A Company has just invested in a new Machining Center that cost $150,000. The company believes that it will be able to use this new piece of equipment forthe next 10 years. At the end of this 10 year period, the company thinks that they can sell this equipment for $20,000. The company's MARR value is 10% ycy.(P/F %.n)(A/F %,n)(F/A %,n) (A/P %,n)(P/A %,100.38550.0627515.93740.162756.1446Question: Calculate the Annual Capital Recovery & Return Value (CR) for this new equipment. Please Fill the dollar amount in the answer window. (Forexample if your answer was $30,000; enter 30,000. If your answer was $-15,000; then enter -15,000)-23,157.5

Capital recovery is the equivalent annual amount that an asset must earn every year in order to recover the initial cost at the given rate of return over its useful expected life. Capital recovery=-PA/P,i%,n+SA/F,i%,nCapital recovery=-$150,000×0.16275+20,000×0.06275=-24,412.5+1255=-23,157.5

Business

Finance

A Company has just invested in a new Machining Center that cost $150,000. The company believes that it will be able to use this new piece of equipment for the next 10 years. At the end of this 10 year period, the company thinks that they can sell this equipment for $20,000. The company's MARR value is 10% ycy. (P/F% n) (AE %.n) (F/A %,n) (A/P %,n) (P/A %.n) 0.3855 0.06275 15.9374 0.16275 6.1446 Question: Calculate the Annual Capital Recovery & Return Value (CR) for this new equipment. Please Fill the dollar amount in the answer window. (For example if your answer was $30,000; enter 30,000. If your answer was $-15,000; then enter -15,000) -23,157.5

A Company has just invested in a new Machining Center that cost $150,000. The company believes that it will be able to use this new piece of equipment for the next 10 years. At the end of this 10 year period, the company thinks that they can sell this equipment for $20,000. The company's MARR value is 10% ycy. (P/F% n) (AE %.n) (F/A %,n) (A/P %,n) (P/A %.n) 0.3855 0.06275 15.9374 0.16275 6.1446 Question: Calculate the Annual Capital Recovery & Return Value (CR) for this new equipment. Please Fill the dollar amount in the answer window. (For example if your answer was $30,000; enter 30,000. If your answer was $-15,000; then enter -15,000) -23,157.5

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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Note: Just answer the letter d) PROFITABILITY INDEX
A company is considering purchasing a new piece of equipment that costs $100,000 and has an estimated useful life of 5 years. The equipment should increase annual cash receipts by $80,000 per year. Cash expenses to operate the equipment should be $25,000. The company uses straight-line depreciation. If the after-tax cost of capital is 10% and the tax rate is (Round your 30%, the net present value of this project based on the tables in the appendix is $ answer to the nearest whole number.) Need help? Review these concept resources. Read About the Concept
3. Suppose that the new equipment has a cost basis of $12,000 and a salvage value of $3,000 at the end of 6 years. This asset is depreciated by the Straight-Line method. The effective income tax rate is 40 % and the after-tax MARR ic = 10%. If the company is going to sell this asset after 3 years at the market value of $6,000, what is the minimum profit per year this asset should produce to breakeven the investment? (20%)
Company H is planning to purchase a machine for $100,000 and will incur an additional $10,000 in installation expenses. It is replacing a similar machine that can be sold for $30,000. Because of this transaction, the company’s current assets will increase by $6,000 and current liabilities will increase by $3,000. Calculate the initial investment in this equipment. Options: A)83000 B)100000 , C)110000 D), 80000
(Part I) The Farmer Corporation is considering investing in a new manufacturing machine that has an estimated life of five years. The cost of the machine is $40,000 and the machine will be depreciated straight line over its five-year life to a residual value of $0. The manufacturing machine will result in sales of $50,000 in year 1. Sales are estimated to grow by 6% each year. It is estimated that the Farmer Corporation needs to hold 5% of its annual sales in cash, 10% of its annual sales in accounts receivable, 15% of its annual sales in inventory, and 20% of its annual sales in accounts payable. What is the required net working capital in the first year for this project? Multiple Choice $-1,500. $0. $2,500. $5,000. $10,000.
Oriole Corporation is considering adding a new product line. The cost of the factory and equipment to produce this product is $1,700,000. Company management expects net cash flows from the sale of this product to be $630,000 in each of the next eight years. If Oriole uses a discount rate of 11 percent for projects like this, what is the net present value of this project? (Round intermediate calculations to 5 decimal places, e.g. 0.42354. Round answer to O decimal places, e.g. 52.25. Enter negative amounts using negative sign e.g. -45.25.) NPV $ 36695.55 What is the internal rate of return? (Round answer to 2 decimal places, e.g. 52.50.) Internal rate of return %
A company is considering purchasing a new piece of machinery at a cost $60,000. It is expected to generate revenues of $20,000 per year for 4 years against $3,000 of annual operating expenses. The machinery is MACRS 3-year property. The income tax rate is 25%. MARR is 10%. What is the EVA for year 3?
A manufacturer of video games develops a new game over two years. This costs $850,000 per year with one payment made immediately and the other at the end of two years. When the game is released, it is expected to make $1.20 million per year for three years after that. What is the net present value (NPV) of this decision if the cost of capital is 10%? OA. $1,462,112 OB. $1,005,202 OC. $913,820 OD. $1,736,258
Ilana Industries Incorporated needs a new lathe. It can buy a new high-speed lathe for $1 million. The lathe will cost $35,000 per year to run, but it will save the firm $125,000 in labor costs and will be useful for 10 years. Suppose that, for tax purposes, the lathe is entitled to 100% bonus depreciation. At the end of the 10 years, the lathe can be sold for $100,000. The discount rate is 8%, and the corporate tax rate is 21%. What is the NPV of buying the new lathe? Note: A negative amount should be indicated by a minus sign. Enter your answer in dollars not in millions. Do not round intermediate calculations. Round your answer to 2 decimal places.
Oriole Company is considering an investment that will return a lump sum of $820,000, 6 years from now. Click here to view the factor table 1. Table 2 Table 3 Table 4 What amount should Oriole Company pay for this investment to earn an 7% return? (For calculation purposes, use 5 decim displayed in the factor table provided, e.g. 5.24571. Round answer to 2 decimal places, e.g. 25.25.) Oriole Company should pay 4 $
15. A company purchases a piece of equipment for $15,000. After nine years, the salvage value is $900. The annual insurance cost is 5% of the purchase price, the electricity cost is $600/yr, and the maintenance and replacement parts cost is $120/yr. The effective annual interest rate is 10%. Neglecting taxes, what is most nearly the present worth of the equipment if it is expected to save the company $4500 per year? (A) $2300 (B) $2800 (C) $3200 (D) $3500
A company invested P100,000 to purchase a new equipment that wil We used to increase the profit but it is expected to be realized after two years from the year of purchase. The said profit was P50,000 per year for four years. Three years later, the company purchased an add-on to the machine worth P75,000. Due to that add on, the profit increased to P85,000 and lasted for five more years. If the company decided to sell that equipment for P8,000 and MARR is 15% per year

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