Pigs-R-Us is trying to decide whether or not to automate their meat packing process. The machine costs $200,000, has a useful life of 10 years and a salvage value of $10,000. It will require a $60,000 overhaul after 5 years of use. The machine costs $9,000 per year to operate and maintain, but it will save the company $50,000 per year in labor costs. Pigs-R-Us has asked you to evaluate the economics of this purchase and tell them what do to. If their MARR is 14%, what would you recommend? Use External Rate of Return Method.

Q: Biggerstaff Automotive Group is looking to replace their office printer. Option 1 costs $4,000 and…

A: Here, Net present value is 'NPV' Note: minus (-) sign indicates that it is a cost to the company.

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A: Capital budgeting is a set of techniques that are used by companies to determine the profitability…

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A: Equivalent Annual cost :  To choose one model we have to find annual equivalent cost  of each model…

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A: The net cash flow = $4,700 per month - $2,500, = $2,200 per month or $26,400 per year.

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A: Depreciation is the reduction in the value of asset due to its usage, wear or tear. Net operating…

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A: We will calculate the present value of future costs.

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A: Variable costs are costs that vary with the change in the level of output whereas fixed costs are…

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A: Opportunity Cost  Opportunity cost is the benefit that the investor has to let go due to the…

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A: Incremental Cost is the cost incurred for the  production of additional units of products. Variable…

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A: Hondrich Company faces a tough decision: continue making oil drums internally with rented new…

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A: Given: Cost of tractor is $50,000 Tax rate =35% Life = 4 years Discount rate = 14%

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A: Current Machine (3 years old):    - Initial cost: $140,000 (not relevant for future costs)  -…

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A: The lowest bid price is the selling price that will earn the lowest required rate of return after…

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A: NPV It is a capital budgeting tool to decide on whether the capital project is beneficial or not. As…

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A: The lowest bid:The lowest bid price is the selling price that will earn the lowest required rate of…

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A: Lets understand the basics. When there are two alternatives available then management try to choose…

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Q: ars, the PDX w W

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A: Here, Tax Rate is 23% Required Return is 10% Variable Cost is $85 Required NPV is $100,000

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A: Annual after tax cash flow the operating cash flow available after tax and depreciation.

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A: The present value would be the equivalent value based on interest rate and time period of project…

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A: Calculation of incremental cash flows and NPV is shown below:

Q: DeYoung Entertainment Enterprises is considering replacing the latex molding machine it uses to…

A: As per the guidelines, I am required to answer only the first three questions. The question is based…

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Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.