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Brown's local bakery is worried about increased costs- particularly energy. Last year's records can provide a fairly good estimate of the parameters for this year. Wende Brown the owner does not believe things have changed much, but she did invest in additional $3000 for modifications to bakery's oven to make them more energy efficient. The modifications were supposed to make the oven's atleast 15% more efficient. Brown has asked you to check the energy savings of the new ovens and also look over other measures of bakery's productivity to see if the modifications were beneficial. You have the following data to work with:
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- A businessman bought a used building and found that the roof insulation was insufficient. He estimated that with 6 inches of foam insulation he could lower his heating bill by $25 a month and the cost of air conditioning by $20 a month. Assuming that the first six months of the year are winter and the next six are summer, how much can you afford to spend on insulation if you expect to have the building for only two years? Assume i=1 ½ % per month.A large city in the midwest needs to acquire a street-cleanıng machine to keep its roads looking nice year round A used cleaning vehicle will cost $75,000 and have a $20,000 market (salvage) value at the end of its five-year Iife. A new system with advanced features will cost $150,000 and have a $50,000 market value at the end of its five-year life. The new system is expected to reduce labor hours compared with the used system. Current street-cleaning activity requires the used system to operate 8 hours per day for 20 days per month Labor costs $40 per hour (including fringe benefits), and MARR is 12% per year compounded monthly a. Find the breakeven percent reduction in labor hours for the new system b. If the new system is expected to be able to reduce labor hours by 20% compared with the used system, which machine should the city purchase? a. The breakeven reduction in lebor hours for the new system is ________% (Round to one decimal place)Wendell’s Donut Shoppe is investigating the purchase of a new $42,800 donut-making machine. The new machine would permit the company to reduce the amount of part-time help needed, at a cost savings of $5,700 per year. In addition, the new machine would allow the company to produce one new style of donut, resulting in the sale of 2,500 dozen more donuts each year. The company realizes a contribution margin of $1.50 per dozen donuts sold. The new machine would have a six-year useful life. Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables. Required: 1. What would be the total annual cash inflows associated with the new machine for capital budgeting purposes? 2. What discount factor should be used to compute the new machine’s internal rate of return? (Round your answers to 3 decimal places.) 3. What is the new machine’s internal rate of return? (Round your final answer to nearest whole percentage.) 4. In addition to the…
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- Wendell’s Donut Shoppe is investigating the purchase of a new $40,000 donut-making machine. The new machine would permit the company to reduce the amount of part-time help needed, at a cost savings of $5,200 per year. In addition, the new machine would allow the company to produce one new style of donut, resulting in the sale of 2,000 dozen more donuts each year. The company realizes a contribution margin of $2.40 per dozen donuts sold. The new machine would have a six-year useful life. Required: 4. In addition to the data given previously, assume that the machine will have a $10,515 salvage value at the end of six years. Under these conditions, what is the internal rate of return? (Hint: You may find it helpful to use the net present value approach; find the discount rate that will cause the net present value to be closest to zero.) (Round your final answer to the nearest whole percentage.)You have been hired as a consultant for Pristine Urban-Tech Zither, Incorporated (PUTZ), manufacturers of fine zithers. The market for zithers is growing quickly. The company bought some land three years ago for $740,000 in anticipation of using it as a toxic waste dump site but has recently hired another company to handle all toxic materials. Based on a recent appraisal, the company believes it could sell the land for $950,000 on an aftertax basis. In four years, the land could be sold for $1,225,000 after taxes. The company also hired a marketing firm to analyze the zither market, at a cost of $130,000. An excerpt of the marketing report is as follows: The zither industry will have a rapid expansion in the next four years. With the brand name recognition that PUTZ brings to bear, we feel that the company will be able to sell 7,120, 7,920, 9,215, and 6,110 units each year for the next four years, respectively. Again, capitalizing on the name recognition of PUTZ, we feel that a premium…Brown's, a local bakery, is worried about increased costs particularly energy. Last year's records can provide a fairly good estimate of the parameters for this year. Wende Brown, the owner, does not believe things have changed much, but she did invest an additional $3,000 for modifications to the bakery's ovens to make them more energy efficient. The modifications were supposed to make the ovens at least 20% more efficient. Brown has asked you to check the energy savings of the new ovens and also to look over other measures of the bakery's productivity to see if the modifications were beneficial. You have the following data to work with Production (dozen) Labor (hours) Capital Investment (5) Energy (BTU) Last Year 1,600 340 15,000 3,000 Now 1,600 320 18,000 2,800 Energy productivity increase=% (enter your response as a percentage rounded to two decimal places and include a minus sign if necessary) Capital productivity increase=% (enter your response as a percentage rounded to two…
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