Q: A new operations system requires an initial investment of $100,000 and will generate $70,000 in…
A:
Q: le production. You will need an Initlal $5,900,000 investment In threadıne nt to get the project…
A: Given, Initial investment is $5,900,000 Required return is 9% Tax rate of 21% Salvage value is…
Q: A company is considering buying a piece of machinery that costs $20,000 and has a salvage value of…
A: Internal rate of return Or IRR is the rate or percentage that is minimum required to cover the…
Q: You are evaluating a product for your company. You estimate the sales price of product to be $240…
A: Free Cash Flow (FCF) is a critical financial metric that provides insights into a company's ability…
Q: A piece of new equipment has been proposed by engineers to increase the productivity of a certain…
A: Internal Rate of Return: When evaluating projects or investments, the internal rate of return is…
Q: ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The project will…
A: NPV is also known as Net Present Value.. It is a capital budgeting technique which helps in decision…
Q: Use the following for the next 2 questions: A facility is to be built with construction costs of…
A: Variable cost means the cost which vary with the level of output and fixed cost means the cost which…
Q: An engineering consultancy firm makes an economic analysis of two machines that will be purchased.…
A: Machine A Economic Life = 6 years Initial Cost = 10,000 Annual Insurance Cost = 1% of Initial Cost =…
Q: Lakeside Incorporated is considering replacing old production equipment with state-of-the-art…
A: The payback period is the time to recover the cost of investment.
Q: (c) Annual rate of return. (Round answer to 2 decimal places, e.g. 15.25%) Annual rate of return %
A: One of the traditional techniques that is used for capital budgeting is the annual/ accounting rate…
Q: A casting company is considering the replacement analysis of a furnace. If it is bought from A…
A: The present value of the annuity is the current worth of a cash flow series at a certain rate of…
Q: You are evaluating two different silicon wafer milling machines. The Techron I costs $267,000, has a…
A: Equivalent annual cost refers to the cost incurred for owning, operating, and the maintenance of an…
Q: A widget machine will cost $480,000. The anticipated increase in revenue will be $140,000/year for…
A: Cost of the machine = $480000 Revenue increase for 5 years = $140000 Annual expenses for 5 years =…
Q: Natural Foods Inc. is planning to invest in new manufacturing equipment to make a new garden tool.…
A: Net Cash flow represent the amount which is available after all application of money required as per…
Q: ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The project will…
A: ABC Corporation Project Evaluation (4 Years)Project Cash Flows:Year 0:Initial Investment:Work Cell:…
Q: ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The project will…
A: NPV is also known as Net Present Value.. It is a capital budgeting technique which helps in decision…
Q: Blue Sky Corporation is evaluating the proposed acquisition of a new production machine. The…
A: Net present value: It is the difference between the present value of cash inflow and the present…
Q: Should the fork-lift truck be purchased?
A: To determine whether the lift truck should be purchased or not by computing the NPV. NPV is the net…
Q: Natural Foods Inc. is planning to invest in new manufacturing equipment to make a new garden tool.…
A: Residual value is the value of any asset left at the end of useful life of an asset. Depreciation is…
Q: A widget machine will cost $480,000. The anticipated increase in revenue will be $140,000/year for…
A: Internal rate of return is the rate expressed in percentage terms which equalize the net present…
Q: Reacher Corporation is evaluating a proposal to purchase a new machine that would cost $100,000 and…
A: To further understand the decision-making process, let's go over the computations in more detail.…
Q: ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The project will…
A: NPV is also known as Net Present Value & it is a capital budgeting technique which helps in…
Q: A certain factory building has an old lighting system. To light this building costs, on average,…
A: The present value is the value of the sum received at time 0 or the current period. It is the value…
Q: Briggs Excavation Company is planning an investment of $688,600 for a bulldozer. The bulldozer is…
A:
Q: Maui Fabricators Inc. is considering an investment in equipment that will replace direct labor. The…
A: Average rate of return is the return that is earned on an investment in a year. The return earned…
Q: Briggs Excavation Company is planning an investment of $108,600 for a bulldozer. The bulldozer is…
A: Net present value is important method of selection of projects based on time value of money.Net…
Q: Jones Excavation Company is planning an investment of $348,200 for a bulldozer. The bulldozer is…
A: The net cash inflow is the computed after deducting the total cash outflow from the total cash…
