A chemical company is considering buying a new production equipment. The following models are identified as viable candidates from the technical perspectives. The company's MARR is 8%. The estimated cash flows for each alternative are below. Suppose the cotermination assumption is made. Please round all your answers to the nearest integer. Machine A: • Capital Investment: $34,000 • Useful Life: 8 years • Market Value at the End of Life: $6,000 • Annual Revenues: $153,000 • Annual Expenses: $i19,000 Machine B: • Capital Investment: 814,000 • Useful Life: 15 years • Market Value at the End of Life: $6,000 · Annual Revenues: $198,000 • Annual Expenses: $154,000 Machine C: • Capital Investment: $55,000 • Useful Life: 7 years • Market Value at the End of Life: $2,000 • Annual Revenues: $247,500 • Annual Expenses: $192,500 a) What is FW of Machine A? b) What is FW of Machine B? c) What is FW of Machine C?
A chemical company is considering buying a new production equipment. The following models are identified as viable candidates from the technical perspectives. The company's MARR is 8%. The estimated cash flows for each alternative are below. Suppose the cotermination assumption is made. Please round all your answers to the nearest integer. Machine A: • Capital Investment: $34,000 • Useful Life: 8 years • Market Value at the End of Life: $6,000 • Annual Revenues: $153,000 • Annual Expenses: $i19,000 Machine B: • Capital Investment: 814,000 • Useful Life: 15 years • Market Value at the End of Life: $6,000 · Annual Revenues: $198,000 • Annual Expenses: $154,000 Machine C: • Capital Investment: $55,000 • Useful Life: 7 years • Market Value at the End of Life: $2,000 • Annual Revenues: $247,500 • Annual Expenses: $192,500 a) What is FW of Machine A? b) What is FW of Machine B? c) What is FW of Machine C?
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
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Transcribed Image Text:A chemical company is considering buying a new production equipment. The following models are identified as viable candidates
from the technical perspectives. The company's MARR is 8%. The estimated cash flows for each alternative are below. Suppose
the cotermination assumption is made.
Please round all your answers to the nearest integer.
Machine A:
• Capital Investment: $34,000
• Useful Life: 8 years
• Market Value at the End of Life: $6,000
• Annual Revenues: $153,000
• Annual Expenses: $119,000
Machine B:
• Capital Investment: $44,000
• Useful Life: 15 years
• Market Value at the End of Life: $6,000
• Annual Revenues: $198,000
• Annual Expenses: $154,000
Machine C:
• Capital Investment: $55,000
• Useful Life: 7 years
• Market Value at the End of Life: $2,000
• Annual Revenues: $247,500
• Annual Expenses: $192,500
a) What is FW of Machine A?
b) What is FW of Machine B?
c) What is FW of Machine C?
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