Assume that a company is choosing between two alternatives-keep an existing machine or replace it with a new machine. The costs associated with thetwo alternatives are summarized as follows:Multiple ChoicePurchase cost (new)Remaining book valueOverhaul needed nowAnnual cash operating costsSalvage value (now)Salvage value (eight years from now)$ 6,000Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided.If the company overhauls its existing machine, it will be usable for eight more years. If it buys the new machine, it will be used for eight years. Assuming adiscount rate of 12%, what is the net present value of the cash flows associated with keeping the existing machine?$(50,760)$(56,760)ExistingMachine$ 15,000$ 6,000$ 5,000$ 10,500$ 2,000$ 1,000$(71,760)NewMachine$ 22,000$ 7,000 Remaining book valueOverhaul needed nowAnnual cash operating costsSalvage value (now)Salvage value (eight years from now)Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables proded.If the company overhauls its existing machine, it will be usable for eight more years. If it buys the new machine, it will be usediscount rate of 12%, what is the net present value of the cash flows associated with keeping the existing machine?Multiple Choice$(50,760)$(56,760)$(71,760)$ 6,000$ 5,000$ 10,500$ 2,000$ 1,000$(54,760)$ 7,000$ 6,000

It represents the amount of profitability in absolute dollar terms generated by the project after…

Answered: Assume that a company is choosing…

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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Subject: accounting
A cost analysis is to be made to determine what, if anything, should be done in a situation offering three "do-something" and one "do-nothing" alternatives. Estimates of the costs and benefits are as follows: End-of- Uniform Useful- Life Benefit Salvage (years) Value Useful First Alternatives Cost Annual Life -$500 $135 -600 100 250 5 -700 100 180 10 4 Use Present Worth Analysis with the Least Common Multiple Method to select the best alternative. Use MARR=6%. (Note: You MUST describe your answers with conversion factor notations and you DON'T NEED TO calculate the values of PW for supporting a decision. Simply describe your selection criterion with PW expressions.) 1.
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An engineering analysis by net present worth (NPW) is to be made for the purchase of two devices, A and B. If an 8% interest rate is used, recommend the device to be purchased.
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Assume that a company is choosing between two alternatives-lease a piece of equipment for five years or buy a piece of equipment and sell it in five years. The costs associated with the two alternatives are summarized as follows: Lease Buy $ 60,000 $ 6,000 Purchase cost of equipment Annual operating costs Immediate deposit Annual lease payments Salvage value (5 years from now) $ 8,000 Click here to view Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using the tables provided. If the company chooses the lease option, it will have to pay an immediate deposit of $25,000 to cover any future damages to the equipment. The deposit is refundable at the end of the lease term. The annual lease payments are made at the end of each year. Based on a net present value analysis with a discount rate of 12%, what is the financial advantage (disadvantage) of buying the equipment rather than leasing it? $ 25,000 $ 18,000
Cadet Inc. is considering the purchase of new equipment that will automate production and thus reduce labor costs. Cadet made the following estimates related to the new machinery: (Click the icon to view the information.) Present Value of $1 table Present Value of Annuity of $1 table Future Value of $1 table Future Value of Annuity of $1 table Read the requirements. C Requirement 1. Calculate (a) net present value, (b) payback period, (c) discounted payback period, and (d) internal rate of return. a. Net present value. (Round intermediary calculations to the nearest whole dollar. Use factors to three decimal places, X.XXX, and use a minus sign or parentheses for a negative net present value. Enter the net present value of the investment rounded to the nearest whole dollar.) The net present value is Requirements 1. Calculate (a) net present value, (b) payback period, (c) discounted payback period, and (d) internal rate of return. 2. Compare and contrast the capital budgeting methods in…
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Provide step by step manual solution, given, and depreciation table for below mentioned problem. Make sure yet that your answer is the same as the given answer before sending your solution. An asset costing P50,000 has a life expectancy of 6 years and an estimated salvage value of P8,000. Calculate the depreciation charge at the end of the fourth period using fixed-percentage method. Answer. P5,263.87
Its required to select one of the two machines, if you know that the firms MARR-12% and if the costs are shown below: Project A Project B Initial cost, $ 7650 12900 Maintenance cost, S/year 1200 900 Salvage value, $ 2000 Economic life, year 4 Compare the two-alternative using: 1-Equavlent Annual worth comparison. 2- Present worth comparison

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