A piece of labor-saving equipment has just come onto the market that Mitsui Electronics, Limited, could use to reduce costs in one ofits plants in Japan. Relevant data relating to the equipment follow:Purchase cost of the equipment.Annual cost savings that will beprovided by the equipmentLife of the equipmentRequired:1a. Compute the payback period for the equipment.1b. If the company requires a payback period of four years or less, would the equipment be purchased?2a. Compute the simple rate of return on the equipment. Use straight-line depreciation based on the equipment's useful life.2b. Would the equipment be purchased if the company's required rate of return is 15%?Req 1AComplete this question by entering your answers in the tabs below.Req 1B$ 522,000$90,000Req 2AYears10 yearsReq 2BCompute the payback period for the equipment. (Round your answer to 1 decimal place.)Payback Period< Req 1AReq 1B >

Payback period is defined as the number of years required to recover the original cash investment.…

Answered: A piece of labor-saving equipment has…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Assume that a company is considering purchasing a machine for $100,000 that will have a seven-year useful life and no salvage value. The machine will lower operating costs by $18,000 per year. The company also expects this investment to provide qualitative benefits that it is struggling to incorporate into its financial analysis. Assuming the company's required rate of return is 17% and the net present value of the investment before considering the qualitative benefits is $(29,404), the minimum dollar value per year that must be provided by the machine's qualitative benefits to justify the $100,000 investment is closest to: Multiple Choice O O о O $7,787. $8,247. $7,497. $8,067.
3- Please solve this question in detail.
1. Marginal Cost-Benefit Analysis As a financial analyst for Longview Products Company, you have been asked to evaluate a proposal for new, more efficient manufacturing equipment. The existing equipment will produce benefits over the next five years of $780,000 in today's dollars. The proposed new equipment will produce benefits of $970,000 in today's dollars over the same period. The installed cost of the new equipment is $300,000; the old equipment can be sold for $130,000. Apply marginal cost-benefit analysis to determine: a. The marginal benefits of the new equipment b. The marginal costs of the new equipment c. The net benefit of the new equipment d. Based on your calculations, what do you recommend? Why? e. What factors other than the costs and benefits should be considered before the final decision is made? 2. Interest verens Dividend Exnence
A shelve manufacturer is developing a plan for the following two years. The question iswhether to lease a large workshop space with highproduction capacity or two workshop spaces with a smaller capacity. The initial cost to lease a large workshop space is equal tothe total cost of leasing two smaller ones. If the large workshop space is leased and customer demand is high, then NPV is $8,500,000 annually. If the large workshop is leased and customer demand is low, then NPV is$4,500,000. If two small workshops are leased and demand is low, the total NPV is $6,500,000 but if they experience high demand, the total NPV of two small offices will be $8,000,000.Some studies have been done on market dynamic and the market expert suggested that the likelihood of high demand is 0.7.Use the above information to determine which option returns the best NPV outcome in thetwo-year period.The rate of return is 0.1.
Yıldız Processing Technologies Company wants to buy lathe in order to meet their increasing production needs. As a result of the studies, the data in the table below were found. Based on these data, what will be future value (FV) of the annual operating expense of alternative A? For Alternative A; Purchase Cost= 10000 Annual Operating Expense= 3000 Scrap Value= 2000 Economic Life= 4 Capital Cost = 10%
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
6. The Imperial Chemical Company is considering purchasing a chemical analysis machine worth $13,000. Although the purchase of this machine will not produce any increase in sales revenues, it will result in a reduction of labour costs. In order to operate the machine properly, it must be calibrated each year. The machine has an expected life of 6 years, after which it will have no salvage value. The following table summarizes the annual savings in labour cost and the annual maintenance costs in calibration over 6 years: Net Cash Flow ($) Costs ($) Year (n) 0 Savings ($) 13,000 -13,000 1 2,300 6,000 3,700 2 2,300 7,000 4,700 3 2,300 9,000 6,700 4 2,300 9,000 6,700 5 2,300 9,000 6,700 6 2,300 9,000 6,700 Find the internal rate of return for this project. [6]
1. Prepare a contribution format income statement that shows the expected net operating income each year from the franchise outlet. 2-a. Compute the simple rate of return promised by the outlet. 2-b. If Mr. Swanson requires a simple rate of return of at least 18%, should he acquire the franchise? 3-a. Compute the payback period on the outlet. 3-b. If Mr. Swanson wants a payback of two years or less, will he acquire the franchise?
Thank you for checking.
A company received from a dealer who wishes to offer a new generator to power their industrial hoist for the replacement of their existing unit. The company wants to know how much they could afford to pay for another unit for the same purpose if the money is worth 10%. Data as follows:

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