8 Help me answer the given question. Do not round off answer when solving, instead just the final answer will be rounded off. Because it fumes at room temperatures, hydrochloric acid creates a very corrosive work environment. A machine working in thatenvironment is deteriorating quickly and can be used for only one more year, at which time it will be scrapped with no salvagevalue. It was purchased 3 years ago for $88,000, and its operating cost for the next year is expected to be $52,000. A morecorrosion-resistant challenger will cost $230,000 with an operating cost of $58,000 per year. It is expected to have a $40,000 salvagevalue after its 10-year ESL. At an interest rate of 13% per year, what minimum replacement value would render the challengerattractive?The Replacement Value,(in $)

Given Challenger Cost = $230,000 Operating cost per year of challenger = $58000 Salvage value of new…

Answered: At an interest rate of 13% per year,…

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At an interest rate of 13% per year, what minimum replacement value would render the challenger

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter12: Capital Investment Decisions

Section: Chapter Questions

Problem 51P: Newmarge Products Inc. is evaluating a new design for one of its manufacturing processes. The new...

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Hydrochloric acid, which fumes at room temperatures, creates a very corrosive work environment. A mixing machine, working in this environment, is deteriorating fast and can be used for only one more year, at which time it will be scrapped. It was purchased 3 years ago for $88,000 and its operating cost for the next year is expected to be $63,000. A more corrosion-resistant challenger will cost $226,000 with an operating cost of $48,000 per year. It is expected to have a $60,000 salvage value after its 10-year ESL. At an interest rate of 15% per year, what minimum trade-in value will make the challenger economically attractive?
The Container Corporation of America is considering replacing an automatic painting machine purchased 9 years ago for $700,000. It has a market value today of $40,000. The unit costs $350,000 annually to operate and maintain. A new unit can be purchased for $800,000 and will have annual O&M costs of $120,000. If the old unit is retained, it will have no salvage value at the end of its remaining life of 10 years. The new unit, if purchased, will have a salvage value of $100,000 in 10 years. Using an EUAC measure and a MARR of 20% should the automatic painting machine be replaced if the old automatic painting machine is taken as a trade-in for its market value of $40,000? Solve, a. Use the cash flow approach (insider’s viewpoint approach). b. Use the opportunity cost approach (outsider’s view point approach).
A packaging factory is considering the replacement of some equipment. The new plan is to install equipment to produce a new can that uses less energy and less metal than the old one. Current equipment was installed 5 years ago for $100 million and can be sold for $35 million. Due to obsolescence the depreciation of this equipment results in an annual depreciation of $4 million for the next years. If you keep this equipment for one more year your operating and maintenance costs will be $65 million increasing by $3 million/year each year thereafter. The new equipment will cost $130 million, with an economic life of 8 years and a salvage value of $10 million. Its operating and maintenance costs will be $49 million. For a TMAR = 15% p.a. what new equipment should be installed? Make a recommendation about it. (Answer: The solution would be to use the current equipment for another two years and then exchange it for new equipment.
An oil refinery finds that it is necessary to treat the waste liquids from a new process before discharging them into a stream. The treatment will cost $30,000 the first year, but process improvements will allow the costs alternative, an outside company will process the wastes for the fixed price of $15,000/year throughout the 15 year period, payable at the beginning of each year. Either way, there is no need to treat the wastes after 15 years. Use the annual worth method to determine how the wastes should be processed. The company's MARR is 12%. decline by $3,000 each year. As an Click the icon to view the interest and annuity table for discrete compounding when the MARR is 12% per year. The AW of the in-house treatment is S (Round to the nearest dollar) The AW of the outside treatment is S (Round to the nearest dollar.) The processing is the most economical alternative
The Sumitomo Chemical Corporation is considering replacing a 5-year-old machine that originally cost $50,000 and can be sold for $60,000. This machine is totally depreciated. The replacement machine would cost $125,000 and have a 5-year expected life over which it would be depreciated down using the straight-line method and have no salvage value at the end of five years. The new machine would produce savings before depreciation and taxes of $45,000 per year. Assuming a 34 percent marginal tax rate and a required return of 10%, calculate The internal rate of return and the net present value. Please show work in Excel.
