not use ai please 5-20. Your firm is thinking about investing $200,000in the overhaul of a manufacturing cell in a leanenvironment. Revenues are expected to be $30,000 inyear one and then increasing by $10,000 more each yearthereafter. Relevant expenses will be $10,000 in year oneand will increase by $5,000 per year until the end ofthe cell's seven-year life. Salvage recovery at the end ofyear seven is estimated to be $8,000. What is the annualTABLE P5-23 Table for 11sSOeequivalent worth of the manufacturing cell if the MARRis 10% per year? (5.5)5.24 Dotthe Efoll

1. Steps to Calculate Annual Equivalent Worth (AEW)Net Cash Flow (NCF) Calculation for Each Year:For…

Answered: 5-20. Your firm is thinking about…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 40P

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Manzer Enterprises is considering two independent investments: A new automated materials handling system that costs 900,000 and will produce net cash inflows of 300,000 at the end of each year for the next four years. A computer-aided manufacturing system that costs 775,000 and will produce labor savings of 400,000 and 500,000 at the end of the first year and second year, respectively. Manzer has a cost of capital of 8 percent. Required: 1. Calculate the IRR for the first investment and determine if it is acceptable or not. 2. Calculate the IRR of the second investment and comment on its acceptability. Use 12 percent as the first guess. 3. What if the cash flows for the first investment are 250,000 instead of 300,000?
If a copy center is considering the purchase of a new copy machine with an initial investment cost of $150,000 and the center expects an annual net cash flow of $20,000 per year, what is the payback period?
Caduceus Company is considering the purchase of a new piece of factory equipment that will cost $565,000 and will generate $135,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return In Excel, see Appendix C.
Gardner Denver Company is considering the purchase of a new piece of factory equipment that will cost $420,000 and will generate $95,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further Instructions on internal rate of return in Excel, see Appendix C.
Conestoga Plumbing plans to invest in a new pump that is anticipated to provide annual savings for 10 years of $50,000. The pump can be sold at the end of the period for $100,000. What is the present value of the investment in the pump at a 9% interest rate given that savings are realized at year end?
Consolidated Aluminum is considering the purchase of a new machine that will cost $308,000 and provide the following cash flows over the next five years: $88,000, 92,000, $91,000, $72,000, and $71,000. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return in Excel, see Appendix C.
A grocery store is considering the purchase of a new refrigeration unit with an Initial Investment of $412,000, and the store expects a return of $100,000 in year one, $72000 in years two and three, $65,000 in years four and five, and $38,000 in year six and beyond, what is the payback period?
Garnette Corp is considering the purchase of a new machine that will cost $342,000 and provide the following cash flows over the next five years: $99,000, $88,000, $92,000. $87,000, and $72,000. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return in Excel. see Appendix C.
You have been given the following information on a project. It has a 5-year lifetime The initial investment in the project will be $25 million, and the investment will be depreciated straight line, down to a salvage value of $10 million at the end of the fifth year. The revenues are expected to be $20 million next year and to grow 10% a year after that for the remaining 4 years. The cost of goods sold, excluding depreciation, is expected to be 50% of revenues. The tax rate is 40%. The project will require a $1 million increase in working capital. If the cost of capital is 12% what is the NPV and IRR? (Ans. $10,413,439.23 and 24.56%)
Alpha Company is planning to invest in a machine, the use of which will result in the following:• Annual revenues of $ l 0.000 in the first year and increases of $5,000 eachyear. up to year 9. From year IO. the revenues will remain constant ($52,000)for an indefinite period.• The machine is to be overhauled every 10 years. TI1c expense for each overhaul is $40.000.If Alpha expects a present worth of at least $100,000 at a MARR of 10% forthis project. what is the maximum investment that Alpha should be prepared to make?(a) $250.140(b) $67.697(c) $350, 100(d) $509.600
Alpha Company is planning to invest in a machine, the use of which will resultin the following:• Annual revenues of $10,000 in the first year and increases of $5,000 each year,up to year 9. From year 10, the revenues will remain constant ($52,000) for anindefinite period.• The machine is to be overhauled every 10 years. The expense for each overhaulis $40,000.If Alpha expects a present worth of at least $100,000 at a MARR of 10% for thisproject, what is the maximum investment that Alpha should be prepared to make?(a) $250,130 (b) $674,697(c) $350,100 (d) $509,600
2.) LandMING has borrowed $8 Million to implement a new production line in its Dallas metal plant. If the interest rate on the loan is 10% per year (on unrecovered balance) for 5 years, what is the amount of interest payable for year 2?

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