Costs associated with the manufacture of miniature high-sensitivity piezoresistive pressure transducers is $85,000 per year. A clever industrial engineer found that by spending $19,000 now to reconfigure the production line and reprogram two of the robotic arms, the cost will go down to $52,000 next year and $58,000 in years 2 through 5. Using an interest rate of 15% per year, determine the present worth of the savings due to the reconfiguration. The present worth of the savings is determined to be $

Costs associated with the manufacture of miniature high-sensitivity piezoresistive pressure transducers is $85,000 per year. A clever industrial engineer found that by spending $19,000 now to reconfigure the production line and reprogram two of the robotic arms, the cost will go down to $52,000 next year and $58,000 in years 2 through 5. Using an interest rate of 15% per year, determine the present worth of the savings due to the reconfiguration. The present worth of the savings is determined to be $

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

See similar textbooks

Similar questions

A computer platform requires $160,000 initial investment and additional $80,000 after 10 years. The annual software maintenance costs are $6,000 for the first 4 years and $11,000 thereafter. In addition, there is expected to be a recurring major upgrade cost of 27,000 every 13 years. Assuming 5% interest rate, calculate the capitalized value of the project's costs (Round your answer to 2 decimal places and don't include the $ sign in your answer)
A company that manufactures magnetic flow meters expects to undertake a project that will have the cash flows below. At an interest rate of 10% per year, what is the equivalent annual cost of the project? Find the AW value using (a) tabulated factors, (b) calculator functions, and (c) a spreadsheet. Which method did you find the easiest to use?
The firm is considering two machines: Machine A with initial investment of $10,000 and annual maintenance cost of $1,000. The life of the machine A is 4 years. Machine B with initial investment of $20,000 and annual maintenance cost of $800. The life of the machine B is 6 years. If the required rate of return is 10%, calculate the equivalent annual cost (EAC) of each machine and which machine company must choose?
A new electronic process monitor costs $990,000. This cost could be depreciated at 30% per year (Class 10). The monitor would actually be worth $100,000 in five years. The new monitor would save $460,000 per year before taxes and operating costs. Suppose the new monitor requires us to increase net working capital by $47,200 when we buy it. If we require a 15% return, what is the NPV of the purchase? Assume a tax rate of 40%. (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) NPV $ 94186.67 x
Mellon Bank wants to experiment by adding a robot drive through at a cost of $226,000. The robot is expected to have a four year life and be sold for $76,000 at the end of its useful life. The belt is expected to lower labor by 180,000 each year as well as increase maintenance by 12,000 each year. Their working capital is not expected to change much. The required rate of return is 7%. What is the net present value of this investment?
The manufacture of equipment costs $73,000 per year. An engineer finds that by spending $16,000 now to reconfigure the production line, the cost of manufacturing will decrease to $58,000 next year and $52,000 in years 2 through 5. Using an interest rate of 10% per year, which of the following Excel functions that is used to determine the savings (present worth) due to the reconfiguration? (Hint: Include the reconfiguration cost.) Click the answer you think is right. PV(0.1,5,-73000)-((PV(0.1,4,-1)&PV(0.1,2,-1)&52000)PV(0.1,1,-58000)16000)) PV(0.1,5,-73000)-((PV(0.1,4,-1)&PV(0.1,1,-2)&52000)PV(0.1,1,-5800O)PV(0.1,1,-16000))) PV(0.1,5,-73000)-((PV(0.1,4,-1)&PV(0.1,1,-1)&52000)PV(0.1,1,-580000)16000)) NPV(0.1,5,-73000)-(((PV(0.1,4,-1)&PV(0.1,2,-1)&52000)PV(0.1,1,-58000)16000))
Michael Scott Paper, Inc. is considering a new machine that requires an initial investment of $ 650,000, including installation costs, and has a useful life of ten years. The expected annual after - tax cash flows for the machine are $90, 000 during the first two years, $115, 000 during years three through six, and $85, 000 during the remaining years of its useful life. What is the net present value ( NPV) when the discount rate is 5% ?
A remotely situated fuel cell has an installed cost of $1,900 and will reduce existing surveillance expenses by $500 per year for 15 years. The salvage (market) value after 15 years is $350. The border security agency’s external investment rate is the same as its MARR at 8% per year. What is the ERR of the project?
A new machine for your company has a first cost of $80,000 and an estimated net salvage value of $15,000 at the end of 20 years. It is expected to have operating and maintenance costs of $3,000 per year, and it is expected to reduce costs by $5,000 per year. Assume an interest rate of 8%. What is the annual equivalent cost of the investment if the planning horizon is 20 years?
You are considering a proposal to produce and market a new sluffing machine. The most likely outcomes for the project are as follows: Expected sales: 115,000 units per year Unit price: $220 Variable cost: $132 Fixed cost: $4,890,000 The project will last for 10 years and requires an initial investment of $16.70 million, which will be depreciated straight-line over the project life to a final value of zero. The firm's tax rate is 30%, and the required rate of return is 12%. However, you recognize that some of these estimates are subject to error. In one scenario a sharp rise in the dollar could cause sales to fall 30% below expectations for the life of the project and, if that happens, the unit price would probably be only $210. The good news is that fixed costs could be as low as $3,260,000, and variable costs would decline in proportion to sales. a. What is project NPV if all variables are as expected? Note: Do not round intermediate calculations. Enter your answer in thousands not in…
Dowling sportswear is considering building a new factor to produce aluminum baseball bats. This project would require an initial cash outlay of $6,000,000 and would generate annual net cash inflows of $900,000 per year for 7 years. Calculate the project’s NPV using a discount rate of 7 percent. If the discount rate is 7 percent, then the project’s NPV is Round to the nearest dollar
An engineer has designed 2 alternative systems to cater for customer's plant operation. System 1 will need initial investment of $150,000 and will have an annual operating cost of $20,000 with salvage price of $5,000 after 4 years. System 2 will need an investment of $180,000 and the annual operating cost will be $15,000. System can be salvaged for $8,000 after 6 years. At an interest rate of 10% per year, which system should be proposed by the engineer on the basis of a present worth analysis? Use equations to solve this problem.

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS