a machine can be purchased at $15000 The annual maintenance costs are expected to increase by $800 /year with the fist years maintenance cost of $1500. If the salvage value is neglected regardless of time of replacement using minimum attractive rate of retun of 25 % construct the equivalent uniform annual cost table and determine the suitable time of replacement.

a machine can be purchased at $15000 The annual maintenance costs are expected to increase by $800 /year with the fist years maintenance cost of $1500. If the salvage value is neglected regardless of time of replacement using minimum attractive rate of retun of 25 % construct the equivalent uniform annual cost table and determine the suitable time of replacement.

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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A new factory would require a fixed and variable production costs of 2000000000 $. It is estimated that variable costs of production will amount to 30% of the cash cost of production, and annual depreciation costs are estimated to be 8 % of the fixed and variable production. If the annual profit is going to be 900000 $ million, determine the quality percent return on the entire cost and the minimum payout period.
A project with a life of 10 has an initial fixed asset investment of $25,620, an initial NWC investment of $2,440, and an annual OCF of −$39,040. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required return is 10 percent, what is the project's equivalent annual cost, or EAC? Show equations using excel.
Based on estimates the data for 2 types of bridges with different lives are as follows. If the minimum attractive rate of return is 9%, determine which project is more desirable using Annual Cost Method & Rate of Return Method. Timber Bridge Steel Bridge First Cost Salvage Value Life in yrs Annual maintenance 500k 20k 12 60k 1.4M 100k 36 25k
Two roadway design are under consideration. Design 1A will cost $3 million to build and $100,000 per year to maintain. Design 1B will cost $3.5 million to build and $40,000 per year to maintain. Both designs are assumed to be permanent. Use an AW based rate of return equation to determine (a) the breakeven ROR, and (b) which design is preferred at a MARR of 10% per year
Consider the following alternatives below.Based on a 7% interest rate, assuming both alternatives perform the same task and there is a continuing requirement, which alternative should be selected and what is its equivalent uniform annual cost?
1. Each aiternative has a 10-year useful life and have no salvage value. If the MARR is 8%, which alternative would you select? You must use incremental analysis (incremental internal rate of return). Please show step by step calculations. R Initial Cost 15000 22000 35000 Annual Costs 3500 3100 2750 Annual Revenues 8000 9575 11500
Lesego Ltd is considering an investment in a new machine for the production of a new product, X. There are two possibilities, Machine A and Machine B. Both product X and the machine would have an expected life of five years.The following information is available:Product X Selling price $50Variable cost 32Increase in fixed overhead (excluding depreciation of the new machine) is $90,000 per year.YearSales units 1 10,0002 15,0003 20,0004 20,0005 5,000 Machine A Machine BInitial cost ($000) 550 480Residual value 50 30The company’s cost of capital is 10%,Required:Evaluate each machine, using the following methods:Accounting rate of return Payback;Net present value. Discuss the importance of capital budgeting in organisations.
Alternative X has a first cost of 36000 an annual operating cost of 6900, and a salvage value of 11025 after 13 year. Alternative Y has a first cost of 37000 an annual operating cost of 7000, and a salvage value of 16280 after 13 year. If MARR of 13% per year, approximately what is the PW of each alternative? Select one: O a. PW of X= -77518 and PW of Y= -78067 O b. PW of X= -75990 and PW of Y= -76529 O c. PW of X= -76750 and PW of Y= -77294 O d. PW of X= -78293 and PW of Y= -78848
A manufacturer of automated optical inspection devices is deciding on a project to increase the productivity of the manufacturing processes. The estimated costs for the two feasible alternatives being compared are shown below. Use the internal rate of return (IRR) method to determine which alternative should be selected if the analysis period is 8 years and the company's MARR is 4% per year. Alternative M N Initial costs $30,000 $45,000 Net annual cash flow $4,500 $7,000 Life in years 8 8 (a) IRR of base alternative = (b) IRR of incremental cash flow = (c) Choose Alternative
Solve for the rate of return and Explain
Two techniques can be used to produce expansion anchors. Technique A costs $90,000 initially and will have a $12,000 salvage value after 3 years. The operating cost with this method will be $33,000 in year 1, increasing by $2600 each year. Technique B will have a first cost of $113,000, an operating cost of $7000 in year 1, increasing by $7000 each year,and a $43,000 salvage value after its 3-year life. At an interest rate of 13% per year, which technique should be used on the basis of a present worth analysis? Notice that there are no revenues. Please work out and do not use excel, however if you use excel please show how to input everything needed down to the formula, thank you!
Find the expected EUAW from the financial data provided in the table for new equipment. Because of the uncertainty of technology being used in this equipment, it has not been possible to get the initial cost accurately. The annual benefit, however, is estimated to be $25,000 with a possible equipment life of 5 years. The salvage value is expected to be 10% of the initial cost. MARR = 8%. First Cost, $ $60,000 $80,000 $100,000 $120,000 Probability 0.25 0.35 0.30 0.10 Choices: A. $3957 B. $2977 C. $4628 D. $5157 Determine the associated risk measure in this equipment investmest in terms of standard deviation. A. $6,123 B. $4437.80 C. $8,523 D. $4,923

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