Dunder Mifflin Paper Company is considering the following two alternatives. The cost information for the two proposals for replacing an equipment are provided are in table below. Machine A Machine B Initial cost $120,000 $96,000 $20.000 for the first 10 years $12,000 per year for 20 Benefits/year and $9,000 for the next 10 years. years Life 20 years for both Salvage value $40,000 $20,000 interest 8% per year for both The NPW of machine A is Choose the closest answer.

Dunder Mifflin Paper Company is considering the following two alternatives. The cost information for the two proposals for replacing an equipment are provided are in table below. Machine A Machine B Initial cost $120,000 $96,000 $20.000 for the first 10 years $12,000 per year for 20 Benefits/year and $9,000 for the next 10 years. years Life 20 years for both Salvage value $40,000 $20,000 interest 8% per year for both The NPW of machine A is Choose the closest answer.

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

Do not use Excel.
Octavia Bakery is planning to purchase one of two ovens. The expected cash flows for each oven are shown below. MARR is 8% / year. Initial Investment Estimated Life End of Life Salvage Annual Income Annual Expense Part a Model 127B $50,000 Part b 10 $10,000 $19.400 $10,000 Your answer is correct. Model 334A $80,000 5 Your answer is partially correct. $0 What is the discounted payback period for Model 127B? $26,000 $6,000 Round entry to two decimal places. The tolerance is ±0.02. eTextbook and Media What is the discounted payback period for Model 334A? Is the DPBP greater than the planning horizon? No V Round entry to two decimal places. The tolerance is ±0.02. 7.18 years 5.10 years Attempts: 1 of 3 used
A firm is considering three mutually exclusive alternatives as part of an upgrade to an existing transportation network. If the MARR is 10% per year, which alternative (if any) should be chosen using the IRR analysis procedure? Use trial & error and show your calculations. A B Initial Cost Annual Revenue Annual Cost Salvage Value Useful Life 40,000 10,400 4,000 3,000 30,000 8,560 3,000 2,500 20,000 7,750 2,500 2,000 20 20 10
Dexcon Technologies, Inc., is evaluating two alternatives to produce its new plastic filament with tribological (i.e., low friction) properties for creating custom bearings for 3-D printers. The estimates associated with each alternative are shown below. Using a MARR of 9% per year, which alternative should be selected? Method First Cost M&O Cost, per Year Salvage Value Life DDM $-100,000 $-30,000 $2,000 3 years LS $-300,000 $-5,000 $15,000 6 years
A construction company is evaluating two options for an elevator, each of which has a useful life in 10 years. Option 1 costs $45, 000 to install and $2700 annually, with a salvage value of $ 3000 in year 10. Option 1 also requires a significant overhaul in year 6 with a cost of $8, 000. Option 2 costs $54, 000, costs $2, 800 annually, and has a salvage value of $5000 in year 10. Annual interest is 4%, compounded monthly. Which option would you choose? Show your work.
A company wishes to evaluate two alternative machines. Use the AW method to select the better alternative, considering the interest rateas 29% Machine R Machine S First cost, $ —250,000 —370,500 Annual operating cost, —40,000 -50,000 $ per year Salvage value, $ 20,000 30,000 Life, years 3 5 [
Saved Help Save & Prairie Corporation has provided the following information for a proposed investment project: Discount rate 10% Life of the project 4 years Initial investment cost $23,775 Annual cost savings 7,500 Salvage value 1,500 What is the net present value of the proposed investment project? (Select the answer that is closest to your calculations.) Present value tables are provided below. Present Value of $1 Table (Exhibit 11B-1) (Partial table) Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.901 0.893 0.885 0.877 0.925 0.907 0.890 0.873 0.857 0.842 0.826 0.812 0.797 0.783 0.769 0.889 0.864 0.840 0.816 0.794 0.772 0.751 0.731 0.712 0.693 0.675 0.855 0.823 0.792 0.763 0.735 0.708 0.683 0.659 0.636 0.613 0.592 0.822 0.784 0.747 0.713 0.681 0.650 0.621 0.593 0.567 0.543 0.519 4. 0.790 0.746 0.705 0.666 0.630 0.596 0.564 0.535 0.507 0.480 0.456 0.760 0.711 0.665 0.623 0.583 0.547 0.513 0.482 0.452 0.425 0.400 0.731 0.677 0.627 0.582 0.540…
A company with a MARR of 10% must install one of two production machines. The economic parameters of each machine are as follows: Machine Initial cost (5) Service life (years) Salvage value end of life (S) $15,000 4 years $22,000 6 years 52,000 $1,000 The Future worth (FW) for the machine Y over the 12 years analysis period is:
Machines that have the following costs are under consideration for a new manufacturing process. Compute the Equivalent Annual Worth with an interest rate of 8%, compounded semiannually. The machine last 4 years. First cost: $40,000 Semiannual Operating cost: $8,970 Semiannual incomes: $14,000 Salvage value: $10,000 a. EAW = $2,285 Ob. EAW = $175 O c. EAW = $1,958 O d. EAW $ 21,745
Two sites for suspension bridges are under consideration for crossing the Allegheny River in Pittsburgh, PA. Use the B/C ratio method at a discountrate of 6% per year to determine which bridge, if either, should be built.
As an engineer, you have been asked to recommend a new cooling system for a large warehouse. You have narrowed it down to three different systems with the associated costs shown below If the minimum attractive rate of return in 10%, which system would you recommend. Cooling system A В C $250,000 $75,000 $300,000 $60,000 $36,000 $375,000 $80,000 $45,000 9 years Installation costs Annual operating costs Salvage value Lifespan None 5 years 7 years
A construction company is evaluating two similar pieces of equipment for their gravel pit operation. If the company policy is to use a MARR = 12%, determine which alternative is economically the better option. Use the EAC method: Option B $75,000 Item Option A $40,000 Initial Purchase Cost Operating Cost (1st year) $25,000 $15,000 Annual increase in Operating Cost No increase 2%/yr Lifespan Salvage Value @ end-of-life 4 years 6 years $10,000 $7,000 Do this question by hand.

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