Q: Nature’s Way Inc. is planning to invest in new manufacturing equipment to make a new garden tool.…
A:
Q: ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The project will…
A: NPV is also known as Net Present Value. It is a capital budgeting technique that helps in…
Q: Nature’s Way Inc. is planning to invest in new manufacturing equipment to make a new garden tool.…
A: Capital investment analysis: Capital investment analysis is the process by which management plans,…
Q: An engineer developed a fee proposal that requests the owner pay $20,000 after 6 months of work and…
A: To evaluate the attractiveness of project, rate of return of the project is to be calculated. Rate…
Q: A consultant has recommended that you modernize a production line. Costs include $650,000 in…
A: The initial outlay implies the amount of net cash outflow at t= 0.The cost of equipment and delivery…
Q: A construction company excavator will take. A new excavator costs $150,000, lifespan 10 years, scrap…
A:
Q: Esquire Company needs to acquire a molding machine to be used in its manufacturing process. Two…
A: Present Value is the current price of future value which will be received in near future at some…
Q: ing the component (option B). Details of the two options are given below: Option A : Three…
A: In the given question, a component can either be produced in-house or purchased from outside. We…
Q: Use the PW method. Show the cash flow diagram if necessary and complete solution. Do not use excel…
A: i) Present worthIt is not worthwhile to purchase the new machine because its present worth is less…
Q: ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The project will…
A: Terminal cash flow is the final cash flow at the end of the project. It consists of the cash flow…
Q: A land development company is considering the purchase of earth-moving equipment. The equipment will…
A: Purchase of machine:Initial cost = $190,000Salvage value = $70,000Annual service contract =…
Q: ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The project will…
A: NPV is also known as Net Present Value.. It is a capital budgeting technique which helps in decision…
Q: Which of the two options would be the best if you knew that the interest rate approved by the…
A: Information Provided: Price of mechanism = $50,000 Operating costs (when buying) = $2000 Salvage =…
Q: ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The project will…
A: NPV is also known as Net Present Value.. It is a capital budgeting technique which helps in decision…
A mining company is considering buying or renting a drill rig. The cost data for owning the asset are as follows: Purchase price, $24,000; service life, 4 years; salvage value, $1,800; fixed operating costs, $9,200 per year; variable costs, $120 for each day the rig is used. The total cost of hiring the rig is $225 per day. With the money worth 14.7 %, determine the minimum number of days per year the rig must be needed to justify its purchase.
Step by step
Solved in 4 steps
- who has an average wage of $48,890 per year. In addition, the equipment will have operating and energy costs of $12, 190 per year. Determine the average rate of return on the equipment, giving effect to straight-line depreciation on the investment. If required, round to the nearest whole percent. % Maui Fabricators Inc. is considering an investment in equipment that will replace direct labor. The equipment has a cost of $126,000 with a $11,000 residual value and a 5-year life. The equipment will replace one employee who has an average wage of $48,890 per year. In addition, the equipment will have operating and energy costs of $12,190 per year. Determine the average rate of return on the equipment, giving effect to straight-line depreciation on the investment. If required, round to the nearest whole percent. %You have been asked to make a recommendation about whether to spend $115,000 on a new Laser cutting machine for your company. Annual net revenues in Current/Actual dollars are estimated to be $25,000 in the first year, increasing by $460 per year for each year thereafter. Salvage value is estimated to be $6,000 in Real dollars in 18 years. Taking into account the following information: Your company uses a Real-MARR of 8% for all its projects. • Inflation is expected to average 1.2% per year for at least the next 18 years. • There will be an equipment overhaul cost in Real dollars of $2,000 in BOTH year 6 and year 8.Company is considering purchasing a breadmaker. The cost of the breadmaker is $200,000 and an additional $10,000 is required for installation and training expenses. The old equipment can be sold for $4000. Annual cash flows are $6,285 It is estimated the breadmaker will operate for 25 years Annual costs are expected to consist of $2500 for maintenance, 8,200 for depreciation, and 4,000 for electricity. The rate of return is 6%. The companies corporate tax rate is 25% and the present value of the tax shield for the breadmaker is $28000 Given all of this information, what would be the NPV of the breadmaker and should the company purchase it?
