A company plans to spend $ 156244 to install a new machine. Annual maintenance cost is $ 13178. Estimated annual income is $ 34918 starting in the first year. This revenue begin increasing by $ 1078 per year at the end of 2nd year and continue increasing through the end of 15 years. The market value of the machine is $ 20234 at the end of study period of 15 years. Determine the annual worth if the minimum attractive rate of return is 9% per year. Answer:

A company plans to spend $ 156244 to install a new machine. Annual maintenance cost is $ 13178. Estimated annual income is $ 34918 starting in the first year. This revenue begin increasing by $ 1078 per year at the end of 2nd year and continue increasing through the end of 15 years. The market value of the machine is $ 20234 at the end of study period of 15 years. Determine the annual worth if the minimum attractive rate of return is 9% per year. Answer:

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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Webster Mining is considering the purchase of a new sorting machine. The quote consists of quarterly payments of $17,000 for 8 years at an annual interest rate of 6% (APR with quarterly compounding). If the first payment begins one quarter after date of purchase. What is the purchase price of the equipment?
A company plans on purchasing a new piece of equipment in six years. The equipment is expected to cost $200,000. In planning for this purchase, the company will deposit an amount of money into an investment account earning 8% compounded annually. Using an 8% interest rate, the implied annual interest is $200,000 x 0.08 = $16,000. The following information is given: Assuming an annual interest rate of 8% for six years is appropriate, the present value of the deposit is $200,000 x 0.63017 = $126,034. Assuming an annual interest rate of 8% for eight years is appropriate, the present value of the deposit is $200,000 x 0.54027 = $108,054. Assuming an annual interest rate of 6% for eight years is appropriate, the present value of the deposit is $200,000 x 0.62741 = $125,482. How much does this company need to deposit today? $108,054 $126,034 $125,482 $104,000
The management of River Corporation is considering the purchase of a new machine costing $380,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment: Year 1 2 O 10.5% O 5.5% O 25.5% Operating O 15.5% Income $20,000 20,000 20,000 20,000 20,000 Net Cash Flow $95,000 95,000 The average rate of return (rounded to one decimal place) for this investment is 95,000 95,000 95,000
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A three-year-old small crane is being considered for early replacement. Its current market value is $17,500. Estimated future market values and annual operating costs for the next five years are given in the table below. What is the economic life for this crane if the interest rate is 5.1% per year? Year 0 Market Value Annual Operating Cost $17,500 1 $15,110 $4,700 2 $12,930 $4,809 3 $10,110 $4,883 4 $7,400 $4,997 5 $- $5,095
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The cost for manufacturing a component used in intelligent interface converters was $23,000 the first year. The company expects the cost to increase by 2% each year. Calculate the present worth of this cost over a five-year period at an interest rate of 10% per year.
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A new project is being planned for a study period of 8 years. It will require $250,000 for the start-up and after theend of the first year, $13,500 shall be paid for its innovation. The board then requires to add another modifiedtechnology which will cost $25,000 by the end of the second year. After the end of third year, the project will startto earn $57,500 annually. Calculate the annual effective interest rate using ERR method if the interest rate externalto this project (ε) is 13.75%.
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An agricultural engineer wishes to calculate a project's present worth with estimated costs of Php 1.69M now and Php 350,000 per year for 5 years beginning 1 year from now with increases of 12% per year thereafter for the next 8 years. Use a real interest of 15% per year to make the calculations without an adjustment for inflations and considering inflation at a rate of 11% per year.
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