(Related to Checkpoint 13.4) (Break-even analysis) The Marvel Mfg. Company is considering whether or not to construct a new robotic production facility. The cost of this new facility is $600,000 and it is expected tohave a six-year life with annual depreciation expense of $100,000 and no salvage value. Annual sales from the new facility are expected to be 2,040 units with a price of $950 per unit. Variable production costs are $600per unit, and fixed cash expenses are $85,000 per year.a. Find the accounting and the cash break-even units of production.b. Will the plant make a profit based on its current expected level of operations?c. Will the plant contribute cash flow to the firm at the expected level of operations?a. The accounting break-even units of production is 242.9 units. (Round to the nearest whole number.)

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Answered: Related to Checkpoint 13.4) (Break-even…

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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The management Biden ltd intends to replace it existing two-year-old milk scheming machine whose original cost wash. 1000,000. The machine is two years old and it has a current market value of sh 700,000. The capital budgeting analysts believe that the machine has five more years of useful life. At the end of the five years, the asset will have a zero-salvage value. The netbook value of the machine is sh 800,000. The management is contemplating the purchase of a new machine to replace the old one. The new machine costs sh 1,600,000 and installation estimated at sh 300,000. It has an estimated salvage value of shs. 200,000 at the end of five-year useful life. The new machine will have a greater technological capacity and therefore annual sales are expected to increase by sh 240,000 operating efficiencies with the new machine will produce an expected savings of shs 260,000 a year. The company uses modified accelerated capital recovery depreciation method of 23% ,17%,20% ,21% and 19% from…
Two stamping machines are under consideration for purchase by a metal recycling company. The manual model will cost P1,250,000 to buy with an eight-year life and a P250,000 salvage value. Its annual operating costs will be P800,000. A computer-controlled model will cost P4,750,000 to buy and it will have a twelve-year life if upgraded at the end of year six for 750,000. Its terminal salvage value will be P1,150,000, with annual operating costs of P375,500 for labor and P125,000 for maintenance. The company's minimum attractive rate of return is 18%.Show the Cash Flow Diagram?
2
Option E) is incorrect . Please solve correctly
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 $. EX of St. PVA of Stand EVA of $ (Use appropriate factors) from the tables provided) Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery 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% Complete this question by entering your answers in the tabs below. Required 1 Required 2 year 4 Required 3 Compute net present value for this machine using a discount rate of 7%. (Do not round intermediate calculations. Negative amounts should be entered with a minus sign.…
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Find the expected EUAW from the financial data provided in the table for new equipment. 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 $25,000 with a possible equipment life of 5 years. The salvage value is expected to be 10% of the initial cost. MARR = 8%. First Cost, $ $60,000 $80,000 $100,000 $120,000 Probability 0.25 0.35 0.30 0.10 Choices: A. $3957 B. $2977 C. $4628 D. $5157 Determine the associated risk measure in this equipment investmest in terms of standard deviation. A. $6,123 B. $4437.80 C. $8,523 D. $4,923
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The X Company is considering the acquisition of a new processor that has an estimated installed cost of $57,000. The processor has an expected life of 5 years and will be depreciated over a 5 year ACRS life to a zero salvage value. However, it is expected that the processor can be sold at that time for $6,000. If purchased, the entire $57,000 would be borrowed at an interest rate of 9%. A capital budgeting analysis results in a positive NPV for the project. An alternative to purchase is to lease the asset for an annual lease payment of $13,500. The lease includes maintenance services estimated to cost Company C $3,000 per year if they were not included in the lease payment. Company C's cost of capital is 11% and its marginal tax rate is 34%. Evaluate the purchase and lease options and make a recommendation of which is preferred.
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