Green Rose Inc. is considering these following investments for year 2022: Initial amount Salvage Value Cost savings Machine A 450,000 75,000 66,730 • • Testing cost Training he following cost are associated to each of the machines: • Inspection cost Installation cost Warranties 3,000 3,500 2,700 Machine B 4,300 4,500 375,000 67,000 73,425 Machine C 425,000 58,000 63,950 a) Determine the Net investment of each Machine. b) Determine the accounting rate of return. c) Which of these investments would Green Rose Inc. purse if the required rate of return is 18%?
Green Rose Inc. is considering these following investments for year 2022: Initial amount Salvage Value Cost savings Machine A 450,000 75,000 66,730 • • Testing cost Training he following cost are associated to each of the machines: • Inspection cost Installation cost Warranties 3,000 3,500 2,700 Machine B 4,300 4,500 375,000 67,000 73,425 Machine C 425,000 58,000 63,950 a) Determine the Net investment of each Machine. b) Determine the accounting rate of return. c) Which of these investments would Green Rose Inc. purse if the required rate of return is 18%?
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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Transcribed Image Text:1. Green Rose Inc. is considering these following investments for year 2022:
Machine A
Machine B
Machine C
450,000
375,000
425,000
Initial amount
Salvage Value
75,000
67,000
58,000
Cost savings
66,730
73,425
63,950
The following cost are associated to each of the machines:
• Inspection cost
3,000
• Installation cost
3,500
•
Warranties
2,700
• Testing cost
4,300
•
Training
4,500
a) Determine the Net investment of each Machine.
b) Determine the accounting rate of return.
c) Which of these investments would Green Rose Inc. purse if the required rate of return is
18%?
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