A new drill press is being considered to purchased. The estimated first cost is Php 200,000. The net annual income is Php 75,000 the first year, which decreases by Php 12,500 each year thereafter. After 5 years, the press can be sold for Php 25,000. Should this new drill press be considered if the company uses an MARR of 10%? Use the following method to support your recommendation; PW and IRR

A new drill press is being considered to purchased. The estimated first cost is Php 200,000. The net annual income is Php 75,000 the first year, which decreases by Php 12,500 each year thereafter. After 5 years, the press can be sold for Php 25,000. Should this new drill press be considered if the company uses an MARR of 10%? Use the following method to support your recommendation; PW and IRR

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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Choose the best option in terms of which sets of workers and equipment should be chosen. The project is expected to last in 300 days. Show complete solution Option A. 4 workers with one having ₱ 750 daily rate while the rest with ₱500, To buy equipment with original cost of ₱50 000 and salvage value of ₱10 00 Option B. 3 workers with two having ₱ 750 daily rate while the rest with ₱500, To buy equipment with original cost of ₱20 000 and salvage value of ₱5 000
Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $491,000 cost with an expected four-year life and a $20,000 salvage value. Additional annual information for this new product line follows. (PV of $1. EV of $1. PVA of $1, and EVA of $1) (Use appropriate factor(s) from the tables provided.) Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Required: 1. Determine income and net cash flow for each year of this machine's life. 2. Compute this machine's payback period, assuming that cash flows occur evenly throughout each year. 3. Compute net present value for this machine using a discount rate of 7%. $ 1,990,000 1,509,000 117,750 162,000 Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute net present value…
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.
Denger
Two altemnative machines will produce the same product, but one is capable of higher-quality work, which can be expected to return greater revenue. The following are relevant data. Determine which is the better alternative, assuming repeatability and using SL depreciation, an income-tax rate of 25%, and an after-tax MARR of 10%. Capital investment Life Machine A $20,000 12 years $3,500 Calculate the AW value for the Machine A. AWA (10%) = $(Round to the nearest dollar.) Terminal BV (and MV) Annual receipts Annual expenses Click the icon to view the interest and annuity table for discrete compounding when the MARR is 10% per year. Machine B $34,000 9 years $2,000 $144,000 $142,000 $190,000 $163,000
5) Company is considering about buying an equipment. This equipment needs 100.000 $ initial investment, produces 30.000 $ revenue for 5 years and 10.000 $ salvage value at the end of year 5. a) Find the rate of return (ROR) on this investment. b) What will be the decision If MARR is 15% ?
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!
Salty Nuts, Inc. must buy a new nut-shelling machine. The industrial engineer has collected the following information concerning the apparent best alternative. Calculate the net future worth of the alternative if the MARR is 6%.
A new machine can be purchased for $50,000. Its expected useful life is seven years, with a salvage value of $5,000. Annual revenues will be $22,000 per year and annual expenses will be 8,000 per year, over the seven-year study period. If the MARR is 10%, determine whether the offer should e accepted. O a. Acceptable and its AW = $4257 O b. Not acceptable and its AW = $2,345 O. Acceptable, and its AW = $5067 O d. Not acceptable and its AW = -$3,281
You are building a new facility and are trying to determine which vendor you are going to use to install new windows. You get quotes from two vendors-Vendor A and Vendor B. The useful life of the windows is 9.1 years and the MARR is 14%. The annual worth from the quotes are given below. What should you do? Vendor A B AW Save for Later -$6300 -$3200 O Purchase windows from Vendor B. O Purchase windows from Vendor A O Do nothing. Attempts: 0 of 1 used Sand
A marketing company intends to 0 distribute a new product. It is expected to produce net returns of $17,000 per year for the first four yoars and $13,000 per year for the following throe yoars Tha faciltios roquirodto distribute the product will cost $70,000 with a disposal value of $9,000 after seven years. The facilities will require a major facelift costing $10,000 each after three years and after five years. If the companyrequires a return on investment of 10%, should the company distribute the new product?
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