2. A company is considering two types of equipment for its manufacturing plant. Capital is atleast 16%. ? Use (a) ROR (b) AWM (c) PWM (d) EUACΤΥΡΕ ΑΤΥΡΕ ΒFirst cost8,000Salvage valueAnnualoperation14,0002,0002,4003,000Annualmaintenance1,2001,0003%Taxes and insurance3%Life, years1015

PWM: It is the present worth method of capital budgeting. It is the current value of cash flows that…

2. A company is considering two types of equipment for its manufacturing plant. Capital is at least 16%. ? Use (a) ROR (b) AWM (c) PWM (d) EUAC ΤΥΡΕΑ ΤΥΡΕΒ 14,000 2,000 2,400 1,000 3% First cost 8,000 Salvage value Annualoperation Annualmaintenance Taxes and insurance 3,000 1,200 3% Life, years 10 15

2. A company is considering two types of equipment for its manufacturing plant. Capital is at least 16%. ? Use (a) ROR (b) AWM (c) PWM (d) EUAC ΤΥΡΕΑ ΤΥΡΕΒ 14,000 2,000 2,400 1,000 3% First cost 8,000 Salvage value Annualoperation Annualmaintenance Taxes and insurance 3,000 1,200 3% Life, years 10 15

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

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Your firm is considering purchasing a machine with the following annual, end-of-year, book investment accounts. Gross investment Less: Accumulated depreciation Net investment AAR Year 0 Year 1 Year 2 Year 3 Year 4 $ 58,000 $58,000 $ 58,000 $ 58,000 $58,000 0 14,500 29,000 43,500 58,000 +% $ 58,000 $43,500 $ 29,000 $14,500 $ The machine generates, on average, $6,000 per year in additional net income. What is the average accounting return for this machine? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) 0
A biotechnology company's stock is currently selling for $46.35 per share. The earnings per share are $2.14, and the dividend is $1.80. (a) What is the current yield of the stock (as a %)? (Round your answer to the nearest tenth of a percent.) % (b) What is the price-earnings ratio? (Round your answer to the nearest whole number.)
Amazon in OKC has just invested $250,000 in equipment having a negligible salvage value (SV 0) regardless of when the equipment if replaced. O&M costs equal $50,000 the first year and increase $10.000 per year. Based on a MARR of 10% What is the Capital Recovery (CR) cost for Year 4? A. $86,428 B. $60,317 C. $47,320 D. $39,569
A3
You are given the following financial data about an assembly machine to be implemented at a company: - Investment cost at year 0 (n=0) is $22,000 - Investment cost at the end of the first year (n=1) is $18,500 - Useful life: 15 years - Salvage value (at the end of 15 years): $7,000 Annual revenues: $18,000 per year - Annual expenses: $5,000 per year Assuming the first revenues and expenses will occur starting from the end of year 2, determine the conventional (non-discounted) payback period.
Duo Corporation is evaluating a project with the following cash flows: Year Cash Flow -$ 29,800 012345 12,000 14,700 16,600 13,700 -10,200 The company uses a discount rate of 13 percent and a reinvestment rate of 6 percent on all of its projects. a. Calculate the MIRR of the project using the discounting approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the MIRR of the project using the reinvestment approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. Calculate the MIRR of the project using the combination approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Discounting approach MIRR b. Reinvestment approach MIRR c. Combination approach MIRR % % %
Problems 43 and 44 are based on the following statement: Used New machine machine Initial Cost 15,000 40,000 ($) Annual 8,000 2,000 operating cost ($/year) Salvage 5,000 10,000 value ($) Life (years) 3 6 Use an interest rate of 10% per year 43. The present worth of the new machine is closest to: (A) $43,630 (B) $43,066 (C) $45,210 (D) $49,660 44. To compare the machines on the basis of a present worth analysis, the present worth values to use are: (A) PWused $31,139, PW new = $43,066 (B) PWused $31,139, PW new = $37,461 (C) PWused $54,533, PW new = $43,066 (D) PWused $54,533, PW new = $37,461
Is the return on this investment proposal exactly 14%, more than 14%, or less than 14%? Explain. The Net Present Value Method-An Extended Example
D1. Answer ASAP. Please complete all parts correctly.
Q/ A contractor purchase an equipment with a delivered price of (750000$) to operate it in one of his projects. He estimate the cost of this equipment according to the following justification - Total interest rate (including bank interest, storage, insurance, .) =15 % Consumption of (oil, fuel, and grease) =(8.25 S/hr) - Cost of maintenance and repair = 60% of the annual straight line depreciation - salvage value = 150000 S Useful life = (10 years) with (1400 hours used per year). a- Determine the probable cost per hour according to the previous justification. b- After (7 years) of operating the equipment, the contractor recorded all the costs of the equipment as shown in the table blow. He notice the increment in the average consumption and maintenance in the last two years (the 6", and 7th years). Calculate the average cost per hour of the equipment for the first five years, according to the salvage value of the equipment at the end of the 5th year = (200000$). Fuel oil Grease…
Required: If ABC requires has a cost of capital (discount rate) of 10%, How much is the equivalent annual cost of Model Y
Ef 56.

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