None Data tableCost of the machineIncreased annual contribution marginLife of the machineRequired rate of return$90,000$19,0009 years6%Fantastic estimates it will be able to produce more candy using the secondmachine and thus increase its annual contribution margin. It also estimates therewill be a small disposal value of the machine but the cost of removal will offset thatvalue. Ignore income tax issues in your answers. Assume all cash flows occurat year-end except for initial investment amounts.PrintDoneI

Part 2: Explanation:Step 1: Calculate the annual cash flows generated by the second machine.The…

Answered: Data table Cost of the machine…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 7EA: A mini-mart needs a new freezer and the initial Investment will cost $300,000. Incremental revenues,...

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A mini-mart needs a new freezer and the initial Investment will cost $300,000. Incremental revenues, including cost savings, are $200,000, and incremental expenses, including depreciation, are $125,000. There is no salvage value. What is the accounting rate of return (ARR)?
An auto repair company needs a new machine that will check for defective sensors. The machine has an Initial investment of $224,000. Incremental revenues, including cost savings, are $120,000, and Incremental expenses, including depreciation, are $50,000. There is no salvage value. What is the accounting rate of return (ARR)?
Fablab Mindanao purchased a water jet cutter in which their total manufacturing cost is expected to decrease due to an increased productivity as shown on the table below. 4 190 185 180 7 175 170 Year 2 200| 195 3 6 1 Cost, PhP 1000 165 a) Draw the Cash Flow Diagram b) Determine the equivalent annual cost at an interest rate of 8% per yeari
Two alternative machines will produce the same product, but one is capable of higher-quality work, which can be expected to return greater revenue. The following are relevant data. Determine which is the better alternative, assuming repeatability and using SL depreciation, an income-tax rate of 27%, and an after-tax MARR of 11%. Capital investment Life Calculate the AW value for the Machine A. Machine A $23,000 12 years $4,000 Terminal BV (and MV) Annual receipts Annual expenses Click the icon to view the interest and annuity table for discrete compounding when the MARR is 11%er year. AWA (11%) = $ (Round to the nearest dollar.) Machine B $33,000 6 years $1,500 $197,000 $176,000 $152,000 $130,000
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Two altemnative machines will produce the same product, but one is capable of higher-quality work, which can be expected to return greater revenue. The following are relevant data. Determine which is the better alternative, assuming repeatability and using SL depreciation, an income-tax rate of 25%, and an after-tax MARR of 10%. Capital investment Life Machine A $20,000 12 years $3,500 Calculate the AW value for the Machine A. AWA (10%) = $(Round to the nearest dollar.) Terminal BV (and MV) Annual receipts Annual expenses Click the icon to view the interest and annuity table for discrete compounding when the MARR is 10% per year. Machine B $34,000 9 years $2,000 $144,000 $142,000 $190,000 $163,000
What is the Delta IRR of the difference between the cashflow of the machine with the higher initial value and the lower initial value with the following data? Benefits are constant over all years. Machine A Machine B Initial cost $125,000 $175,000 Life in years 3 6 Salvage after life 15 % 15% Benefits per year $72,000 S 81,000 Costs per year $15,800 $24, 200 Inflation 2.50% Costs keep increasing at 2.5% every year even when a new machine is bought.
need solution with all process in as soon as possible
1. Prepare a differential anaysis comparing present machine (Alt. 1) to new machine (Alt. 2). Analysis should indicate total differential income over the six-year period if the new machine is purchased. 2. Which Alternative would you propose? What other factors should be considered? 3. What if you could invest the funds required to purchase the new equipment (cost less proceeds from sale of old machine) at 4% per year. Does this change your viewpoint? What does this indicate of the limitations of this method for evaluating an investment proposal?

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