A piece of machinery is projected to provide an income of 125, 000 5000dollars per year with f in I (t) machine is expected to last 12 years. Determine the maximum price that can be paid for the machine when purchased new years. The %3D - assuming you could receive 6% return on the money if you chose to invest the money instead of purchasing the equipment.

A piece of machinery is projected to provide an income of 125, 000 5000dollars per year with f in I (t) machine is expected to last 12 years. Determine the maximum price that can be paid for the machine when purchased new years. The %3D - assuming you could receive 6% return on the money if you chose to invest the money instead of purchasing the equipment.

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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ROR Using Present Worth, Future Worth or Annual Worth: An investment of $20000 in a certain machine will generate income of $7000 per year for 3 years, at which time the machine can be sold for $8000. If the company's MARR is 15% per year, should it buy the machine?
Elijah Enterprises will need to upgrade the computer system in 4 years. They anticipate the upgrade to cost $105,300. If the discount rate is 13%, what will be the required yearly investment needed to obtain the money for the upgrade?Round your (1+R)^n value to 2 decimal places and use that number for your final amount required rounded to the nearest dollar. Future Value / (1+R)^n = Amount Required / = What would be required if the discount rate was 8%? Future Value / (1+R)^n = Amount Required / =
Elijah Enterprises will need to upgrade the computer system in 5 years. They anticipate the upgrade to cost $98,900. If the discount rate is 15%, what will be the required yearly investment needed to obtain the money for the upgrade?Round your (1+R)^n value to 2 decimal places and use that number for your final amount required rounded to the nearest dollar.
Answer using excel: Machine A costs $316 and produces a profit of $106 at the end of each year for 7 years, while Machine B costs $128 and produces a profit of $71 at the end of each year for 4 years. Assuming the operation continues indefinitely and the cost of capital is 13%. Calculate equivalent annual value (EAV) to determine the better option. Enter EAV for Machine A below.
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…
Suppose you wish to purchase a factory that will yield an annual return of $12,000 for 12 years, after which the factory will have no value. You want to earn 8.25% annually on your investment and also set up a sinking fund to replace the purchase price. If money is placed in the fund at the end of each year and earns 4.2% compounded annually, how much should you pay for the factory? a) $81,921 b) $81,487 C)O $80,487 $80,921 e) O $82,487 Boş bırak Cevap Listesi KÖnceki 2/12 Sonraki> Карat
Calculate the equivalent future amount in year 4 that a company is paying for the dozer at 4% per year if the price of the price of the bulldozer now $100,000 (Draw the cash flow diagram) e
Pendleton Products has a project requiring an initial cash investment of $3,100. The project is expected to return $1,000 each period for the next 5 periods, and it has a discount rate of 4%.1. Determine how long it will take, if at all, for the project to have a positive payback.Present value formula:
Elijah Enterprises will need to upgrade the computer system in 6 years. They anticipate the upgrade to cost $95,300. If the discount rate is 15%, what will be the required yearly investment needed to obtain the money for the upgrade?Round your (1+R)^n value to 2 decimal places and use that number for your final amount required rounded to the nearest dollar. Future Value / (1+R)^n = Amount Required / = What would be required if the discount rate was 8%? Future Value / (1+R)^n = Amount Required / =
Given the initial investment in a factory processing equipment as Ghc500,037. Let the opportunity cost of capital for the industry be 10% p.a. Assuming that the equipment is capable of generating an after-tax returns of Ghc115,000 for the first 5 years and Ghc65000 for the 6 year and Ghe53400 for the 7th year. a. Find the Net Present Value (NPV) b. Detemine the Internal Rate of Return c. Identify three ways in which the Net Present value is superior to the Internal Rate of return as investment criteria
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The development requires investments of $100,000 today, $300,000 in 1 year from today and $200,000 in 2 years from today. Net returns for the project are expected to be $90,000 at the end of year over the next 15 years. If the company requires a rate of return of 12% compounded annually-find the NPV of the project.

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