Even Better Cakes wants to purchase a new machine for $36,990 with a 5-year useful life. The machine is expected to generate additional cash revenues of $4,200 per year and reduce operating costs by $5,100 each year of its economic life. The discount rate is 8%. What is the amount of the net present value of the machine? (For calculation purposes, use five decimal places as displayed in the factor table provided. Round net present value answer to whole number (e.g., 125).) Click here to view PV table. Net present value SA $ I

Even Better Cakes wants to purchase a new machine for $36,990 with a 5-year useful life. The machine is expected to generate additional cash revenues of $4,200 per year and reduce operating costs by $5,100 each year of its economic life. The discount rate is 8%. What is the amount of the net present value of the machine? (For calculation purposes, use five decimal places as displayed in the factor table provided. Round net present value answer to whole number (e.g., 125).) Click here to view PV table. Net present value SA $ I

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 5PA: Falkland, Inc., is considering the purchase of a patent that has a cost of $50,000 and an estimated...

See similar textbooks

Similar questions

Incognito Company is contemplating the purchase of a machine that provides it with cash savings of $87,000 per year for five years. Interest is 10%. Assume the cash savings occur at the end of each year. Required: Calculate the present value of the cash savings. Note: Use tables, Excel, or a financial calculator. Round your final answer to the nearest whole dollar. (EV of $1. PV of $1. FVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) Present value
Elijah Enterprises will need to upgrade the computer system in 8 years. They anticipate the upgrade to cost $112,100. If the discount rate is 11%, what will be the required yearly investment needed to obtain the money for the upgrade?Round your (1+R)^n value to 2 decimal places and use that number for your final amount required rounded to the nearest dollar. Future Value / (1+R)^n = Amount Required / = What would be required if the discount rate was 9%? Future Value / (1+R)^n = Amount Required / =
even better cakes wants to purchase a new machine for 36850 with a 5-year useful life. The machine is expected to generate additional cash revenues of 4100 per year and reduce operating costs by 5400 each year of its economic life. the discount rate is 9%. what is the amount of net present value of the machine.
You are operating an old machine that is expected to produce a cash inflow of $5,100 in each of the next 3 years before it fails. You can replace it now with a new machine that costs $20,100 but is much more efficient and will provide a cash flow of $10,150 a year 4 years. Calculate the equivalent annual cost of the new machine if the discount rate is 14%. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Equivalent ann the purchase price Should you replace your equipment now? Yes No
Blossom Manufacturing is considering the purchase of a new sewing machine that costs $23200. The machine, because of its efficiency, will save about $4960 in cost each year. The machine is expected to have a salvage value of $3720 and a life of 6 years. Blossom's required rate of return is 12%. Click here to view the factor table. Using the present value tables, what is the machine's net present value? (round to the nearest dollar) O $18600 $-3402 O $-922 O $29760
You are operating an old machine that is expected to produce a cash inflow of $5,600 in each of the next 3 years before it fails. You can replace it now with a new machine that costs $20,600 but is much more efficient and will provide a cash flow of $10,900 a year for 4 years. Calculate the equivalent annual cost of the new machine if the discount rate is 15%. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Equivalent annual cost of the purchase price $ 791.60 x
Consider a firm with a contract to sell an asset for $154,000 five years from now. The asset costs $90,000 to produce today. a. Given a relevant discount rate of 13 percent per year, calculate the profit the firm will make on this asset. (A loss should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. At what rate does the firm just break even? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Firm's profit (loss) b. Break-even rate %
A project that costs $4,000 to install will provide annual cash flows of $1,300 for each of the next 6 years. a. What is NPV if the discount rate is 14%? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. How high can the discount rate be before you would reject the project? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Haresh
Consolidated Aluminum is considering the purchase of a new machine that will cost $308,000 and provide the following cash flows over the next five years: $88,000, 92,000, $91,000, $72,000, and $71,000. What is the internal rate of return (IRR) for this piece of equipment? Use the Present Value tables in Time Value of Money Appendix e of the book or use Excel to calculate the answer. Round to 2 decimal places. O Cannot be determined from the information provided. O 11.30% O 11.28% O 11.00%
Ramson Corporation is considering purchasing a machine that would cost $609,580 and have a useful life of 9 years. The machine would reduce cash operating costs by $105,100 per year. The machine would have a salvage value of $107,340 at the end of the project. (Ignore income taxes.) Required: a. Compute the payback period for the machine. (Round your answer to 2 decimal places.) b. Compute the simple rate of return for the machine. (Round your intermediate calculations to nearest whole dollar and your final answer to 2 decimal places.) a. Payback period 5.80 years b. Simple rate of return 8.09 %
Please help me