Cori's Dog House is considering the installation of a new computerized pressure cooker for hot dogs. The cooker will increase sales by $18,600 per year and will have variable costs of $1,700 per year. Fixed costs are $950. The system will cost $50,400 to purchase and install. This system is expected to have a 5-year life and will be depreciated to zero using straight-line depreciation and have no salvage value. The tax rate is 21 percent. Please provide a pro forma financial statement to Cash Flows from Operations for the life of the pressure cooker. PLEASE ANSWER THIS QUESTION IN EXCEL FORMULA, NOT ALGEBRAICALLY!
Denny Corporation is considering replacing a technologically obsolete machine with a new state-of-the-art numerically controlled machine. The new machine would cost $290,000 and have a tenericals controll nortunately, the new machine would have no salvage value. The new machine would cost $48,000 per year to operate and maintain but would save $89,000 per year in labor and other costs. The old machine can be sold now for scrap for $29,000. The simple rate of return on the new machine is closest to (Ignore income taxes.):
Denny Corporation is considering replacing a technologically obsolete machine with a new state-of-the-art numerically controlled machine. The new machine would cost $180,000 and would have a twelve-year useful life. Unfortunately, the new machine would have no salvage value. The new machine would cost $26, 000 per year to operate and maintain, but would save $58,000 per year in labor and other costs. The old machine can be sold now for scrap for $18,000. The simple rate of return on the new machine is closest to (Ignore income taxes.):
A small company that manufactures vibration isolation platforms is trying to decide whether it should immediately upgrade the current assemblysystem D, which is rather labor-intensive, with the more highly automated system C one year from now. Some components of the current system canbe sold now for $9000, but they will be worthless hereafter. The operating cost of the existing system is $192,000 per year. System C will cost $320,000 with a $50,000 salvage value after four years. Its operating cost will be $68,000 per year. If you are told to do a replacement analysis using an interest rate of 10% per year, which system do you recommend?
Elmdale Company has a machine that affixes labels to bottles. The machine has a book value of $80,000 and a remaining useful life of 3 years and no salvage value. A new, more efficient machine is available at a cost of $300,000 that will have a 5-year useful life with no salvage value. The new machine will lower annual variable production costs from $520,000 to $410,000.Prepare an analysis showing whether the old machine should be retained or replaced. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Retain Equipment Replace Equipment Net Income Change New machine costVariable manufacturing costsFixed manufacturing costsNet savings over 3 years $ $ $ Variable manufacturing costsNet savings over 3 yearsFixed manufacturing costsNew machine cost Net savings over 3 yearsVariable manufacturing costsNew machine costFixed manufacturing costs…
Assume you have been hired to evaluate an investment required by EPA for a waste managment system for a nearby hog operation. The system will cost $350,000 and will last 30 years but only depreciated for 10 years. Assuming straight line depreciation, the salvage value is zero for depreciation. The actual expected terminal value is $50,000 which will be received in 30 years time. The system has a $3,250 annual maintenance cost. The marginal tax rate is 28% and the after-tax cost capital is 8.25%. The production of hog will require feed at $23,000 per year and the operation will produce $60,000 in income each year. Prepare a net present cost budget for the capital investment. All answers should be rounded to two places to the right of the decimal. Item Pre-Tax Flow After-Tax Flow Years Discount Rate PV Factor Present Value Waste System -350,000 -$350,000 0 0.0825 1.00 Depr Shield 1-10 0.0825 Terminal Value 30 0.0825 Maintenance Cost 1-30 0.0825 NPV…
More Info Fund Series Amount Factor Recovery Factor Present Amount Factor Present Worth Factor Present Worth Factor Factor Worth Factor Factor ToFind A Given P To Find F To Find P Given G P/G To Find A Given G To Find F To Find A Given F To Find P To Find P Given P Given F Given A Given A F/P P/F FIA PIA A/F A/P A/G 1.0500 0.9524 1.0000 0.9524 1.0000 1.0500 0.0000 0.0000 1.1025 0.9070 2.0500 0.4878 0.3172 1.8594 0.5378 0.9070 0.4878 al 3 1.1576 0.8638 3.1525 2.7232 0.3672 2.6347 0.9675 4. 1.2155 0.8227 4.3101 3.5460 0.2320 0.2820 5.1028 1.4391 1.2763 0.7835 5.5256 4.3295 0.1810 0.2310 8.2369 1.9025 6. 1.3401 0.7462 6.8019 5.0757 0.1470 0.1970 11.9680 2.3579 1.4071 0.7107 8.1420 5.7864 0.1228 0.1728 16.2321 2.8052 8. 1.4775 0.6768 9.5491 6.4632 0.1047 0.1547 20.9700 3.2445 1.5513 0.6446 11.0266 7.1078 0.0907 0.1407 26.1268 3.6758 10 1.6289 0.6139 12.5779 7.7217 0.0795 0.1295 31.6520 4.0991 11 1.7103 0.5847 14.2068 8.3064 0.0704 0.1204 37.4988 4.5144 12 1.7959 0.5568 15.9171 8.8633…