2. The company is considering a project involving the purchase of new equipment. Change the data area of your worksheet to matchthe following: Use Exhibit 148-1 and Exhibit 148-2. (Use appropriate factor(s) from the tables provided.)AChapter 14: Applying Excel3.Data4.Example E5.Cost of equipment needed310,0006.Working capital needed20,0007.Overhaul of equipment in four years2$30,0008.Salvage value of the equipment in five years35,0009.Annual revenues and costs:415.00010Sales revenues270,00011Cost of goods sold%2455,00012Out-of-pocket operating costs16 %13 Discount ratea. What is the net present value of the project? (Negative amount should be indicated by a minus sign. Round your present valuefactor to 3 decimals and round all other intermediate calculations to nearest whole dollar.)Net present value

Net present value (NPV) It is a capital budgeting tool to decide on whether the capital budget…

2. The company is considering a project involving the purchase of hew equi he following: Use Exhibit 148-1 and Exhibit 148-2. (Use appropriate factor(s) from the B 1 Chapter 14: Applying Excel 2 3. Data Example E 310,000 Cost of equipment needed Working capital needed Overhaul of equipment in four years 5. 6. %24 20,000 %24 30,000 7. 35,000 Salvage value of the equipment in five years 9. Annual revenues and costs 415.000 10 Sales revenues 270,000 11 Cost of goods sold 55,000 12 Out-of-pocket operating costs 16 % 13 Discount rate a What is the net present value of the project? (Negative amount should be indicat Factor to 3 decimals and round all other intermediate calculations to nearest whol Net present value %24

2. The company is considering a project involving the purchase of hew equi he following: Use Exhibit 148-1 and Exhibit 148-2. (Use appropriate factor(s) from the B 1 Chapter 14: Applying Excel 2 3. Data Example E 310,000 Cost of equipment needed Working capital needed Overhaul of equipment in four years 5. 6. %24 20,000 %24 30,000 7. 35,000 Salvage value of the equipment in five years 9. Annual revenues and costs 415.000 10 Sales revenues 270,000 11 Cost of goods sold 55,000 12 Out-of-pocket operating costs 16 % 13 Discount rate a What is the net present value of the project? (Negative amount should be indicat Factor to 3 decimals and round all other intermediate calculations to nearest whol Net present value %24

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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Apply WACC in IRR. Leeward Sailboats is reviewing the following new boat line: Click on the Icon in order to copy its content into a spreadsheet. Category T₁ Investment Net working capital change Operating cash flow Salvage To - $10,244,762 - $569,000 $3,277,000 What is the IRR of the project? 10.5% (Round to two decimal places.) T2 $3,884,000 T3 $569,000 $4,570,000 $615,000 At what adjusted WACCS will the company accept this project? Hint: Find the IRR of the project, and use it as the maximum adjusted WACC for accepting the project.
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9. A local company is analyzing 5 alternatives for a new machine the information is given in the table below. Option Cost Savings per Year Salvage value FV Vehicle life n A -$10,000.00 $ 2,050.00 $ 500.00 B -$12,500.00 $ 3,405.00 -$15,300.00 $ 3,680.00 -$20,500.00 $ 5,281.50 -$30,125.00 $ 6,785.00 C D E $1,000.00 $3,000.00 $ 5,000.00 $5,000.00 5 5 5 5 5 a) which alternative should be selected without considering salvage value? The company is considering a MARR of 7%. b) which alternative should be selected with considering salvage value? The company is considering a MARR of 10%.
1. Green Rose Inc. is considering these following investments for year 2022: Machine A Machine B Machine C Initial amount 450,000 375,000 425,000 Salvage Value 75,000 67,000 58,000 Cost savings 66,730 73,425 63,950 The following cost are associated to each of the machines: • Inspection cost 3,000 • Installation cost 3.500 • Warranties 2,700 • Testing cost 4,300 • Training 4,500 a) Determine the Net investment of each Machine. b) Determine the accounting rate of return. c) Which of these investments would Green Rose Inc. purse if the required rate of return is 18%?
Q/ A contractor purchase an equipment with a delivered price of (750000$) 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 information A land development company is considering the purchase of earth-moving equipment. This equipment will have an estimated first cost of $163,000, a salvage value of $55,000, a life of 10 years, a maintenance cost of $32,000 per year, and an operating cost of $220 per day. Alternatively, the company can rent the necessary equipment for $1010 per day and hire a driver at $180 per day. When approached to rent for the breakeven number of days, the equipment owner indicated that the minimum rental is for 100 days per year; however, he might consider a lower daily rental cost. What is the daily rental cost to justify renting over purchasing? If the equipment was purchased, assume it would be used for the breakeven number of days. Determine the required rental cost per day. The daily rental cost to justify renting over purchasing is determined to be $
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
An engineer has received two bids for an elevator to be installed in a new building. Given a 10% interest rate, which bid should be accepted? Alternatives Installed cost Annual cost Salvage value Life, in years Westinghome $45,000 2700 3000 10 Itis $54,000 2850 4500 15
Baguio Rabbitry must replace the piping system in its barn. Based on cost of capital of 12%which of the two following alternatives should be chosen using the following methods?a) RORAI b) AW c) PW

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