A steel fabrication company invested $900,000 in a new shearing unit. The company obtains a monthly net income of $25,000. If the company uses a minimum acceptable rate of return of 18% per year, compounded monthly, the equivalent payback period for this investment would be closest to: A. 5 years B. 4 years C. 3 years D. 2 years Formula used:
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- Caduceus Company is considering the purchase of a new piece of factory equipment that will cost $565,000 and will generate $135,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return In Excel, see Appendix C.A restaurant is considering the purchase of new tables and chairs for their dining room with an initial investment cost of $515,000, and the restaurant expects an annual net cash flow of $103,000 per year. What is the payback period?Camellia Engineering Ltd is a manufacturer of high pressure steam valves andsteam traps. Its initial investment on equipment was $50,000 and its annualoperating costs were $20,000. The revenues generated from these products were$45,000 per year. The used equipment was salvaged for $ 4,000 at the end of 5years. The minimum attractive rate of return of the company is 15% per year. a.Calculate the internal rate of return (IRR) that the company earned on theproducts. Justify your answer.b. Compute the discounted payback period for the above investment at MARRof 15% per year.
- A new process for manufacturing laser levels will have a first cost of $40,000 with annual cost o f$17,000. Extra income associated with the new process is expected to be $22,000 per year. Determine the payback period at:. (A) i= 0% (B) i= 10% per yearDuraTech Manufacturing is evaluating a process improvement project. The estimated receipts and disbursements associated with the project are shown below. MARR is 6%/year. Solve, a. What is the annual worth of this investment? b. What is the decision rule for judging the attractiveness of investments based on annual worth? c. Should DuraTech implement the proposed process improvement?A certain investment costs $3400. The investment produces income of $1500 at the end of the first year and $2500 at the end of the second year. Find the annual return on the investment.
- Elearning Company would like to develop its technology process by purchasing a production equipment for 11.2 million HUF. The equipment is expected to have a useful life of 5 years, and will be sold at the end of 5 years for 2.5 million HUF. The annual operating costs are predicted to be 1.5 million HUF. The estimated revenues are in yearly sequence ( HUF) 5.2 million; 5.5 million; 6.1million; 7 million; 7.5 million. The company's required rate of return is 12 percent. You can see the way of the economic efficiency calculation in the table. Some of the data are missing. Enter the missing data in the table. Perform further calculations and explain the results obtained. Data Year O Year 1 Year 2 Year 3 Year 4 Year 5 Pt (M HUF) 5.2 5.5 6.1 7 kt (M HUF) 1.5 1.5 1.5 1.5 1.5 Et (M HUF) 11.2 CFt (M HUF) -11.2 3.7 4 4.6 5.5 8.5 Dt 1 0.89286 0.79719 0.63552 0.56743 CFt*Dt (M HUF) -11.20 3.30 3.19 3.27 4.82 ECF**Dt (M HUF) -11.20 -7.90 -4.71 -1.43 2.06 The NPV of the project is million HUF.A new garbage truck can be purchased for $64,000. Its expected useful life is six years at which time its market value will be zero. Annual receipts is expected to be $20,000 with expenses of $2,000 per year over the six-year study period. The company's MARR is 18%. a. What is the ROI? b. Determine if this is a good investment using Net Present Worth(NPW) method. What is its Net Annual Worth? с. d. Using IRR method, is this investment acceptable?A company can earn 8.5% on amount deposited now. For an IT project, the company predicts to have these components costs: Yearl $25,000 Cost associated with year 1 reduced by 21% Cost associated with year augmented by 3% Year2 Year6 How much money should the company deposit now. At the end of each year, try to analyze the balance (the available amount of money against the inflow).
- Carson, Inc. invests in cost saving technology. Based on the data below, the annual cost savings would be closest to: Investment required now $10,000 Net present value $1,300 Annual cost savings ? Discount rate 14% Life of the project 8 yearsExample: A new process for a manufacturing process will have a first cost of $55,000 with annual costs of $38,000. Extra income associated with the new process is expected to be $62,000 per year. What is the payback period at j = 12% per year? a) 2.29 b) 3.00 c) 6.00 d) 2.14A poultry business project requires an initial investment of $75 000. The business generates the following incomes at the end of the given times.6 months : $20 00012 months : $25 00018 months : $40 000The expected return on this project is 10% per annum. Find the net present value of this project.