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Company X is purchasing a new machine for $949000. The annual expenses, in today's dollars, is estimated to be 92400. Assume that the inflation rate is 0.08 and the company X' real MARR is 0.11 per year. The depreciation for this type of machine is best represented using the declining-balance method where R= 0.29. The project is estimated to last for 9 years. a) What is the BV at year 7? b) What is the PW of these expenses? e) What is the actual value of MARR? Knowing that the project will last for 9 years, what minimum Uniform Annual Revenue, in actual dollars, would this machine need to generate to benefit?

Company X is purchasing a new machine for $949000. The annual expenses, in today's dollars, is estimated to be 92400. Assume that the inflation rate is 0.08 and the company X' real MARR is 0.11 per year. The depreciation for this type of machine is best represented using the declining-balance method where R= 0.29. The project is estimated to last for 9 years. a) What is the BV at year 7? b) What is the PW of these expenses? e) What is the actual value of MARR? Knowing that the project will last for 9 years, what minimum Uniform Annual Revenue, in actual dollars, would this machine need to generate to benefit?

Practical Management Science
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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Company X is purchasing a new machine for $949000. The annual expenses, in today's dollars, is estimated to be $92400. Assume that the inflation rate is 0.08 and the company X' real MARR is 0.11 per year. The depreciation for this type of machine is best represented using the declining-balance method where R= 0.29. The project is estimated to last for 9 years. a) What is the BV at year 7? b) What is the PW of these expenses? c) What is the actual value of MARR? Knowing that the project will last for 9 years, what minimum Uniform Annual Revenue, in actual dollars, would this machine need to generate to benefit?
Transcribed Image Text:Company X is purchasing a new machine for $949000. The annual expenses, in today's dollars, is estimated to be $92400. Assume that the inflation rate is 0.08 and the company X' real MARR is 0.11 per year. The depreciation for this type of machine is best represented using the declining-balance method where R= 0.29. The project is estimated to last for 9 years. a) What is the BV at year 7? b) What is the PW of these expenses? c) What is the actual value of MARR? Knowing that the project will last for 9 years, what minimum Uniform Annual Revenue, in actual dollars, would this machine need to generate to benefit?
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