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: A company is considering buying a piece of machinery that costs $20,000 and has a salvage value of…

A: Internal rate of return Or IRR is the rate or percentage that is minimum required to cover the…

Q: X Company is considering the purchase of a new machine. The machine would reduce the amount of…

A: Capital budgeting is a set of techniques that are used by companies to determine the profitability…

Q: The management of ABC company are considering buying a new machine which would produce parts for a…

A: Machine A Initial cost  $65,000.00 Salvage Value  $  5,000.00 Cash sales  $24,000.00 Cash…

Q: An engineering consultancy firm makes an economic analysis of two machines that will be purchased.…

A: Machine A Economic Life = 6 years Initial Cost = 10,000 Annual Insurance Cost = 1% of Initial Cost =…

Q: A casting company is considering the replacement analysis of a furnace. If it is bought from A…

A: The present value of the annuity is the current worth of a cash flow series at a certain rate of…

Q: The expenses included in the fabrication of a wind turbine for a planned Wind Farm is $73,000…

A: Investment needed today (X) = $16000 First year cost saving (S1) = $73000 - $58000 = $15000 S2 to S5…

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: Natural Foods Inc. is planning to invest in new manufacturing equipment to make a new garden tool.…

A: Net Cash flow represent the amount which is available after all application of money required as per…

Q: calculate the amount of payments

A: Payments: Payments are the amounts that are used to settle the borrowings from any financial or…

Q: e Fine Clothing Factory wants to replace an old machine with a new one. The machine can be sold to a…

A: Fine clothing factory should purchase the machine if average rate of return in more than desired…

Q: Moonshine Corporation is considering purchasing one of two machines. Machine A has a useful life of…

A: Equivalent Annual Cost is a financial metric used to estimate the capital cost of investment…

Q: Epica PLC is considering marketing a new product with a four-year life. Epica will need to install…

A: Machine 1 Purchase and Installation Cost (present value of cash outflow) = K 460000 Residual value =…

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: 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: Lui Co. is considering disposal of a night vision glasses manufacturing machine with a book value…

A: Net purchase cost of new machine = Purchase price of new machine - sales price of old machine =…

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: Should the fork-lift truck be purchased?

A: To determine whether the lift truck should be purchased or not by computing the NPV. NPV is the net…

Q: compute the rate of return.

A: Accounting rate of return (ARR) refers to a financial ratio which is used by the company to compute…

Q: Natural Foods Inc. is planning to invest in new manufacturing equipment to make a new garden tool.…

A: Residual value is the value of any asset left at the end of useful life of an asset. Depreciation is…

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: A temporary warehouse can be built for $10 million and its salvage value when decommissioned is…

A: The any investment can be justified if there are sufficient revenues based on time value and period…

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: Masters Machine Shop is considering a four-year project to improve its production efficiency. Buying…

A: In the computation of NPV of such proposal, we should consider the annual cash flow post tax and…

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

A: Present worth of this investment :— It is the sum of all present value of future cash flows.  It is…

Q: The Bruin's Den Outdoor Gear is considering a new 7-year project to produce a new tent line. The…

A: Project life = 7 yearsCost of equipment = $1.95 millionUnits = 30,500 tentsPrice = $78Variable costs…

Q: Nature’s Way Inc. is planning to invest in new manufacturing equipment to make a new garden tool.…

A:

Q: The Balas Manufacturing Company is considering buying an overhead pulley system. The new system has…

A: The calculation is: The formula image is:

Q: Nature’s Way Inc. is planning to invest in new manufacturing equipment to make a new garden tool.…

A: Capital investment analysis: Capital investment analysis is the process by which management plans,…

Q: A company is considering the opportunity to invest into a new 12- year project: manufacturing and…

A: A financial break even is a point of units sold where profit after tax is equal to $0.

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: Two 100-horsepower motors are under consideration by the Mighty Machinery Company. Motor Q costs…

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…

Q: Company is considering purchasing a breadmaker. The cost of the breadmaker is $200,000 and an…

A: To Find: NPV

Q: PT Tamaro has a plastic manufacturing machine. To increase its production capacity, PT Tamaro plans…

A: Npv is also known as Net Present Value. It is a capital budgeting techniques which help in decision…

Q: trofitted space-heating system is being considered for a small office building. The system can be…

A: Present worth method is to determine the present value of all cost and benefits from the project.…

Q: worthwhile to invest in the insulation? What is the payback period of the investment?

A: Reduction in fuel = P190000 × 20% = P38000  Less: Annual cost of taxes and insurance = 5% of P120000…

Q: Starling Co. is considering disposing of a machine with a book value of $23,500 and estimated…

A: REPLACEMENT DECISION   Replacement Decision is one of the most important classifications of…

Q: Natural Foods Inc. is planning to invest in new manufacturing equipment to make a new garden tool.…

A: Net cash flow is the amount that a company generates from a project.  Net cash flow = Total cash…

Q: What is the IRR for this project cashflow?

A: IRR (Internal Rate of Return): It is the rate at which the NPV (net present value) of an investment…

Q: Inc. uses fine-tuned equipment to produce electronic products. Each one of its machines costs…

A: Equivalent annual cost: It is the annual cost of operating, owning, and maintaining an asset over…

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.