Required informationAn electric switch manufacturing company is trying to decide between three different assembly methods. Method A hasan estimated first cost of $45,000, an annual operating cost (AOC) of $6,000, and a service life of 2 years. Method B willcost $85,000 to buy and will have an AOC of $3,000 over its 4-year service life. Method C costs $145,000 initially with anAOC of $5,500 over its 8-year life. Methods A and B will have no salvage value, but Method C will have equipment worth11% of its first cost.Perform a present worth analysis to select the method at /= 14% per year.The present worth of method A is $The present worth of method B is $The present worth of method C is $Method (Click to select) is selected.A

NPV is also known as Net Present Value.. It is a capital budgeting technique which helps in decision…

Answered: An electric switch manufacturing…

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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Please help me i will surely like please make sure its correct
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You are evaluating a project for The Farstroke golf club, guaranteed to correct that nasty slice. You estimate the sales price of The Farstroke to be $450 per unit and sales volume to be 1,200 units in year 1; 1,325 units in year 2; and 1,000 units in year 3. The project has a 3-year life. Variable costs amount to $250 per unit and fixed costs are $100,000 per year. The project requires an initial investment of $150,000 in assets, which can be depreciated using bonus depreciation. The actual market value of these assets at the end of year 3 is expected to be $30,000. NWC requirements at the beginning of each year will be approximately 20 percent of the projected sales during the coming year. The tax rate is 21 percent and the required return on the project is 10 percent. What is the operating cash flow for the project in year 2? Note: Enter your answer as a whole number. Operating cash flow
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