Maps News-mework itaInterstate Manufacturing is considering either overhauling an old machine or replacing it with a new machine. Information about thetwo alternatives follows. Management requires a 8% rate of return on its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1)(Use appropriate factor(s) from the tables provided.)Alternative 1: Keep the old machine and have it overhauled. This requires an initial investment of $146,000 and results in $40,000 ofnet cash flows in each of the next five years. After five years, it can be sold for a $23,000 salvage value.Alternative 2: Sell the old machine for $40,000 and buy a new one. The new machine requires an initial investment of $295,000 andcan be sold for a $11,000 salvage value in five years. It would yield cost savings and higher sales, resulting in net cash flows of$49,000 in each of the next five years.Required:1. Determine the net present value of alternative 1.2. Determine the net present value of alternative 2.3. Which alternative should management select based on net present value?Required 1AComplete this question by entering your answers in the tabs below.Van 15Translate M SmartBook 2.0M SmartBook 2.0 M SmartBook 2.0F1@Determine the net present value of alternative 1. (Do not round intermediate calculations. Round your present value factor to4 decimals and final answers to the nearest whole dollar.)2WSRequired 230²F2Net CashFlows3Required 3#con&external_browser=0&launchUrl=https%253A%252F%252Felearning.kctcs.edu%252Fultra%2E80F3Present ValueFactors at 8%APR11$4RaF4FPresent Value ofCash Flows%5< PrevSaved0F5TGm tv68 of 8 # Next >F6Y&7H←F7U8IZAⓇFB(DD9F9K)F10OOO.IP

The value of an investment taken into account across its whole expected lifespan and then discounted…

Answered: Interstate Manufacturing is considering…

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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An engineering company is evaluating two different options for buying a triaxial testing machine. The expected cash flow for two different options and other required data are given in Table. By considering data given in Table, which option should be preferred by the engineering company. Give all calculation steps. First Cost (TL) Annual Operating COsts (TL) Annual Revenue (TL) Salvage Value (TL) Economic Life (TL) Option A 120000 14000 50000 30000 5 Option B 150000 10000 60000 350000 5 Interest Rate - 0.05 Discount Rate - 0.05
Hook Industries is considering the replacement of one of its old metal stamping machines. Three alternative replacement machines are under consideration. The cash flows associated with each are shown in the following table attached: . The firm's cost of capital is 10%. a. Calculate the net present value (NPV) of each press. b. Using NPV, evaluate the acceptability of each press. c. Rank the presses from best to worst using NPV.
Assume that a company is considering purchasing a machine for $50,500 that will have a five-year useful life and no salvage value. The machine will lower operating costs by $17,000 per year. The company's required rate of return is 18%. The profitability index for this investment is closest to: Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. Multiple Choice C O 0.95. 1.01. 1.05. 1.11.
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Interstate Manufacturing is considering either overhauling an old machine or replacing it with a new machine. Information about the two alternatives follows. Management requires a 10% rate of return on its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Alternative 1: Keep the old machine and have it overhauled. This requires an initial investment of $150,000 and results in $60,000 of net cash flows in each of the next five years. After five years, it can be sold for a $20,000 salvage value. Alternative 2: Sell the old machine for $50,000 and buy a new one. The new machine requires an initial investment of $300,000 and can be sold for a $20,000 salvage value in five years. It would yield cost savings and higher sales, resulting in net cash flows of $60,000 in each of the next five years. Required: 1. Determine the net present value of alternative 1. 2. Determine the net present value of alternative 2. 3. Which…
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DuraTech Manufacturing is evaluating a process improvement project. The estimated receipts and disbursements associated with the project are shown below. MARR is 6%/year. Solve, a.What is the future worth of this investment?b. What is the decision rule for judging the attractiveness of investments based on future worth? c. Should DuraTech implement the proposed process improvement?
Interstate Manufacturing is considering either overhauling an old machine or replacing it with a new machine. Information about the two alternatives follows. Management requires a 10% rate of return on its investments. (PV of $1, FV of $1. PVA of $1. and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Alternative 1: Keep the old machine and have it overhauled. This requires an initial investment of $154,000 and results in $52,000 of net cash flows in each of the next five years. After five years, it can be sold for a $20,000 salvage value. Alternative 2: Sell the old machine for $41,000 and buy a new one. The new machine requires an initial investment of $291,000 and can be sold for a $12,000 salvage value in five years. It would yield cost savings and higher sales, resulting in net cash flows of $43,000 in each of the next five years. Required: 1. Determine the net present value of alternative 1. 2. Determine the net present value of alternative 2. 3. Which…
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OptiLux is considering Investing in an automated manufacturing system. The system requires an initial Investment of $6.0 million, has a 20-year life, and will have zero salvage value. If the system is Implemented, the company will save $740,000 per year in direct labor costs. The company requires a 10% return from Its Investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) a. Compute the proposed Investment's net present value. b. Using the answer from part a, is the investment's Internal rate of return higher or lower than 10%? Hint: It is not necessary to compute IRR to answer this question. Complete this question by entering your answers in the tabs below. Required A Required B Compute the proposed investment's net present value. Net present value
please answer both requirements

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