Caine Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost $200,000 and has anestimated useful life of 8 years with zero salvage value. Management estimates that the new bottling machine will provide net annualcash flows of $34,000. Management also believes that the new bottling machine will save the company money because it is expectedto be more reliable than other machines, and thus will reduce downtime. Assume a discount rate of 9%. Click here to view the factortable.Calculate the net present value. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg(45). For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round present value answer to O decimal places,e.g. 125.)Net present value$How much would the reduction in downtime have to be worth in order for the project to be acceptable? (Round answer to O decimalplaces, e.g. 125.)$eTextbook and MediaSave for LaterAttempts: unlimitedSubmit Answer

Step 1: Introduction :-- Net present value Explanation: The present value of all future cash flows,…

Answered: Caine Bottling Corporation is…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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An auto-parts manufacturer is considering establishing an engineering computing center. This center will be equipped with three engineering workstations each of which would cost $25,000 and have a service life of five years. The expected salvage value of each workstation is practically zero. The annual operating and maintenance cost for each workstation would be $15,000. If the MARR is 15%, determine the equivalent annual cost of operating the engineering center.
A plastic injection molding machine operates 334 days a year. It is the bottleneck workstation in a process that produces plastic housed wall clocks. Industrial engineers collected data on the probability of machine breakdowns, the costs of preventive maintenance, and the cost of a breakdown. Number of Molding Machine Breakdowns per Day Probability of a breakdown 0 0.32 1 0.27 2 0.22 3 0.13 4 0.06 The cost of preventive maintenance is high due to performing it between 1 and 4 a.m. each day by two machine experts. The preventive maintenance cost is $2,030 per day including replacement parts, cleaning, and software upgrades. The cost of a breakdown of $1,940 is also high because the downstream workstations can only work until all work-in-progress inventory is completed; then the entire process must stop. What are the economics of the situation? Do not round intermediate calculations. Round your answers to the nearest cent. The expected cost of a breakdown per day is $ The manufacturing…
Southeastern Airlines's daily flight from Atlanta to Charlotte uses a Boeing 737, with all-coach seating for 120 people. In the past, the airline has priced every seat at $142 for the one-way flight. An average of 79 passengers are on each flight. The variable cost of a filled seat is $26. Aysajan Eziz, the new operations manager, has decided to try a yield revenue approach, with seats priced at $82 for early bookings and at $187 for bookings within 1 week of the flight. He estimates that the airline will sell 67 seats at the lower price and 34 at the higher price. Variable cost will not change. Total S contribution in the single price approach is $ (enter your response as a whole number). Total S contribution in the two price points approach is $ (enter your response as a whole number). Which approach is preferable to Mr. Eziz? O A. Proposed model - two price points O B. Current model - single price
In 2020, Bayer Hospital admitted 15,152 patients. In 2021, a 32% increase in admissions is expected. Currently the hospital has 375 beds and the average patient stays in the hospital 7 days. Assume the hospital operates 365 days a year (assume one patient per bed). a) How many beds were empty, on average, in 2020? b) On average, how many beds do you expect to be empty in 2021?
A company has a factory that is designed so that it is most efficient (average unit cost is minimized) when producing 15,000 units of output each month. However, it has an absolute maximum output capability of 17,250 units per month and can produce as little as 7,000 units per month without corporate headquarters shifting production to another plant. If the factory produces 10,925 units in October, what is the capacity utilization rate in October for this factory?
Estimate the cost of a 0.75 million gallon per day (MGD) induced-draft packed tower for air-stripping trihalomethanes from drinking water if the cost for a 2.9-MGD tower is $153,200. The exponent in the cost-capacity equation is 0.47. The cost of a 0.75 million gallon per day induced-draft packed tower is $
. An airline company must plan its fleet capacity and its long-term schedule of aircraft usage. For one flight segment, the average number of customers per day is 70, which represents a 65 percent utilization rate of the equipment assigned to the flight segment. If demand is expected to increase to 84 customers for this flight segment in 3 years, what capacity requirement should be planned? Assume that management deems that a capacity cushion of 25 percent is appropriate.
A small-size cargo company in Dubai has been operating since the year 2000. The total workforce comprises ten employees, out of which five are in sales, three are in operations, one is handling legal and accounts matters, and one manager is also the owner of the company. Total annual turnover is enough to run the company smoothly. Recently another director has joined who brought large investment to the company. The Board of directors has decided to expand the business in other cities and establish offices overseas in potential locations. This expansion policy will directly be linked to the new manpower needs. Therefore, the board has decided to open an HR department with one HR manager and three staff to look after HR operations. The new HR manager has noticed that the company has a very convenient way of recording the data, where all transactions are recorded on excel documents. “this may not work in the new setup with many branches around the world”, he mentioned in the BOD meeting.…
Gator Beach Marts, a chain of convenience grocery stores in the Fort Lauderdale area, has store hours that fluctuate from month to month as the tourist trade in the community varies. The utility costs for one of the company’s stores are listed below for the past six months. Month Total Hoursof Operation Total UtilityCost January 500 $ 2,120 February 600 2,400 March 750 2,850 April 450 2,050 May 400 1,750 June 350 1,650 Required:1-a. Use the high-low method to estimate the cost behavior for the store’s utility costs. Express the cost behavior in formula form (Y= a + bX).1-b. What is the variable utility cost per hour of operation?3-a. Construct an Excel spreadsheet and use the Excel commands to perform a least-squares regression. Estimate the cost behavior for the store's utility cost. Express the cost behavior in formula form.3-b. What is the variable utility cost per hour of operation?4. During July, the…
Justin Bateh is considering a new machine for his shop. The machine is expected to generate receipts as follows: $50,000 in year I, $30,000 in year 2, nothing in the next year, and $20,000 in year 4. At an interest rate of 6%, what is the present value of these receipts?
McDonalds has a drive-through window and, during peak lunch times, can handle a maximum of 85 cars per hour with one person taking orders, assembling them, and acting as cashier. The average sale per order is $12.00. A proposal has been made to add two additional workers and divide the tasks among the three. One will take orders, the second will assemble them, and the third will act as a cashier. With this system, it is estimated that 120 cars per hour can be serviced. Use productivity arguments to recommend whether or not to change the current system. Hint: Productivity = revenue/labor dollar
Show your calculations. Determine the utilization and the efficiency for each of these situations: A car wash operation processes an average of 60 cars per day. The operation has a design capacity of 100 cars per day and an effective capacity of 80 cars per day. A drive through fast food restaurant has been designed to handle 120 customers during lunchtime (12 to 2 PM) each day, but currently averages only 65 drive through customers at that time. Prior to the recession, when lines of customers were long, the restaurant actually handled a maximum of only 90 customers. Would you say that systems that have higher efficiency ratios than other systems will always have higher utilization ratios than those other systems? Explain.

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