Pina Colada Company is considering the purchase of a machine and has compiled the following data:Initial costOne-time training costAnnual maintenance costsAnnual cost savingsSalvage valueThe cash payback period is2.52 years.2.50 years.O 2.28 years.O2.84 years.$18000024800180009000023400

Payback period one of the simple method of capital budgeting and it is period required to recover…

Answered: da Company is considering the purchase…

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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Your firm is considering purchasing a machine with the following annual, end-of-year, book investment accounts. Gross investment Less: Accumulated depreciation Net investment AAR Year 0 Year 1 Year 2 Year 3 Year 4 $ 58,000 $58,000 $ 58,000 $ 58,000 $58,000 0 14,500 29,000 43,500 58,000 +% $ 58,000 $43,500 $ 29,000 $14,500 $ The machine generates, on average, $6,000 per year in additional net income. What is the average accounting return for this machine? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) 0
An industrial firm uses economic analysis to determine which of two different machines to purchase. Each machine is capable. Each machine is capable of performing the same task in a given amount of time. Assume the MARR=8%. Use the following data for analysis:What is the approximate equivalent uniform annual cost of Machine X?
The production department is proposing the purchase ONE automatic insertion machine. It has identified three machines (A, B and C). Each machine has an estimated useful life of 10 years. minimum desired rate of return of 10%. The accountant has identified the following data: Machine A Machine B Machine C Present value of future cash flows computed using 10% rate of return $305,000 $295,000 $300,500 Amount of initial investment 300,000 300,000 300,000 Based on net present value method, which machine do you recommend?
Its required to select one of the two machines, if you know that the firms MARR-12% and if the costs are shown below: Project A Project B Initial cost, $ 7650 12900 Maintenance cost, S/year 1200 900 Salvage value, $ 2000 Economic life, year 4 Compare the two-alternative using: 1-Equavlent Annual worth comparison. 2- Present worth comparison
Compare the machines below using present worth analysis at i10% per year and find which one should be selected Machine Y First Cost Operating Cost Savage Lfe cycle Machine X 20.000 3.000 3.000 3years Firat Cost 30.000 .000 Annuel Operating Cost Salvage Life cycle 3.000 6 yoars
Required information A company that manufactures magnetic flow meters expects to undertake a project that will have the cash flows estimated. First cost, $ Equipment replacement cost in year 2, $ Annual operating cost, $/year Salvage value, $ Life, years -880,000 -300,000 -930,000 250,000 14 At an interest rate of 10% per year, what is the equivalent annual cost of the project? Find the AW value using tabulated factors The equivalent annual cost of the project is $- 980,731.95
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A firm has two alternatives for the improvement of its current production system. The data are as follows: Machine A Machine B First Cost - P6M First cost-P8968578 Annual operating cost-P250T Annual operating cost - P294445 Service life - 6 years Service life - 4 years Salvage value - P150T Salvage value - P142107 Using the Present Value (PV) Method and with the firm's interest rate of 23% cpd. annually, what the PV of Machine B?
QUESTION 5 Use the information provided below to answer the following questions. Where applicable, use the present value tables provided in APPENDICES 1 and 2 that appear after QUESTION 5. 5.1 5.2 5.3 5.4 5.5 Calculate the Payback Period of both machines (expressed in years, months and days.) Which machine should be chosen on the basis of payback period only? Why? Calculate the Accounting Rate of Return (on average investment) of Machine A (expressed to two decimal places). Calculate the Net Present Value of each machine (amounts expressed to the nearest Rand.) Calculate the Internal Rate of Return of Machine B (expressed to two decimal places) using interpolation.
What is the annual equivalent cost of purchasing a lift truck that has an initial cost of $85,000, an annual operating cost of $13,500, and an estimated salvage value of $23,000 after six years of use at an annual interest rate of 6%? X More Info Equal Payment Series Single Payment Compound Present Amount Worth Compound Amount Factor (F/A, I, N) Sinking Present Fund Worth Factor Factor Capital Recovery Factor (A/P, i, N) Factor Factor (F/P, i, N) (P/F, i, N) (A/F, i, N) (P/A, i, N) 1.0800 0.9434 1.0000 1.0000 0.9434 1.0800 1.1238 0.8900 2.0800 0.4854 1.8334 0.5454 1.1910 0.8396 3.1836 0.3141 2.6730 0.3741 1.2625 0.7921 4.3746 0.2288 3.4861 0.2886 1.3382 0.7473 5.6371 0.1774 4.2124 0.2374 1.4185 0.7050 6.9753 0.1434 4.9173 0.2034 0.6851 8.3938 0.1191 5.5824 0.1791 1.5038 1.5938 1.6895 0.6274 9.8975 0.1010 6.2098 0.1610 0.5919 11.4913 0.0870 6.8017 0.1470 1.7908 0.5584 13.1808 0.0759 7.3801 0.1359 SAWNIN 1 2 3 4 5 67899 10
Use Service-Output Method. A Machine costs ₱80,000 and an estimated life of 10 years with a salvage value of ₱5,000. Assuming that the total service of the machine is 1,497,600 hours and the number of working days per year is 260 days. What is the book value after 4 years if the machine production time a is 24 hours? Answer: BV4 = P 78,750.00Show Solution
MNO company is evaluating a proposal for purchase of equipment which will cost $180,000. The cash inflows from the use of equipment is given below: Year Cash flow $60,000 $40,000 $70,000 $125,000 $35,000 4. Payback period for the proposal is: a. 3 years b. 2 years c. 4 years d. 3.08 years DELL 123 45

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da Company is considering the purchase of a machine and has compiled Initial cost One-time training cost Annual maintenance costs Annual cost savings Salvage value The cash payback period is $180000 24800 18000 90000 23400