Hello.The answer to a question that is posted on your site is incorrect.(It seems to be incorrect on all the websites.)Can you please have someone check it out and get back to me?Thank you.qwert2688@yahoo.com **Problem 5-1 (Static) Analysis of Alternatives [LO5-3, 5-8]**Esquire 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 financial values using factors such as the Future Value (FV) and Present Value (PV) of $1, and other relevant tables provided.**Machine A**- Purchase Price: $48,000- Lifespan: 10 years- Annual Maintenance Cost: $1,000- Salvage Value after 10 years: $5,000**Machine B**- Purchase Price: $40,000- Lifespan: 10 years- Maintenance Costs: - $4,000 in Year 3 - $5,000 in Year 6 - $6,000 in Year 8- Salvage Value after 10 years: $0**Required:**Assume an interest rate of 8% to reflect the time value of money, with maintenance costs paid at the end of each year. Ignore income tax considerations.Calculate the present value (PV) of Machine A and Machine B to determine which machine Esquire should purchase. Negative amounts are indicated by a minus sign. Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.**Analysis Result:**- PV of Machine A: $52,394- PV of Machine B: $49,568- Recommendation: Esquire should purchase Machine B**Note:** Although Machine B has a lower upfront purchase cost, a detailed analysis of the total present value (considering both purchase and ongoing maintenance costs discounted at an 8% interest rate) shows it to be the more cost-effective option over the 10-year period.The table concludes that Machine B is the preferable option based on present value calculations.

The net present value (NPV) in case of annual cash outflows can be calculated as follows:- The…

Esquire Company needs to acquire a molding machine to be used in its manufacturing process. Two types of machines that would be $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Machine A could be purchased for $48,000. It will last 10 years with annual maintenance costs of $1,000 per year. After 10 years the machine can be sold for $5,000. Machine B could be purchased for $40,000. It also will last 10 years and will require maintenance costs of $4,000 in year three, $5,000 in year six, and $6,000 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 purchase? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.) Answer is complete but not entirely correct. PV 52,394 8 Machine A Machine B Esquire should purchase 49,568 Machine B

Esquire Company needs to acquire a molding machine to be used in its manufacturing process. Two types of machines that would be $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Machine A could be purchased for $48,000. It will last 10 years with annual maintenance costs of $1,000 per year. After 10 years the machine can be sold for $5,000. Machine B could be purchased for $40,000. It also will last 10 years and will require maintenance costs of $4,000 in year three, $5,000 in year six, and $6,000 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 purchase? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.) Answer is complete but not entirely correct. PV 52,394 8 Machine A Machine B Esquire should purchase 49,568 Machine B

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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