A company decides to purchase an industrial gas turbine which costs forty thousand. Additional costs of 14,000 incurred for shipping, insurance, site preparation, fuel lines, and fuel storage tanks. The turbine has an AOC of 450 plus fuel expense of 7.50/hour. The new model is claimed to use less resources which led to an annual savings of 45000. If the engine is set to operate for 3000 hours per year, what is the annual equivalent life-cycle cost of the gas turbine given that the MARR = 15%. Cost of dismantling and disposing of the turbine at the end of its 8-year life is 8,000?

Q: Hana Inc. is considering an investment in new equipment that will be used to manufacture a…

A: Average Rate of ReturnAverage Rate of Return measures the profitability of the investments on the…

Q: Lopez Company is considering replacing one of its old manufacturing machines. The old machine has a…

A: When the decision with regard to keep or to replace the machine is to be made then we make use of…

Q: You are evaluating two different silicon wafer milling machines. The Techron I costs $267,000, has a…

A: Equivalent annual cost refers to the cost incurred for owning, operating, and the maintenance of an…

Q: The equipment needed to manufacture a product costs $1,000,000 to purchase.  This equipment has a…

A: SOLUTION- BREAK EVEN POINT  IS THE POINT AT WHICH TOTAL REVENUE EQUALS TO TOTAL COST OR EXPENSES.

Q: Lopez Company is considering replacing one of its old manufacturing machines. The old machine has a…

A: To compute the income increase or decrease from replacing the old machine with Machine A, we'll…

Q: The initial cost of a van is $22,800; its salvage value after 5 years will be $8500. Maintenance is…

A: The equivalent uniform annual cost(EUAC) is the annual cost of maintaining and operating assets…

Q: Rocko Incorporated has a machine with a book value of $50,000 and a five-year remaining life. A new…

A: Total cost of 5 years:   Old machine: = $24,000 x 5 years = $120,000   New machine: = $85,000 -…

Q: Assuming a discount rate of 7%, what is the net present value of buying the new machine?

A: NPV = $36,465 Working - Calculation of NPV Year Cashflows Present value factor(7%) Present value…

Q: A machine, costing $30,000 to buy and $2.500 per year to operate, will savemainly labor expenses in…

A: Minimum required annual savings are the savings at a point where NPV is zero. This implies the point…

Q: Wettway Sailboat Corporation is considering whether to launch Its new Margo-class sallboat. The…

A: As per the given information: Selling price - $54,000 per boat Variable costs - $33,000 per…

Q: Lopez Company is considering replacing one of its old manufacturing machines. The old machine has a…

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Q: Bailey, Inc., is considering buying a new gang punch that would allow them to produce circuit boards…

A: IRR is used to measure the profitability of a project. It uses the NPV formula and equates it to…

Q: Rory Company has an old machine with a book value of $77,000 and a remaining five-year useful life.…

A: a.  Keep or Replace AnalysisKeep ReplaceIncome Increase (Decrease) if replaced Revenues____ Sale of…

Q: Lopez Company is considering replacing one of its old manufacturing machines. The old machine has a…

A: KEEP OR REPLACE DECISIONIf there is increase in income by replacing, then the old machine should be…

Q: Jax Inc is considering the purchase of a new machine for the production of computers. Machine A…

A: Equivalent annual savings is the cost of operating and maintaining an asset annually. It is also…

Q: You are evaluating two different silicon wafer milling machines. The Techron I costs $255,000, has a…

A: To solve this question accurately, we must consider the time value of money.This involves converting…

Q: You are evaluating two different silicon wafer milling machines. The Techron I costs $249,000, has a…

A: EAC refers to Equivalent Annual Cost, annual cost incurred for operations or business. To calculate…

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A: Operating Cashflow = PAT +Depreciation

Q: A machine costs $555,000 to purchase. Fuel, Oil, Grease, and minor maintenance are estimated to cost…

A: Calculating the hourly operating cost of a machine involves several factors. Begin by dividing the…

Q: Reacher Corporation is evaluating a proposal to purchase a new machine that would cost $100,000 and…

A: To further understand the decision-making process, let's go over the computations in more detail.…

Q: You are evaluating two different silicon wafer milling machines. The Techron I costs $213,000, has a…

A: Investment = -213,000 Depreciation amount = Acquiring Value - Salvage Value Depreciation amount =…

Q: Your company is deciding whether to purchase a durable delivery vehicle or a short-term vehicle. The…

A: In the world of finance in general and in the domain of capital budgeting in particular equivalent…

Q: (D) Delta Company produces mobiles and purchases batteries at $30 per unit. The management proposes…

A: Dear student, find a detailed answer and step by step solution in the explanation part…

Q: your tax rate is 24 percent and your discount rate is 9 percent, compute the EAC for both machines.…

A: The net present value compares the present value of anticipated cash inflows and the expenditures to…

Q: ALUM Inc. uses high-tech equipment to produce specialized products. Each one of its machines costs…

A: Cost of Machine = $2345000Required rate of return = 9.5%Life of the machine = 4 years

Q: Lopez Company is considering replacing one of its old manufacturing machines. The old machine has a…

A: Whenever organization to choose between whether to continue operation or close the operation of any…

Q: Rory Company has an old machine with a book value of $83,000 and a remaining five-year useful life.…

A: If there is increase in income by replacing, then the old machine should be replaced. If there is…

Q: Oahu Inc. is considering an investment in new equipment that will be used to manufacture a…

A: Average rate of return : Average rate of return calculate the rate at which average income is…

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A: Information Provided: Cost of Motor Q = $5000 The efficiency of Motor Q = 90% Cost of Motor R =…

Q: Your company is analyzing two machines to determine which one it should purchase. Whichever machine…

A: NPV is also known as Net Present Value. It is a capital budgeting technique which helps in decision…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.