do exercise in excel. 7-41. 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: Machine A Machine B $20,000 12 years $4,000 Capital investment $30,000 8 years $0 $188,000 $170,000 Life Terminal BV (and MV) Annual receipts Annual expenses 7.41 Do not assume repeatability. $150,000 $138,000 Use AW Determine which is the better alternative, assuming repeatability and using SL depreciation, an income-tax rate of 40%, and an after-tax MARR of 10%. (7.9)

do exercise in excel. 7-41. 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: Machine A Machine B $20,000 12 years $4,000 Capital investment $30,000 8 years $0 $188,000 $170,000 Life Terminal BV (and MV) Annual receipts Annual expenses 7.41 Do not assume repeatability. $150,000 $138,000 Use AW Determine which is the better alternative, assuming repeatability and using SL depreciation, an income-tax rate of 40%, and an after-tax MARR of 10%. (7.9)

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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The Mowbot plant must replace an existing HVAC unit (doing nothing is not an option). You are evaluating two pieces of equipment. Each unit offers a saving in annual energy cost over the existing equipment. Alternative Unit A Unit B Unit C Up front cost $44,000 $65,000 $84,000 Operating cost/year $1.900 $1.400 $900 Energy savings / year $14,000 $16,500 $17,500 Salvage Value $2,000 $4,000 $5,000 Economic life, years 7. 7. Mowbot's MARR is 12%. Based on annual worth analysis (not incremental), which unit should you recommend? HTML Editora BI 工E三 E三xi x ミ = ECE 12pt Paragraph
Celestial Crane Cosmetics is considering an investment that will have the following sales, variable costs, and fixed operating costs: Year 1 Year 2 Year 3 Year 4 Sales (units) 5,500 5,200 5,700 5,820 Sales price $42.57 $43.55 $44.76 $46.79 Variable cost per unit Fixed costs, excluding depreciation Accelerated depreciation rate $22.83 $22.97 $23.45 $66,750 $68,950 $69,690 33% 45% 15% $23.87 $68,900 7% This project will require an investment of $20,000 in new equipment. The equipment will have no salvage value at the end of the project's four-year life. Celestial Crane Cosmetics pays a constant tax rate of 40%, and it has a required rate of return of 11%. When using accelerated depreciation, the project's net present value (NPV) is When using straight-line depreciation, the project's NPV is Using the depreciation method will result in the greater NPV for the project. No other firm would take on this project if Celestial Crane Cosmetics turns it down. How much should Celestial Crane…
A calculate the NPV for the following: (answer in millions rounded to 1 decimal place) Small facility ————- million Do nothing ———— million Large facility ————million B. The best decision to help Expando is A. To do nothing B. To build the small facility C. To build the large facility
Scenario 1: Four years ago, The Kresser Sdn. Bhd. purchased an Industrial Shredder Machine. Because of increasing maintenance costs for this equipment, a new piece of machine is being considered for the assembly line. The cost characteristics of the defender (present machine) and the challenger are shown in Table 1 below: Table 1 Defender Original cost = RM9,000 Maintenance = RM500 in year one (four years ago) increasing by a uniform gradient of RM100 per year thereafter Market Value (MV) at end of life = 0 Original estimated life = 9 years Challenger Purchased cost =RM11,000 Maintenance = RM150 per year 2 Market Value (MV) at end of life = RM3,000 Estimated life = 5 years Suppose a RM6,000 Market value is available now for the defender. Perform a before- tax analysis, using before-tax MARR of 15%, to determine which alternative to select. Be sure to state all important assumptions you make, and utilize a uniform gradient in your analysis of the defender.
A manufacturer of automated optical inspection devices is deciding on a project to increase the productivity of the manufacturing processes. The estimated costs for the two feasible alternatives being compared are shown below. Use the internal rate of return (IRR) method to determine which alternative should be selected if the analysis period is 8 years and the company's MARR is 4% per year. Alternative M N Initial costs $30,000 $45,000 Net annual cash flow $4,500 $7,000 Life in years 8 8 (a) IRR of base alternative = (b) IRR of incremental cash flow = (c) Choose Alternative
None
A cookie factory needs a new cookie machine. They have narrowed their choices to the following machines: a Cost $18000 25000 15000 Annual net savings 1055 2125 1020 IRR 7% 9% 8% Each machine has a 25-year useful life with no salvage value. If the MARR for this factory is 10%, which alternative should be chosen? (Incremental IRR analysis method is required)

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