7.15 A corporation is considering purchasing a machine that will save $ 210,000 per year before taxes. The cost of operating the machine, including maintenance, is $60,000 per year. The machine, costing $ 120,000, will be needed for four years after which it will have a salvage value of $16,000. If the firm wants a 12% rate of return before taxes, what is the net present value of the cash flows generated from this machine? Answer: 345763

7.15 A corporation is considering purchasing a machine that will save $ 210,000 per year before taxes. The cost of operating the machine, including maintenance, is $60,000 per year. The machine, costing $ 120,000, will be needed for four years after which it will have a salvage value of $16,000. If the firm wants a 12% rate of return before taxes, what is the net present value of the cash flows generated from this machine? Answer: 345763

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

See similar textbooks

Similar questions

Compute the present value of $80,000, to be received in 10 years, if the interest rate is 12%.
5. A telephone company purchased a microwave equipment for P6 Million with a salvage value of P600,000.00 over a period of 5 years and pay lump sum of P400,000.00 for maintenance cost. Minimum attractive rate of return is 16% annually. Compute the annual cost of investment of purchasing the microwave equipment. A. P1,592,362.54 B. P1,695,452.87 C. P1,803,374.41 D. P1,346,121.25
need answer of this question
You purchased a drill press machine for $50,000. It is expected to have a useful life of 8 years. The accounting department tells you that the annual capital cost is $9,740 at i = 12%. What salvage value is used in obtaining the annual capital cost of this machine?(a) $3,010(b)$4,000(c) $4,997(d)$4,200
A borrower bought a house for $250,000; he can obtain an 80% loan with a 30-year fully amortizing, 6% interest rate and monthly payment. Assuming the marginal tax rate for the borrower is 25%. Maintain and insurance are currently $1,200 each per year, Selling cost is 6% of sale; property tax is 2% of the value each year, property value increases 5% per year. What is the first year total tax deduction from owning? $4250.0 $4920.71 53940.0 $3729.25
In 2011, the fixed costs of a company were $500,000, and its variable costs equaled $150,000. In 2010, the company made an annual profit of $200,000. It has been predicted that, despite a steady growth, the company's variable costs will likely equal $300,00 by 2013. The total costs of the company in 2011 were
The owner of a greenhouse and nursery is considering whether to spend $6,000 to acquire the licensing rights to grow a new variety of rosebush, which she could then sell for $6 each. Per-unit variable cost would be $3. What would the profit be if she were to produce and sell 5,000 rosebushes?
You deposited $540 in a saving account paying 2.8% simple interest. How much intrest will you earn in 7 years? Hou much is the account at the end of 7 years?
Suppose that Skipper's insurer views him as having the following distribution for the present value of losses: (i) Probability 0.02 0.04 0.10 0.84 Loss $20,000 5,000 1,000 0 What is the fair premium for full coverage if the competitive loading (administrative costs and capital costs) equals 15% of expected claim cost? Suppose that Skipper believes his probabilities of losses are one-half of what the insurer believes (expected claim). What is the loading- as a dollar value, and as a percentage of the expected claim on the policy from Skipper's perspective?
, On janury 1 of 2017, year company purchased the following equipment. How much wii you depreciate for the fascal year ending in 2020 when you have your CPA ( certified public accoutant) file year tax return on April 15, 2021 assuming a straight-line depreciation method ? How much will you have depreciated total as of this point in time ? What are the remaining book values for each piece of equipment? 1, Dump truck, 1,000,000 birr expected resale value of 200,000 birr 2, Bachoe, 2,800,000 birr, rasale 400,000 birr 3, Five computers, 10,000 birr each, no reasale value 4, Flatbed trailer, 750,000 birr, resale $ 100,000 birr 5, Five pickup trucks,, 300,000 birr each ,20,500 birr resale value each 6, Two construction jobsite trailers , 200,000 birr each, 50,000 birr resale value each
If I invest 25,363 today and expect a reimbursement every 6 months with a ROR of 0.09 compounded semi-annually for 3 years. How much will I expect to receive every June and December of every year.
Consider the following information: Economy Recession Normal Boom Probability of State of Economy .23 .58 .19 Rate of Return if State Occurs Stock B a. Expected return of A Expected return of B b. Standard deviation of A Standard deviation of B Stock A .025 .105 .270 a. Calculate the expected return for the two stocks. Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. b. Calculate the standard deviation for the two stocks. Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. -.38 .28 .51 % % % %