A local cleaning services company has purchased equipment costing $200,000 with an estimated lifetime of 10 years using straight-line depreciation. Additional fixed costs per year are $120,000. Variable costs per cleaning service are $50, and the price per unit averages $150. What will the annual profit be if the company services 600 customers annually?
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- Gardner Denver Company is considering the purchase of a new piece of factory equipment that will cost $420,000 and will generate $95,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further Instructions on internal rate of return in Excel, see Appendix C.A local pest control company has purchased equipment costing $150,000 with an estimated lifetime of 7.5 years using straight line depreciation. Additional fixed costs per year are $100,000. Variable costs per pest control service are $40 and the price per unit averages $125. What will annual profit be if the company services 475 customers annually?For a new punch press. Company A charges $250,000 to deliver and install it. Company A has estimated that the machine will have operating and maintenance (O & M) costs of $4000 a year. You estimate an annual benefit of $89,000. Company B charges $205,000 to deliver and install the device. Company B has estimated O & M of the press at $4300 a year. You estimate an annual benefit of $86,000. Both machines will last 5 years and can be sold for $15,000. Use an interest rate of 12%. Which machine should your company buy?
- Nancy’s Notions pays a delivery firm to distribute its products in the metro area. Shipping costs are $30,000 per year. Nancy can buy a used truck for $10,000 that will be adequate for the next 3 years. Operating and maintenance costs are estimated to be $25,000 per year. At the end of 3 years, the used truck will have an estimated salvage value of $3,000. Nancy’s MARR is 24%/yr. Solve, a. What is the internal rate of return of this investment? b. What is the decision rule for judging the attractiveness of investments based on internal rate of return? c. Should Nancy buy the truck?Nancy’s Notions pays a delivery firm to distribute its products in the metro area. Delivery costs are $30,000 per year. Nancy can buy a used truck for $10,000 that will be adequate for the next 3 years. Operating and maintenance costs are estimated to be $25,000 per year. At the end of 3 years, the used truck will have an estimated salvage value of $3,000. Nancy’s MARR is 24%/year. Solve, a. What is the annual worth of this investment? b. What is the decision rule for judging the attractiveness of investments based on annual worth? c. Should Nancy buy the truck?A service center has installed a new computer costing 1.6 million dollars. The system is expected to serve for 8 years and straight-line depreciation is acceptable. There are additional fixed costs of $300,000 per year. The service repair charges a flat fee of $30 per customer. Variable costs are $20. What will profit be if annual volume is 75,000 units? Question 1 options: $1,000,000.00 $500,000.00 -$250,000.00 $250,000.00
- You are considering two types of machines fora manufacturing process.◼◼ Machine A has a first cost of $75,200, and itssalvage value at the end of six years of estimatedservice life is $21,000. The operating costs ofthis machine are estimated to be $6,800 per year.Extra income taxes are estimated at $2,400 peryear.◼◼ Machine B has a first cost of $44,000, and itssalvage value at the end of six years’ service isestimated to be negligible. The annual operatingcosts will be $11,500.Compare these two mutually exclusive alternativesby the present-worth method at i = 13%Please help me i will surely like please make sure its correctA company sells Gizmos to consumers at a price of $90 per unit. The costs to produce Gizmos is $38 per unit. The company will sell 14,000 Gizmos to consumers each year. The fixed costs incurred each year will be $180,000. There is an initial investment to produce the goods of $3,800,000 which will be depreciated straight line over 11 year life of the investment to a salvage value of $0. The opportunity cost of capital is 9% and the tax rate is 31%. A. What is operating cash flow each year? B. Using an operating cash flow of 485, 210.91 each year, what is the NPV of this project? C. Given a net present value of $-498, 047.3, should the company accept or reject this project? D. Find the net present value break-even level of units sold. Round your answer to the nearest whole unit
- A company is planning to purchase a machine that will cost 240,000, have a six-year life, and be depreciated over a six-year period with no salvage value. The company expects to sell the machine's output of 30,000 units evenly throughout each year. A projected income statement for each year of the asset's life appears below. What is the accounting rate of return for this machine? Sales Costs: 900,000 Manufacturing 520,000 Depreciation on machine 40,000 Selling and administrative expenses 300,000 (860,000) Income before taxes 40,000 Income tax (25%) (10,000) Net Income 30,000 Choices: 4% 8% 16.7% 25% 12.5%Nature’s Way Inc. is planning to invest in new manufacturing equipment to make a new garden tool. The garden tool is expected to generate additional annual sales of 9,100 units at $48 each. The new manufacturing equipment will cost $177,400 and is expected to have a 10-year life and $13,600 residual value. Selling expenses related to the new product are expected to be 5% of sales revenue. The cost to manufacture the product includes the following on a per-unit basis: Direct labor $8.2 Direct materials 26.7 Fixed factory overhead-depreciation 1.8 Variable factory overhead 4.1 Total $40.8 Determine the net cash flows for the first year of the project, Years 2–9, and for the last year of the project. Use the minus sign to indicate cash outflows. Do not round your intermediate calculations but, if required, round your final answer to the nearest dollar. Nature’s Way Inc. Net Cash Flows Year 1 Years 2-9 Last Year Initial investment Operating cash…Winthrop Company has an opportunity to manufacture and sell a new product for a five-year period. To pursue this opportunity, the company would need to purchase a plece of equipment for $130,000. The equipment would have a useful life of five years and a $10,000 salvage value. The CCA rate for the equipment is 30%. After careful study. Winthrop estimated the following annual costs and revenues for the new product: Sales revenues: Variable expenses Fixed expenses $250,000 $130,000 $ 70,000 The company's tax rate is 30% and its after-tax cost of capital is 10%. Required: 1. Compute the net present value of the project. (Hint Use Microsoft Excel to calculate the discount factor(s).) (Do not round intermediate calculations and PV factor. Round the final answers to the nearest whole dollar. Negative value should be indicated with minus sign.) 2. Would you recommend that the project be undertaken? 1. Net present value 2 Would you recommend that the project be undertaken?
