A machine worth Php50,000 is expected to last for 3 years. During its operation, a maintenance cost of Php1,000 is needed after the 1st year of operation and Php2,000 at the end of the 2nd year. What present amount of money is required to operate the machine, if money is worth 16% compounded quarterly?

A machine worth Php50,000 is expected to last for 3 years. During its operation, a maintenance cost of Php1,000 is needed after the 1st year of operation and Php2,000 at the end of the 2nd year. What present amount of money is required to operate the machine, if money is worth 16% compounded quarterly?

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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You have an option of either buying a new machine for R2 million or employing 4 people to do the same job at the annual wage of R100,000 per person per year. Assume the following:• Equipment maintenance is 2% of the capital cost per year, the discount rate, equivalent to your working average cost of capital (WACC), is 16% and the project duration is 10 years• Salaries are paid at the end of the year, as from the end of year one.Calculate the following:a. The Annual Worth (AW) of both optionsb. Which option will be better for you? Why?c. Do a sensitivity analysis showing the variation in the AW of both options (separately) with ±25% changes in WACC, capital cost (option 1 only) and number of employees (option 2 only). Draw two separate graphs showing the relationships between the variables.d. Assume that wages are rising; at what salary per employee is the two options equivalent?e. Now assume that WACC is falling; at what value of WACC are the two scenarios equivalent (use base case…
I have purchased a machine worth P1,680,676.00. And it needs maintenance every 6 months starting from its purchased date for the first 10 years of its useful life. The maintenance cost is equivalent to the 2% of the total machine cost. How much money should be prepare today to finance the requirement if the interest rate is 0.10 compounded quarterly?
Equipment A has a cost of Rs.150.000 and net cash flow of Rs.40,000 per year for six years. A substitute equipment B would cost Rs.100,000 and generate net cash flow of Rs.28,000 per year for six years. The required rate of return for both the equipments is 10 percent. Calculate the IRR and NPV for the equipments. Which equipment should be accepted and why?
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The cost of a special purpose equipment will increase at the rate of 10% per year. If the cost for the first year is $10,000, what is the present worth of the costs for a 3-year time period at a MARR of 12% per year compounded annually? Your Answer:
The operating and maintenance expenses for a mining machine are expected to be $11000 in the first year and increase by $700 per year during the 25-year life of the machine. What uniform series of payments would cover these expenses over the life of the machine? Interest is 10%/year compounded annually. $4
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The engineers at a design firm have been tapped by an amusement park to design a water sportsride. The construction of the ride costs P800,000 and will last 6 years. The maintenance of the ridewill commence after a year of construction and will cost P17,000, increasing 11% per yearthereafter. The interest is 8% annually. Determine:(a) Total present worth of the construction and maintenance cost(b) Construct the equivalent cash flow diagram
₱50000 is invested in a machine, in which it has an annual total cost of ₱3000 and a salvage value of ₱4000 at the end of 10 years. Find the equivalent uniform annual cost of this cycle. Money is worth 6%
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The replacement of a digital printing machine is proposed within a year, the price of said machine is $ 350,000.00. It has been decided within the company, to deposit a monthly saving in an investment that pays 12% per annum capitalizable monthly to get the amount of the cost of the machine at the end of the year, with this information answer the following questions: a). What monthly savings must be deposited to get the capital required for the purchase of the machine? b). Considering the same information over a period of 2 years to get the capital, how much should the monthly deposits be? c). Considering the same information: a discount of $ 75,000.00 pesos is obtained if we make the payment for the machine at 6 months, how much should the six monthly payments be to get said discount?

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