Multiple Choice Question"Roper Spring Water" is considering a new bottling line that costs $230,000, lasts 4 years, and yields cost savings of $55,000 in year 1, $65,000 in year 2, and$75,000 in years 3 and 4. If the interest rate is 7%, what is the net present value of the machine? Should Roper Spring Water buy the machine?O -$226,615; NoO $3,385, YesO $226,615; YesO -$3,385; No10

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Answered: Multiple Choice Question "Roper Spring…

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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D-74 Your company is considering two alternatives: Alt. I Alt. II First cost $42,500 $70,000 Annual maintenance 6,000 4,000 Annual savings if implemented 18,500 20,000 Salvage value 12,000 25,000 Useful life of alternative 3 years 6 years What is the annual dollar advantage of Alt. II over Alt. I at an interest rate of 15%? (a) Alt. II has no annual advantage over Alt I. (b) $3020 (c) $3500 (d) $7436
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View Policies Current Attempt in Progress Novak Company is considering investing in a new dock that will cost $670,000. The company expects to use the dock for 5 years, after which it will be sold for $410,000. Novak anticipates annual cash flows of $220,000 resulting from the new dock. The company's borrowing rate is 8%, while its cost of capital is 11% Click here to view PV tables. Calculate the net present value of the dock (Use the above table) (Round factor values to 5 decimal places, eg. 1.25124 and final answer to O decimal places, eg 5,275) Net present value Indicate whether Novak should make the investment. Novak Save for Later the project Attempts: 0 of 1 used Submit Answer
不 NPV for varying costs of capital LePew Cosmetics is evaluating a new fragrance-mixing machine. The machine requires an initial investment of $320,000 and will generate cash inflows of $61,850 per year for 8 years. If the cost of capital is 13%, calculate the net present value (NPV) and indicate whether to accept or reject the machine. The NPV of the project is $ (Round to the nearest cent.) Should this project be accepted? (Select the best answer below.) No ○ Yes
Q. 1 Fatih's plant is trying to decide to buy another CNC machine or not. The machine will cost $20,000 when purchased. Maintenance will cost $1000 per year. The device will generate revenues of $5000 per year for 5 years. The salvage value is $7000. Draw and simplify the cash flow diagram.
A proposal to reduce oil spill on MX5 has a B-C ratio of 1.5. The conventional annual worth of benefits is P560,000 and the disbenefits is P100,000. What is the first cost of the project if the interest rate is 6% per year and the project is expected to have a 20-year life? ANSWER: Blank 1 Blank 1 Add your answer
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View Policies Current Attempt in Progress You are starting a family pizza parlor and need to buy a motorcycle for delivery orders. You have two models in mind. Model A costs $8,000 and is expected to run for 6 years; Model B is more expensive, with a price of $13,000, and has an expected life of 9 years. The annual maintenance costs are $760 for Model A and $600 for Model B. Assume that the opportunity cost of capital is 9 percent. Calculate equivalent annual costs (EAC) of each models. (Do not round the discount factor. Round intermediate calculations and final answers to 2 decimal places, eg. 15.25.) EAC of Model Ai EAC of Model B is $ You should buy $ Which one should you buy? eTextbook and Media Attempts: 0 of 2 used Submit Apne
Answer and draw the cashflow diagram A steam boiler is purchased on the basis of guaranteed performance. However, initial tests indicate that the operating cost will be P40, 000 more per year than guaranteed. If the expected life is 25 years and money is worth 10%, what deduction from the purchased price would compensate the buyer for the operating cost?
eBook Problem Walk-Through Project L requires an initial outlay at t = 0 of $50,000, its expected cash inflows are $10,000 per year for 9 years, and its WACC is 10%. What is the project's NPV? Do not round intermediate calculations. Round your answer to the nearest cent.
Finance There are three mutually exclusive alternatives and do-nothing is also an option. If all machines have useful life of 4 years, find the best machine using the ROR analysis. (a) When MARR = 20% per year. (b) When MARR = 25% per year. (c) When MARR = 30% per year.

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