3. Choose from the two equipment which is more economical. Machine A Machine B First cost Php 8000 Php 14,000 Salvage value Php 2000 Annual operation Php 3000 Php 2400 Annual maintenance Php 1200 Php 1000 Taxes & insurance 3% 3%

3. Choose from the two equipment which is more economical. Machine A Machine B First cost Php 8000 Php 14,000 Salvage value Php 2000 Annual operation Php 3000 Php 2400 Annual maintenance Php 1200 Php 1000 Taxes & insurance 3% 3%

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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Question

3.
Choose from the two equipment which is more economical.
Machine A
Machine B
First cost
Php 8000
Php 14,000
Salvage value
Php 2000
Annual operation
Php 3000
Php 2400
Annual maintenance
Php 1200
Php 1000
Taxes & insurance
3%
3%
BASIC ENGINEERING ECONOMY
62
Life in years
10
15
Money is worth at least 16%.

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A manufacturing plant manager has purchased a new bologna slicing machine for $24,500. The new machine is expected to produce an extra $8,000 of revenue and have an annual operating expense of $3,000. If the useful life is expected at 6 years and i = 7% per year, what is the PW? Select one: a. $50000 b. $23835 36 c. $35000 d. $ 25000
Question 3 Juan is considering the following alternatives for investing in MM Industries: Buy Buy six month call options with: exercise price of for a premium of The selling price per share now Assume no commissions o taxes (ideal world) Assume in the stock reaches and a call was purchased What is the annualized percentage gain? 500shares $40 $6.00 $46 4months $48
D4)
Q5: The machine using PW with first cost $75000, savings the annual operating cost $11000 per year and salvage value $55000 at the end of 4 years find the (P/F, i*,6).
Choose the best option in terms of which sets of workers and equipment should be chosen. The project is expected to last in 300 days. Show complete solution Option A. 4 workers with one having ₱ 750 daily rate while the rest with ₱500, To buy equipment with original cost of ₱50 000 and salvage value of ₱10 00 Option B. 3 workers with two having ₱ 750 daily rate while the rest with ₱500, To buy equipment with original cost of ₱20 000 and salvage value of ₱5 000
3. A food processing plant consumed 600,000 kWh of electric energy annually and pays an average of Php 1.00/kWh. A study is being made to generate its own power to supply the plant's energy requirement. The power plant installed would cost Php 1,500,000. Annual operation and maintenance, Php 350,000. Other expenses, Php 85,000 per year. Life of power plant is 15 years. The salvage value ate the end of life is Php 350,000. Annual taxes and insurance, 4% of the first cost. The rate of interest is 12%. Using the sinking fund method for depreciation, determine if the power plant is justifiable. Use Rate of Return (ROR) method and Annual Worth (AW) method. If the calculations predicted that the plant is a good investment, when will the payback period be?
Six years from today you need $10,000. You plan to deposit$1,500 annually, with the first payment to be made a year from today, in an account thatpays a 5% effective annual rate. Your last deposit, which will occur at the end of Year 6,will be for less than $1,500 if less is needed to reach $10,000. How large will your last paymentbe?
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.
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%.
At i = 10% per year, a machine has a first cost of $9,000 and estimated operating costs and year-end salvage values as shown. The annual equivalent cost if you operate the machine for 3 years is closest to which value? Operating Salvage Cost, $ Value, $ 7000 Year -1000 -1200 5000 -1500 4200 -2000 3000 -3000 2000 O-$-3,568 = $-3,770 -1500 4200 -2000 3000 -3000 2000 O =$-3,568 O = $-3,770 = 2-3,636 %3D O =$-3,454 O = $-3,832 123 n 345

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