A company can rent a machine for an all-inclusive rate of $125 per hour and onaverage makes use of such a machine for1600 hours per year. The company isconsidering purchasing a machine as analternative to rent and obtains theinformation given below:Cost of machine = $320,000Salvage value after 5 years = $120,000Annual insurance premiums = $3,000Annual tax = $1,80Fuel cost per hour = $50Oil and grease cost = 10% of fuel costAnnual maintenance = $15,000Discount Rate = 18%If the planning horizon is 5 years, determinewhether the company should purchase a newmachine or continue to rent?

In this we have to calculate total annual cost of machine and see whether it is feasible or not.

Ivage value after 5 years = $120,000 nnual insurance premiums = $3,000 nual tax = $1,800 el cost per hour = $50 l and grease cost = 10% of fuel cost nual maintenance = $15,000 scount Rate = 18% the planning horizon is 5 years, determine hether the company should purchase a new achine or continue to rent?

Ivage value after 5 years = $120,000 nnual insurance premiums = $3,000 nual tax = $1,800 el cost per hour = $50 l and grease cost = 10% of fuel cost nual maintenance = $15,000 scount Rate = 18% the planning horizon is 5 years, determine hether the company should purchase a new achine or continue to rent?

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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A firm must decide between two designs A and B. Their effective income rate is 50%. If the desired after-tax return on investment is 8% per year, which alternative should be chosen? *Use repeatability assumption and AW method. Detail analysis is required* (20%) 1 B Capital investment 40000 MV at end of useful life 4000 Annual expenses 2500 Depreciation method MACRS (GDS) With 5- year recovery period Useful life (in years) 8 A 30000 6000 3000 SL to zero book value over 5 years 6
10
Flextire Manufacturing is considering two mutually exclusive proposals. Each will cost $80,000 and will last 6 years. Cash flows and estimated probabilities are presented below. Based on an MARR of 10%, use decision tree analysis to determine which proposal Flextire should consider. Proposal A Proposal B Benefits per year Benefits per year Probability $18,000 $17,500 Conservative= 0.40 20,000 20,500 Most likely= 0.35 23,000 23,000 Optimistic= 0.25 Write a brief interpretation of your answer.
cash price wi00. Find the present value of the given future amount: $57,000 for 8 months at 10% simple interest (yearly). N101. What is the present value of $6,000 to be received at the end of 6 years if the discount rate is 12%? vol 102. Sardor has been offered an investment that will pay him $500 three years from today. If his opportunity cost is 7% compounded annually, what value should he place on this opportunity today? 103. A company has cost of debt of 6% and cost of equity of 15%. In this country, the corporate income tax rate is 20%. If the debt to equity ratio is 0.5, what is the WACC? 104. A company has cost of debt of 6% and cost of equity of 15%. In this country, the corporate income tax rate is 20%. If the company's debt to total capital ratio is 60%, what is the WACC?
1
The interest rate is 8%. If all the alternatives have a 12-year useful life and no salvage value, which alternative should be selected?
do not round off on intermediate part of solution
Compare the cost of the following leasing agreement with the finance charge on a loan for the same time period. The price of the car is $25,000, and its projected residual value at the end of five years is $10,000. Monthly payment $450 Capital cost reduction $1,700 Disposition charge $400 Other things being equal, one would want to finance this car rather than take this lease if the finance cost were less than Group of answer choices $14, 100. $15,500. $12,900. $400.
At 6% interest rate, find the capitalized cost of a bridge whose cost is P 300 million and life is 20 years. If the bridge must be partially rebuilt at a cost of P 100 million at the end of each 20 years. P 445,178,192 O P 145,413,221 P 345,307,595 P 245,398,210
Number 14 on image. Also I need to compute the npv for each alternative and assume the discount rate is 8%
When purchasing a $100,000 house, a borrower is comparing two loan alternatives. The first loan is an 80% loan at 4% with monthly payments of $591.75 for 15 years. The second loan is 90% loan at 5% with monthly payments of $526.13 over 25 years. What is the incremental cost of borrowing the extra money assuming the loan will be held for the full term? O 6.50% O 13.21% O 7.20% O 13.70%

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