- A piece of new equipment has been proposed by engineers to increase the productivity of a certain manual welding operation. The investment cost is $25,000, and the equipment will have a market value of $5,000 at the end of a study period of five years. Increased productivity attributable to the equipment will amount to $8,000 per year after extra operating costs have been subtracted from the revenue generated by the additional production. Evaluate the IRR of the proposed equipment. Is the investment a good one? Recall that the MARR is 20% per year.The equivalent annual worth of the process currently used in manufacturing motion controllers is AW = $-62,000 per year. A replacement process is under consideration that will have a first cost of $64,000 and an operating cost of $38,000 per year for the next 3 years. Three different engineers have given their opinion about what the salvage value of the new process will be 3 years from now as follows: $10,000, $13,000, and $18,000. Is the decision to replace the process sensitive to the salvage value estimates at the company’s MARR of 15% per year?ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The project will require the purchase of a $843,200.00 work cell. Further, it will cost the firm $51,700.00 to get the work cell delivered and installed. The work cell will be straight-line depreciated to zero with a 20-year useful life. The project will require new employees to be trained at a cost of $59,100.00. The project will also use a piece of equipment the firm already owns. The equipment has been fully depreciated, but has a market value of $5,200.00. Finally, the firm will invest $10,800.00 in net working capital to ensure the project has sufficient resources to be successful. The project will generate annual sales of $917,000.00 with expenses estimated at 38.00% of sales. Net working capital will be held constant throughout the project. The tax rate is 40.00%. The work cell is estimated to have a market value of $489,000.00 at the end of the fourth year. The firm expects to reclaim 85.00% of the…
- Jones Excavation Company is planning an investment of $233,500 for a bulldozer. The bulldozer is expected to operate for 2,000 hours per year for eight years. Customers will be charged $120 per hour for bulldozer work. The bulldozer operator costs $37 per hour in wages and benefits. The bulldozer is expected to require annual maintenance costing $20,000. The bulldozer uses fuel that is expected to cost $48 per hour of bulldozer operation. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.353 2.991 6 4.917 4.355 4.111 3.785 3.326 7 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192Esquire Company needs to acquire a molding machine to be used in its manufacturing process. Two types of machines that would be appropriate are presently on the market. The company has determined the following: Machine A could be purchased for $11,000. It will last 10 years with annual maintenance costs of $400 per year. After 10 years the machine can be sold for $1,155. Machine B could be purchased for $10,000. It also will last 10 years and will require maintenance costs of $1,600 in year three, $2,000 in year six, and $2,400 in year eight. After 10 years, the machine will have no salvage value. Required: Assume an interest rate of 8% properly reflects the time value of money in this situation and that maintenance costs are paid at the end of each year. Ignore income tax considerations. Calculate the present value of Machine A & Machine B. Which machine Esquire should purchaseNatural Foods Inc. is planning to invest in new manufacturing equipment to make a new garden tool. The new garden tool is expected to generate additional annual sales of 7,600 units at $38 each. The new manufacturing equipment will cost $123,500 and is expected to have a 10-year life and a $9,500 residual value. Selling expenses related to the new product are expected to be 5% of sales revenue. The cost to manufacture the product includes the following on a per-unit basis: Direct labor $6.50 Direct materials 21.00 Fixed factory overhead-depreciation 1.50 Variable factory overhead 3.30 Total $32.30 Determine the net cash flows for the first year of the project, Years 2–9, and for the last year of the project. Use the minus sign to indicate cash outflows. Do not round your intermediate calculations but, if required, round your final answers to the nearest dollar. Natural Foods Inc.Net Cash Flows Year 1 Years 2-9 Last Year Initial investment $fill in the blank 1…
- Steamboat Springs Furniture, Inc., is considering purchasing a new finishing lathe that costs $61,515.00. The lathe will generate revenues of $99,298.00 per year for five years. The cost of materials and labor needed to generate these revenues will total $50,526.00 per year, and other cash expenses will be $10,290.00 per year. The machine is expected to sell for $9,266.00 at the end of its five-year life and will be depreciated on a straight-line basis over five years to zero. Steamboat Springs' marginal tax rate is 36.00 percent, and its cost of capital is 14.00 percent. What is the NPV of the project?Grouper Growth Farms, a farming cooperative, is considering purchasing a tractor for $559,050. The machine has a 10-year life and an estimated salvage value of $43,000. Delivery costs and set-up charges will be $12,800 and $410, respectively. Grouper Growth uses straight-line depreciation and has a required rate of return of 9%. Grouper Growth estimates that the tractor will be used five times a week with the average charge to the individual farmers of $410. Fuel is $55 for each use of the tractor. The present value of an annuity of 1 for 10 years at 9% is 6.41766. Click here to view PV tables. For the new tractor, compute the: (a) Your answer has been saved. See score details after the due date. Cash payback period. (Round answer to 1 decimal places, e.g. 15.2.) Cash payback period (b) Net present value Net present value. (Round factor values to 5 decimal places, e.g. 15.11212. Round Intermediate calculations and final answer to O decimal places, e.g. 5,275.) Save for Later 6.2 $…Macoupin Mining Inc. must purchase a new coring machine that costs $60,000 and will last 15 years with a salvage value of $12,000. The annual operating expenses will be $9000 the first year, increasing by $200 each year thereafter. The annual income is $15,000 per year. If Macoupin’s MARR is 8%, determine the net future worth of the machine purchase.
