below: Initial capital cost Annual OMR cost Life span Timber Bridge $500,000 $30,000 15 years Steel Bridge $700,000 $5000 30 years Find the alternative of the least overall costs (use i = 8%). Use both present worth and annual worth methods.
5. Dawg Engineering is considering a new machine for its assembly line, Each choice has a 10 year life. Calculate the IRR for each alternative Initial Cost $132,000.00 $186,000.00 $144,000.00 Annual Benefit $52,000.00 $42,00.00 $56,000.00 Yearly O & M $33,000.00 $12,000.00 $32,000.00 cost Salvage value $15,000.00 $9,000.00 $16,000.00 IRR-A IRR-B IRR-C
5

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