A newspaper is considering buying locked vending machines to replace open newspaper racks in the downtown area. The vending machines cost $75 each. It is expected that the annual revenue from selling the same quantity of newspapers will increase $12 per vending machine. The useful life of the vending machine is unknown. (a) To determine the sensitivity of rate of return to useful life, prepare a graph for rate of return versus useful life for lives up to 10 years. (b) If the newspaper requires a 15% rate of return, what minimum useful life must it obtain from the vending machines? (c) What would be the rate of return if the vending machines were to last indefinitely?

Q: The plant manager at a company would like to perform an analysis for a new $250,000 machine. If she…

A: Payback period method is a traditional method used in capital budgeting decisions which is used to…

Q: A cannery is considering installing an automatic case-sealing machine to replace current hand…

A: Initial Investment = $5000Monthly Savings = $500Number of Months in a year = 4 (for the 4 months…

Q: What is the simple payback on this improvement? (Ignore Discount Rate) A silicon wafer manufacturing…

A: Present Value is the sum of future cashflows discounted at appropriate discounting rate

Q: Suppose that annual income from a rental property is expected to start at $1,270 per year and…

A: NPV is the difference between present value of cash flow and initial investment and it must be above…

Q: PARC Co. has asked you to recommend a new nutcracker machine. After months of hard research, you…

A: Capital Budgeting techniques are used by firms to understand the feasibility of the project. A…

Q: he Umbrella company is planning to purchase a substance known as Serum Serum A would cost $45,000…

A: Internal rate of return is breakeven rate at which  net present value is zero that means the present…

Q: For a MARR of 12%, which heating system should be installed?

A: To determine which heating system has to be installed we determine the NPV of each alternative.  NPV…

Q: new machine that will check f tal revenues, including cost sav There is no salvage value. Wha

A: Accounting rate of return is the simple method capital budgeting in which annual profit is divided…

Q: It will cost $4,500 to acquire a small ice cream cart. Cart sales are expected to be $3,700 a year…

A: Payback period is the period required to recover initial investment of the project.The payback…

Q: Need answers ASAP... A $2500 computer system can be leased for $79 per month for 3 years. After 3…

A: Monthly Interest rate = r Present Value (PV) = $2,500 Monthly lease payment = $79 Time Period = 3…

Q: Assume you have a flower shop and you bought a delivery van for $37,000. You expect the van to…

A: DEPRECIATION EXPENSEDepreciation means gradual decrease in value of assets due to normal wear and…

Q: A tree cutting business has an insurance policy to cover any damages caused during the tree cutting…

A: Given: Annual premium =$1500Covers in damages =$500000Probability of damage=0.002

Q: Suppose you are a financial manager at a car rental company. The company recently purchased a batch…

A: The break even point rental would be -   Break even point rental  ( after tax )=Cost of asset - PV…

Q: You are asked to determine whether to replace a machine that was purchased 5 years ago for $10,000…

A: The decisions relating to change in capital assets are the decisions relating to capital budgeting…

Q: Ayayai's Lawn Service needs to purchase a new lawnmower costing $8,476 to replace an old lawnmower…

A:

Q: university's college of engineering would like to determine how much it will cost to keep its…

A: Cost of computer=$100000Period=n=5yearsAnnual decrease=g=-2%Required rate=10%Required is to…

Q: A university's college of engineering would like to determine how much it will cost to keep its…

A:

Q: Suppose you are in business and you buy a new machine for $40,000. After paying all other expenses,…

A: We need to compute the rate of return earned by the machine. Machine should be bought if rate of…

Q: Turner Printing is looking to invest in a printer, which costs $60,000. Turner expects a 15% rate of…

A: Accounting Rate of Return (ARR) = Expected annual incremental income/ Initial Investment

Q: Henrie's Drapery Service is investigating the purchase of a new machine for cleaning and blocking…

A: IRR is the rate of return on the investment.It is the rate of return where NPV = 0If the cost of…

Q: A businessman bought a used building and found that the roof insulation was insufficient. He…

A: To recover the cost is the first priority of every investment. So cost should be equal or less than…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.