5.12 A Company that manufactures amplified pressure transducers is trying to decide between the machines shown below. Compare them on the basis of their present worth values, using an interest rate of 15% per year. Variable Dual Speed - 250,000 - 231,000 Speed - 224,000 First Cost, $ Annual Operating Cost, $/Year Overhaul in Year 3, $ Overhaul in Year 4, $ Salvage Value, S ife, Years - 235,000 - 26,000 --- - 140,000 50,000 10,000

5.12 A Company that manufactures amplified pressure transducers is trying to decide between the machines shown below. Compare them on the basis of their present worth values, using an interest rate of 15% per year. Variable Dual Speed - 250,000 - 231,000 Speed - 224,000 First Cost, $ Annual Operating Cost, $/Year Overhaul in Year 3, $ Overhaul in Year 4, $ Salvage Value, S ife, Years - 235,000 - 26,000 --- - 140,000 50,000 10,000

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

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Q1
am. 214.
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 firm has two alternatives for the improvement of its current production system. The data are as follows: Machine A Machine B First Cost - P6M First cost-P8968578 Annual operating cost-P250T Annual operating cost - P294445 Service life - 6 years Service life - 4 years Salvage value - P150T Salvage value - P142107 Using the Present Value (PV) Method and with the firm's interest rate of 23% cpd. annually, what the PV of Machine B?
3
This question is based on the following information: Sphinx Company is planning to invest in a machinery costing P 500,000 with an estimated useful life of 5 years with no salvage value. The use of this machinery will generate cash savings of P 175,000 before taxes. Income taxes are 20% each year, What is the payback reciprocal? 32% P 33% 34% 35% What is the payback period? 3.125 years 3.152 years 3.512 years 3,521 years
S7.33 Tim Smunt has been asked to evaluate two machines. After some investigation, he determines that they have the costs shown in the following table. He is told to assume that: a) the life of each machine is 3 years, and b) the company thinks it knows how to make 12% on investments no more risky than this one. Machine A Machine B Original cost Labor per year Maintenance per year Salvage value $10,000 2,000 $20,000 4,000 1,000 7,000 4,000 2,000 Determine, via the present value method, which machine Tim ce should recommend.
Required: If ABC requires has a cost of capital (discount rate) of 10%, How much is the equivalent annual cost of Model Y
Question 3. Choose the best piping systems as shown in the table below using Annual Worth method (MARR: 6%). Concrete piping UPVC piping Initial cost (OR) Ca Initial cost (OR) Annual 0&M (OR/y)" 10000 Annual O&M (OR/yr) 5000 Rehabilitation cost at the 120000 5th year Useful life (years)¤ 10 Useful life (years)= 20 Ca 1720102 1136000 1828000:
The directors of Brisbane Ltd are considering an investment in new machine. The details of the proposal are as follows: Cost: $500,000. Savings generated per year: $160,000 Useful life: 4 years Scrap value: $40,000 Required rate of return: 15 percent. Present value factors for discount rate of 15 percent for n periods: n 1 2 3 4 Present value factor (15%) 0.870 0.756 0.658 0.572 Required: (a) Calculate the net present value for the proposed purchase of a new machine and specify whether the project is acceptable. Ignore taxation. (b) Explain how money is said to have a 'time value.
15. Two machines A and B are being considered for use in a small manufacturing plant. Machine A has a first cost of P125 000.00, an estimated life of seven years and a salvage value of P12 500.00. Annual operations and maintenance cost is estimated to be P10 000.00. The corresponding figures of machine B are P175 000.00, seven years, P25 000.00, and P8500.00. Using future worth analysis and an interest rate of 14%, specify which machine should be preferred. (Ans. Select Machine A, - P407.588.51)
5

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