Caine Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost $187,400 andhas an estimated useful life of 8 years with zero salvage value. Management estimates that the new bottling machine willprovide net annual cash flows of $35,400. Management also believes that the new bottling machine will save the companymoney because it is expected to be more reliable than other machines, and thus will reduce downtime. Assume a discountrate of 12%. Click here to view PV table.Calculate the net present value. (If the net present value is negative, use either a negative sign preceding the number eg -45or parentheses eg (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided. Roundpresent value answer to 0 decimal places, e.g. 125.)Net present value$How much would the reduction in downtime have to be worth in order for the project to be acceptable? (Round answer to 0decimal places, e.g. 125.)$%24

Name: Caine Bottling Corporation is considering the purchase of a new bottl
Uploaded: 2024-03-05T11:50:36.000Z
Channel: Bartleby
Description: Caine Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost $187,400 andhas an estimated useful life of 8 years with zero salvage value. Management estimates that the new bottling machine willprovide net

Net present value The present value of all future cash flows, discounted back to the present time at the proper discount rate, less the cost to obtain those cash flows, is the net present value. Net present value = Present value of Cash Inflows - Initial Investment =35400 * 4.96764 - 187400 = $-11,546 Reduction in downtime worth = $11546/4.96764 = $2,324

Business

Accounting

life of 8 years with zero salvage value. Management estim. flows of $35,400. Management also believes that the new ected to be more reliable than other machines, and thus wi o view PV table. t value. (If the net present value is negative, use either a ne

life of 8 years with zero salvage value. Management estim. flows of $35,400. Management also believes that the new ected to be more reliable than other machines, and thus wi o view PV table. t value. (If the net present value is negative, use either a ne

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Which equipment with the estimated life of 10 years, will you choose from the following using annual equivalent method and why? (a) Equipment A with the cost of "SAP × 1000" PKR having no salvage and maintenance cost. (b) Equipment B with the cost of "SAP × 100" PKR having salvage value of your "SAP" PKR and maintenance cost of "SAP × 2" PKR.
What is the Delta IRR of the difference between the cashflow of the machine with the higher initial value and the lower initial value with the following data? Benefits are constant over all years. Machine A Machine B Initial cost $125,000 $175,000 Life in years 3 6 Salvage after life 15 % 15% Benefits per year $72,000 S 81,000 Costs per year $15,800 $24, 200 Inflation 2.50% Costs keep increasing at 2.5% every year even when a new machine is bought.
bid on jobs that it currently isn't equipped to do. Estimates regarding each machine are provided here. Machine A $75,500 8 years Original cost Estimated life Salvage value Estimated annual cash inflows Estimated annual cash outflows Click here to view the factor table. Net present value Profitability index 0 $20,000 $5,000 Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round answer for present value to 0 decimal places, e.g. 125 and profitability index to 2 decimal places, e.g. 10.50. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Machine A 706 Machine B $180,000 8 years 0 89 $40,000 $10,000 Machine B 161642.40 1.04
Please do not give solution in image format thanku
Determine the associated risk measure in this equipment investment in terms of standard deviation. Because of the uncertainty of technology being used in this equipment, it has not been possible to get the initial cost accurately. The annual benefit, however, is estimated to be $20,000 with a possible equipment life of 5 years. The salvage value is expected to be 10% of the initial cost. MARR =8% First Cost, $ $50,000 $80,000 $100,000 $125,000 Probability 0.25 0.35 0.30 0.10
An investment that costs $25,000 will produce annual cash flows of $5,000 for a period of 6 years. Further, the investment has an expected salvage value of $3,000. Given a desired rate of return of 12%, the investment will generate a (Do not round your PV factors and intermediate calculations. Round your answer to the nearest whole dollar): Multiple Choice negative net present value of $2,923. negative net present value of $1,520. negative net present value of $25,000. positive net present value of $20,557
Calculate only for LETTER C and D. No Excel, please. (No thumbs up if calculated in excel). Solve MANUALLY. Thank you.
Calculate the profitability of the following proposal using the Average rate of return (ARR) method Proposal I Automatic machine Cost OMR 320000 Estimated life 5 years, scrap value OMR 25000, The estimated profits are given below Year Profits 1 75000 21 55000 3. 60000 4. 70000 80000 O a. 37.71% O b. 36.00% 39.42% O d. All the options are wrong earch 近

I need handwritten and please done correct
Use the following information for the Quick Study below. (Algo) [The following information applies to the questions displayed below.] Following is information on an investment in a manufacturing machine. The machine has zero salvage value. The company requires a 6% return from its investments. Initial investment Net cash flows: Year 1 Year 2 Year 3 Year 1 Year 2 Year 3 QS 24-19 (Algo) Net present value with unequal cash flows LO P3 Compute this machine's net present value. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round all present value factors to 4 decimal places. Round present value amounts to the nearest dollar.) Totals Initial investment Net present value Net Cash Flow $ $ $ (240,000) 195,000 90,000 103,000 388,000 195,000 90,000 103,000 Present Value Factor Present Value of Net Cash Flows $ $ 0 0
E & A Construction must replace a piece of heavy earth moving equipment. Information concerning the three best alternatives is summarized below. If E and A has a minimum attractive rate of return (MARR) of 11%, which alternative should be chosen? Use IRR incremental analysis. Cat Volvo Liebherr $63,000 $105,000 $9,000 $12,000 $31,000 $37,000 $19,000 $22,000 First Cost $52,000 $15,000 $38,000 $13,000 Annual Operating & Maintenance Cost Annual Benefits Salvage Value Useful life 4 6. 12
Following is information on an investment in a manufacturing machine. The machine has zero salvage value. The company requires a 6% return from its investments. $ (260,000) 150,000 146,000 117,000 Initial investment Net cash flows: Year 1 Year 2 Year 3 Compute this machine's net present value. (PV of $1. EV of $1. PVA of $1, and EVA of $1) (Use appropriate factor(s) from the tables provided. Round all present value factors to 4 decimal places. Round present value amounts to the nearest dollar.) Year 1 Year 2 Year 3 Totals Initial investment Net present value Net Cash Flow $ 0 Present Value Factor Present Value of Net Cash Flows $ $ 0