Q9) Muscat Company is planning to start their new factory in Salalah. The company is considering to purchase one of the two manufacturing equipment's required for the factory. The life for both the Manufacturing equipment's is 5 years. Equipment A OMR 13000 and Equipment from B costs OMR.13000. The Discount rate/cost of capital is 4%. Required: Use NET PRESENT VALUE techniques to help company to decide which Equipment is better and justify why? Year Equipment from A Equipment from B Cash inflow 1 2500 3500 2 3500 3500 3 4500 4000 4 5500 4000 5 6500 4500

Q9) Muscat Company is planning to start their new factory in Salalah. The company is considering to purchase one of the two manufacturing equipment's required for the factory. The life for both the Manufacturing equipment's is 5 years. Equipment A OMR 13000 and Equipment from B costs OMR.13000. The Discount rate/cost of capital is 4%. Required: Use NET PRESENT VALUE techniques to help company to decide which Equipment is better and justify why? Year Equipment from A Equipment from B Cash inflow 1 2500 3500 2 3500 3500 3 4500 4000 4 5500 4000 5 6500 4500

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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1. Jamuna Group is evaluating the proposal of a new RMG factory called Jamuna Fabrics. Jamuna Group is renting a premise of 50,000 Square feet in Savar and Jamuna Fabrics is planning to use 10,000 Square feet from this facility. The rest of the premise is currently being used by another RMG factory of Jamuna Group called Jamuna Exclusive Fabrics. The Jamuna Exclusive Fabrics has already started its production. For Jamuna Fabrics, the total capital cost is USD 40,000 and is depreciated using the straight-line method over five years to a zero-salvage value. The monthly salary expense will be USD 2500, whereas annual utility and other expense will be USD 2,000. The annual total rent of 50,000 Square feet premise is USD 25,000. Jamuna Fabrics will need to annually pay USD 6000 as staff’s festival bonus. The cash flow from asset for Jamuna Fabrics is USD 28000 in the first year, followed by USD 12000 in the second year. Assume, initially Jamuna Fabrics will require USD 2,000 in working…
B) Pakar & Son Sdn Bhd is looking to invest in a new project, with a project life of 4 years. The project involves a new manufacturing equipment that makes inline skate wheels. The marketing department estimates a total sale of 6,000 units each year at a price of RM300 per unit. Variable cost is about 40% from the selling price. Fixed cost is estimated at RM450,000 per year. The new equipment will cost RM1,500,000. The machine will be depreciated to zero over its 6-year economic life using the straight-line method. At the end of year 4, the equipment can be sold at RM650,000. The project also requires an investment of RM525,000 in net working capital at the start and it will be recovered in full at the end of the project's life. The corporate tax rate is 35 percent. The required rate of return for the project is 25%. i) What is the initial cost of this project? ii) Determine the annual cash flow of this project from year 1 to year 4.
D4)
Q1. Raysut cement is planning to start their new factory in Ibri. The company is considering to purchase one of the two machines required for the factory. The life for both the machines is 5 years. Machine from Japan costs OMR. 10000 and Machine from China costs OMR.10000. Required: Use the Payback Period techniques to help company decide which Machine is better and justify why? Year Cash inflow 1 2 Machine from Japan 3200 Machine from China 2800 3200 3200 3300 3800 3 3200 3200 4 4300 4800
Rafieza restaurant is considering the installation of a new processing machine that will cost RM54,000. The cooker has an installation cost of RM1,200. Networking capital of RM 800 is required at the time of installation. The decision will warrant an operating cost of RM8,500. What is the amount of initial outlay for the project?
You have a opportunity to make a investment that has $10.000,000 landing, 1.500.000 machine, outsourcing 500.000 and finance cost 1.000.000. Machines have 1.000.000 scrap value at end of 4th year. You will pay interest payment at the end of project, that is $400.000. If you make this investment now, you will receive $4.500,000 one year from today, $3.000,000, $5.000,000 and $ 4.000,000 respectively. The appropriate discount rate for this investment is 14 percent. Tax rate is % 30. Should you make the investment?
Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $491,000 cost with an expected four-year life and a $20,000 salvage value. Additional annual information for this new product line follows. (PV of $1. EV of $1. PVA of $1, and EVA of $1) (Use appropriate factor(s) from the tables provided.) Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Required: 1. Determine income and net cash flow for each year of this machine's life. 2. Compute this machine's payback period, assuming that cash flows occur evenly throughout each year. 3. Compute net present value for this machine using a discount rate of 7%. $ 1,990,000 1,509,000 117,750 162,000 Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute net present value…
Lesego Ltd is considering an investment in a new machine for the production of a new product, X. There are two possibilities, Machine A and Machine B. Both product X and the machine would have an expected life of five years.The following information is available:Product X Selling price $50Variable cost 32Increase in fixed overhead (excluding depreciation of the new machine) is $90,000 per year.YearSales units 1 10,0002 15,0003 20,0004 20,0005 5,000 Machine A Machine BInitial cost ($000) 550 480Residual value 50 30The company’s cost of capital is 10%,Required:Evaluate each machine, using the following methods:Accounting rate of return Payback;Net present value. Discuss the importance of capital budgeting in organisations.
HT Bowling, Inc is considering the purchase of VOIP phone system. It will require an initial investment of $29,500 and $9,000 per year in annual operating costs over the equipment's estimated useful life of 4 years. The company will use a discount rate of 11%. What is the equivalent annual cost? $3,460 O $12,623 O $26,810 O $18,509
A company is planning to install a new automated plastic-moulding press. Four different presses are available. The initial capital investments and annual expenses for these four mutually exclusive alternatives are as follows: Assume that each press has the same output capacity and has no market value at the end of its useful life; the selected analysis period is five years. Which press should be chosen? Use MARR = 20% per year.
Company xyz will buy a carpet loom. Its purchase price is 250000 TL, its scrap value is 25000, its economic life is 10 years, and its annual net cash inflow is 87000 TL. Since the capital cost of the company is %35. Would you recommend that this machine be purchased by the company?
How would I solve this? Thanks!

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