A machine is bought at P 1,000,000. Yearly, it is maintained at a cost of about P 250,000. It can be sold at a value of P 400,000.00 after its 10-year life. What equivalent yearly sales should be made from the machine to redeem its usefulness. Money is worth 6% (Hint: Capital cost= 0).
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Subject:
Lesson: Capitalized Cost
A machine is bought at P 1,000,000. Yearly, it is maintained at a cost of about P 250,000. It can be sold at a value of P 400,000.00 after its 10-year life. What equivalent yearly sales should be made from the machine to redeem its usefulness. Money is worth 6% (Hint: Capital cost= 0).
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- Falkland, Inc., is considering the purchase of a patent that has a cost of $50,000 and an estimated revenue producing life of 4 years. Falkland has a cost of capital of 8%. The patent is expected to generate the following amounts of annual income and cash flows: A. What is the NPV of the investment? B. What happens if the required rate of return increases?A company will buy a packaging machine. Information about the machines is given below. Which of the machines should be invested according to the net present value method? Purchase price TL Annual income, TL Manufacturing cost,annual TL Manufacturing cost every 5 years TL Scrap value TL Economic life Interest rate A 5000 1800 TL for the first year and 100 TL every year increasing 400 500 3000 18 yıl %25 B 4500 1700 TL for the first year and 80 TL every year increasing 350 650 2500 18 yıl %25An equipment was purchased now at P10,000,000.00 prevailing interest rate is 10% per year. Solve the following cases capitalized cost: Answer no. 3 only Solve for case 1 if the projected maintenance cost will total P5,000,000.00 for 10 years. Use 10% as worth of money or interest rate. Solve for case 2 if the machine on item 1.1 is to be replaced every end of 10 years at 10% worth of money. Salvage cost is zero. Solve for case 3 using the above value on case 1 and 2 at 10%
- Choice A: Buy the machine Machine Cost: P700,000 Economic Life: 10 years Trade-in Value: P100,000 Operating Cost per day: P500 Choice B: Rent the machine Rent Payment: P1,500 per day Assuming that the rate of return is 18% and Choice A is to be chosen, how long in days should the machine be in use. Please explain step by step1. Use the information below for the next two questions. Leaky Pipe Inc. is considering a new machine for its largest product line. The cash flows Lastalled Purchase Price S40, 000 Roduced Cost of Materials S 6,000 per year Labor Savings S9, 000 per year locrease in Working Capital $5, 000 (for Year 0 and I only) Depreciable Life (zero salvage value) 4 years Economic Life 8 years Required Return 12% Tax Rate 40% a . What is the NPV of this machine if it does not replace any other?. b. Suppose the machine replaces another machine with the following characteristics: Book Value of Old Machine $6.000 Market Value of Old Machine $4,000 Remaining Depreciable Life of Old Machine 6years Assume the old machine was not expected to have any salvage value and compute the NPV of the New Machine.Mio is going to buy a new machine for manufacturing its product: Machine A has a first cost of P50,000; annual maintenance P6,000; life 12 years and salvage value of P2,000. Machine B has a first cost of P140,000; annual maintenance P2,500, life 36 years and salvage value P10,000. Money is worth 9% .Compute the annual cost of machine A
- 1. A machine costs $250,000 to purchase and will provide $60,000 a year in benefits. The company plans to use the machine for 12 years and then will sell the machine for scrap, receiving $15,000. The company interest rate is 10%. What is the net present worth?A machine costs P30,000 and it has an expected useful life of 10 years. The estimated annual net cash flow of the machine (revenue minus expenses) is P15,000. The interest rate is 5% per year. 1. Disregarding the revenue, what is the future value of the machine cost? 2. What is the present value of the revenue in its 10 years of useful life? Is it worth the investment compared to the machine cost? 3. What is the future value of the revenue in its 10 years of useful life? is it worth the investment compared to the future value of the machine cost? 4. Suppose that at there is a maintenance expense of P5,000 at the first year, P5,500 at the second year, P6,000 at the third year, P6,500 at the fourth year, and P7,000 at the last year. What is the present value of the maintenance expense?Company xyz will buy a carpet loom. Its purchase price is 250000 TL, its scrap value is 25000, its economic life is 10 years, and its annual net cash inflow is 87000 TL. Since the capital cost of the company is %35. Would you recommend that this machine be purchased by the company?
- A heat exchanger is needed in a chemical process. If interest is 9% compounded annually, determine which of the following heat exchangers is cheaper by comparing the capitalized costs: Exchanger A costs P22,000 with a scrap value of P1,000 and a useful life of 7 years; Exchanger B costs P28,000 with a scrap value of P1,500 and a useful life of 10 years. Capitalized cost of Exchanger A: Php Capitalized cost of Exchanger B: Php Note: Input numerical values only, do not type the units, space or comma.Answer number 4 only. You are planning to invest in a machine for your manufacturing facility. The machine costs P55,400, and it has an expected useful life of 5 years. You estimate that the machine will generate an annual net cash flow (revenue minus expenses) of P21,000. The interest rate is 5% per year. 1. Disregarding the revenue, what is the future value of the machine cost? 2. What is the present value of the revenue in its 5 years of useful life? Is it worth the investment compared to the machine cost? 3. What is the future value of the revenue in its 5 years of useful life? is it worth the investment compared to the future value of the machine cost? 4. Suppose that at there is a maintenance expense of P3,000 at the first year, P3,500 at the second year, P4,000 at the third year, P4,500 at the fourth year, and P5,000 at the last year. What is the present value of the maintenance expenseXavier Co. wants to purchase a machine for $37,400 with a four-year life and a $1,100 salvage value. Xavier requires an 8% return on investment. The expected year-end net cash flows are $12,400 in each of the four years. What is the machine's net present value? Periods Present Valueof $1 at 8% Present Value of anAnnuity of $1 at 8% 1 0.9259 0.9259 2 0.8573 1.7833 3 0.7938 2.5771 4 0.7350 3.3121