A company plans to invest $11,000 dollars are new equipment to reduce operating costs. It isestimated that the savings will be $9,000 per year for the 5 year life of the equipment. Determinethe equivalent uniform annual worth (EUAW) of the equipment at 6% interest. Express your answerin $ to the nearest $10.

Data given: Initial investment=$11000 Annual savings=$9000 N=5 year R=6% Formula to be used:…

Answered: A company plans to invest $11,000…

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

See similar textbooks

Similar questions

E2
The annual profit from an investment is $20,000 each year for 5 years and the cost of investment is $80,000 with a salvage value of $40,000. The discount rate (cost of capital) at this risk level is 14%. (round your response to the nearest Based on the given information, the net present value of the investment = $ whole number).
Considering an interest rate of 8%, that the cost of the equipment is $300,000 and you will replace the equipment after 7 years, what is the annual cost if the expected salvage value is $75,000?
New equipment costs $847,000 and is expected to last for five years with the salvage value of 10% of the equipment cost. During this time the company will use a 20% CCA rate. The new equipment will save $280,000 annually before taxes. If the company's required rate of return is 5.35%, determine the PVCCATS of the purchase. Assume a tax rate of 35%. Please show all the calculations by which you came up with the final answer.
The management of Nebraska Corporation is considering the purchase of a new machine costing $490,000. The company's desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing information, use the following data in determining the acceptability: Year OperatingIncome Net CashFlow 1 $100,000 $180,000 2 40,000 120,000 3 40,000 100,000 4 10,000 90,000 5 10,000 120,000 The cash payback period for this investment is
A mechanical workshop invested in purchasing a semiautomatic machine for $50,000, that expected to generate a net income of $8,000 starting year 4 and expected to decrease by 5% per year thereafter. The useful life of the machine is 20 years. If the workshop's minimum attractive rate of return (MARR) is 10% per year, the standard notation for determining the discounted payback period is: O 0 = -50,000 + 8,000 (P/A, 5%, 10%, np - 3) (P/F, 10%, 3) O 0= -50,000 + 8,000 (P/A, 5%, 10%, np) O 0 = -50,000 + 8,000 (P/A, -5%, 10%, np - 4) (P/F, 10%, 4) O 0= -50,000 + 8,000 (P/A, 5%, 10%, np - 4) (P/F, 10%, 4) O 0= -50,000 + 8,000 (P/A, -5%, 10%, np) (P/F, 10%, 4) None of them O 0 = -50,000 + 8,000 (P/A, -5%, 10%, np - 3) (P/F, 10%, 3) O 0= -50,000 + 8,000 (P/A, -59%, 10%, np) (P/F, 10%, 3)
What must the annual earnings be from a new piece of equipment that costs $10 million and has a projected operating life of 10 years? Assume the salvage value is $800,000 at the end of year 10. Use an interest rate of 10% compounded annually.
Mayberry, Inc., is considering a design change that will cost $6,000 and will result in an annual savings of $1,000 per year for the 6-year life of the project. A cost of $2,000 will be avoided at the end of the project as a result of the change. MARR is 8%/year. What is the annual worth of this investment? $Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is ±4.
The maintenance cost for an investment is $2000 per year for the first 10 years and $1000 per year, for the 10 years past the initial maintenance period. The salvage value of the investment is $15,000. Draw the cash flow and calculate the present value of costs and benefits if the rate of return is 5%.
Apex Unlimited is working uponthe renovation of its factory in the upcoming year and for they expect an outflow of $50,000 immediately and they expect the benefits out of the same for $25,000 for the next 3 years. The inflation rate that is currently prevailing is 5%. You are required to assess whether the decisionto renovate will be profitable by using a BCR. (Use Annual Worth method)
A firm can purchase a centrifugal separator (5-year MACRS property) for $22,000. The estimated salvage value is $4,000 after a useful life of six years. Operating and maintenance (O&M) costs for the first year are expected to be $2,200. These O&M costs are projected to increase by $1,000 per year each year thereafter. The income tax rate is 24% and the MARR is 11% after taxes. What must the uniform annual benefits be for the purchase of the centrifugal separator to be economical on an after-tax basis? CAN YOU DO THIS PROBLEM BY HAND? AND NOT USING EXCEL I WOULD REALLY APPRECIATE IT!!!!
Project A requires a $315,000 initial investment for new machinery with a five-year life and a salvage value of $35,500. Project A is expected to yield annual income of $23,900 per year and net cash flow of $78,750 per year for the next five years.Compute Project A’s accounting rate of return. *please help correct the answer

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS