company is considering buying a CNC machine. In today's dollars, it is estimated that the maintenance costs for the machine (paid at the end of each year) will be $29,000, $31,00 , respectively. The general inflation rate (7) is estimated to be 6% per year, and the company will receive 14% return (interest) per year on its invested funds during the inflationary maintenance expenses in equivalent equal payments (in actual dollars) at the end of each of the five years. Find the amount of the company's payments. he amount of the company's payments is $thousand. (Round to the nearest thousand.)

company is considering buying a CNC machine. In today's dollars, it is estimated that the maintenance costs for the machine (paid at the end of each year) will be $29,000, $31,00 , respectively. The general inflation rate (7) is estimated to be 6% per year, and the company will receive 14% return (interest) per year on its invested funds during the inflationary maintenance expenses in equivalent equal payments (in actual dollars) at the end of each of the five years. Find the amount of the company's payments. he amount of the company's payments is $thousand. (Round to the nearest thousand.)

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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A company is considering the purchase of a new machine for $58,000. Management predicts that the machine can produce sales of $17,000 each year for the next 10 years. Expenses are expected to include direct materials, direct labor, and factory overhead totaling $7,000 per year including depreciation of $5,000 per year. The company's tax rate is 40%. What is the payback period for the new machine? a. 3.41 years. b. 6.44 years. c. 5.27 years. d. 11.60 years. e. 32.22 years. Carmel Corporation is considering the purchase of a machine costing $54,000 with a 7-year useful life and no salvage value. Carmel uses straight-line depreciation and assumes that the annual cash inflow from the machine will be received uniformly throughout each year. In calculating the accounting rate of return, what is Carmel's average investment? a. $27,000. b. $30,857. c. $54,000. d. $8,816. e. $7,714.
The following material costs are anticipated over a 5-year period: $9,000, $11,000, $14,000, $18,000, and $23,000. It is estimated that a 4% inflation rate will apply over the time period in question. The material costs given above are expressed in then-current dollars. The time value of money, excluding inflation, is estimated to be 7%. Determine the present worth equivalent for material cost using the following: a. Then-current costs. b. Constant-worth costs.
The optical products division of Panasonic is planning a $3.5 million building expansion for manufacturing its powerful Lumix DMC digital zoom camera. If the company uses an interest rate of 16% per year, compounded quarterly for all new investments, what is the uniform amount per quarter the company must make in order to recover its investment in 3 years?
The optical products division of Panasonic is planning a $3.5 million building expansion for manufacturing its powerful Lumix DMC digital zoom camera. If the company uses an interest rate of 16% per year, compounded monthly for all new investments, what is the uniform amount per month the company must make in order to recover its investment in 4 years? The uniform amount per month that the company must make in order to recover its investment in 4 years is $
Equipment maintenance costs for manufacturing explosion-proof pressure switches are projected to be $125,000 in year one and increase by 3% each year through year five. What is the equivalent annual worth of the maintenance costs at an interest rate of 10% per year, compounded bi-monthly (compounded once in two months)? The equivalent annual worth is $
Peaceful Cruises wants to build a new cruise ship that has an initial investment of $400 million. It is estimated to provide an annual cash flow over the next 10 years of $57 million per year. The discount rate is 5%. What is the discounted payback period? Enter your answer rounded to two decimal places
For this investment, an initial amount of $25,000 should be paid this year (t=0). As of next year (t=1), five equal payments of $20,000 should also be paid (i.e., from t=1 to t=5). Thus, the sum of the required investment expenditure over those periods is $125,000. How much is the sum of the present value of the required investment expenditure over those periods, assuming that the annual interest rate is 5%?
If a copy center is considering the purchase of a new copy machine with an initial investment cost of $148,546 and the center expects an annual net cash flow of $14,877 per year, what is the payback period? Round to the nearest tenth, one decimal place.
A DSL company has made an equipment investment of $40 million with the expectation that it will be recovered in 10 years. The company has a MARR based on a real rate of return of 12% per year. If inflation is 7% per year, how much must the company make each year (a) in constant-value dollars, and (b) in future dollars, to meet its expectation?
Peaceful Cruises wants to build a new cruise ship that has an initial investment of $200 million. It is estimated to provide an annual cash flow over the next 15 years of $24 million per year. The discount rate is 7%. What is the discounted payback period? Enter your answer rounded to two decimal places
An agricultural engineer wishes to calculate a project's present worth with estimated costs of Php 1.69M now and Php 350,000 per year for 5 years beginning 1 year from now with increases of 12% per year thereafter for the next 8 years. Use a real interest of 15% per year to make the calculations without an adjustment for inflations and considering inflation at a rate of 11% per year.

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