Required information The TT Racing and Performance Motor Corporation wish to evaluate two alternative machines for NASCAR motor tune- ups. Machine R S First cost, $ -290,000 -350,500 k Annual operating cost, $ per year -40,000 -50,000 Life, years 5 Salvage value, $ 21,900 16,000 t ht Use the AW method at 9% per year to select the better alternative. The annual worth of machine R is $- 67885, and the annual worth of machine S is $- 37437 ences The better alternative is machine S
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- The following annual costs are associated with three new extruder machines being considered for use in a Styrofoam cup plant: Data Useful Life, Years First Cost Salvage Value Annual Benefit M&O M&O Gradient X 17 $2,090,000 $87,000 $396,000 $56,000 $9,000 X-TRUD 13 $2,610,000 $93,000 $534,000 $60,000 $11,000 SUPR-X 11 $2,430,000 $119,000 $638,000 $53,000 $13,000 The company's interest rate (MARR) is 21%. Which extruder should the Styrofoam company choose? Use Annual Cash Flow Analysis and provide the right reason. Choosing SUPR-X is best because it has the lowest M&O cost in yr1 Choosing SUPR-X is best because it has the highest Annual Benefit Choosing SUPR-X will maximize the EUAB-EAUC; its value is $-127,486 higher than X and $15,650 higher than X-TRUD. Choosing SUPR-X will maximize the EUAB-EAUC; its value is $117,514 higher than X and $126,650 higher than X-TRUD.Required Information [The following information applies to the questions displayed below.] Project Y requires a $327,000 investment for new machinery with a four-year life and no salvage value. The project yields the following annual results. Cash flows occur evenly within each year. (PV of $1, FV of $1, PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Project Y $ 360,000 161,280 81,750 26,000 $ 90,970 2. Determine Project Y's payback period. Project Y Payback Period Numerator: 1 Denominator: 1 Payback Period = 0Required information [The following information applies to the questions displayed below.] Montego Production Company is considering an investment in new machinery for its factory. Various information about the proposed investment follows: Initial investment Useful life Salvage value Annual net income generated Montego's cost of capital Assume straight line depreciation method is used. Help Montego evaluate this project by calculating each of the following: $ 860,000 6 years Net Present Value $ 20,000 $ 66,000 11% Required: 4. Recalculate Montego's NPV assuming its cost of capital is 12 percent. (Future Value of $1, Present Value of $1. Future Value Annuity of $1, Present Value Annuity of $1.) Note: Use appropriate factor(s) from the tables provided. Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places.
- Current Attempt in Progress BAK Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the company to bid on jobs that it currently isn't equipped to do, Estimates regarding each machine are provided below. Original cost Estimated life i Salvage value Estimated annual cash inflows Estimated annual cash outflows Net present value Machine A Profitability index $78,300 Which machine should be purchased? 8 years $19,700 $5,040 Machine A 0 should be purchased Click here to view the factor table Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. Of the net present value is negative, use either a negative sign preceding the number eg-45 or parentheses eg (45). Round answer for present value to O decimal places, s 125 and profitability index to 2 decimal places, eg. 10.50. For calculation purposes, use 5 decimal places as displayed in the factor table provided) Machine B $185,000 8 years 0…Crane Corp. is considering purchasing one of two new processing machines. Either machine would make it possible for the company to produce its products more efficiently than it is currently equipped to do. Estimates regarding each machine are provided below: Machine A Machine B Original cost $113,900 $278,300 Estimated life 10 years 10 years Salvage value -0- -0- Estimated annual cash inflows $29,700 $60,100 Estimated annual cash outflows $7,600 $14,800 Calculate the net present value and profitability index of each machine. Assume an 8% discount rate. Machine A Machine B Net present value top row, profitability index bottom row Which machine should be purchased? Crane Corp. should purchase select a machine .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.…
- Perit Industries has $155,000 to invest in one of the following two projects: Cost of equipment required Working capital investment required Annual cash inflows Salvage value of equipment in six years Life of the project Project A $ 155,000 $ 25,000 $ 8,600 6 1. Net present value project A 2. Net present value project B 3. Which investment alternative (if either) would you recommend that the company accept? X Answer is complete but not entirely correct. Project B $0 $ 155,000 $ 40,000 years The working capital needed for project B will be released at the end of six years for investment elsewhere. Perit Industries' discount rate is 14%. Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables. Required: 1. Compute the net present value of Project A. Note: Enter negative values with a minus sign. Round your final answer to the nearest whole dollar amount. 2. Compute the net present value of Project B. $(53,971) 70,527 X Project B $0…Required information A land development company is considering the purchase of earth-moving equipment. This equipment will have an estimated first cost of $163,000, a salvage value of $55,000, a life of 10 years, a maintenance cost of $32,000 per year, and an operating cost of $220 per day. Alternatively, the company can rent the necessary equipment for $1010 per day and hire a driver at $180 per day. When approached to rent for the breakeven number of days, the equipment owner indicated that the minimum rental is for 100 days per year; however, he might consider a lower daily rental cost. What is the daily rental cost to justify renting over purchasing? If the equipment was purchased, assume it would be used for the breakeven number of days. Determine the required rental cost per day. The daily rental cost to justify renting over purchasing is determined to be $5. Dawg Engineering is considering a new machine for its assembly line, Each choice has a 10 year life. Calculate the IRR for each alternative Initial Cost $132,000.00 $186,000.00 $144,000.00 Annual Benefit $52,000.00 $42,00.00 $56,000.00 Yearly O & M $33,000.00 $12,000.00 $32,000.00 cost Salvage value $15,000.00 $9,000.00 $16,000.00 IRR-A IRR-B IRR-C
- An engineer has received two bids for an elevator to be installed in a new building. Given a 10% interest rate, which bid should be accepted? Alternatives Installed cost Annual cost Salvage value Life, in years Westinghome $45,000 2700 3000 10 Itis $54,000 2850 4500 15a. A new operating system for an existing machine is expected to cost $630,000 and have a useful life of six years. The system yields an incremental after-tax income of $195,000 each year after deducting its straight line depreciation. The predicted salvage value of the system is $26,200 b. A machine costs $540,000, has a $35,000 salvage value, is expected to last eight years, and will generate an after tax income of $82,000 per year after streight-line depreciation Assume the company requires a 12% rate of return on its investments. Compute the net present value of each potential investment (PV of 5), EV of S1, PVA of 31 and EVA of 50 (Use appropriate factor(s) from the tables provided) Complete this question by entering your answers in the tabs below. Required A Required A new operating system for an existing machine is expected to cost $630,000 and have a useful life of six years. The system vieles an incremental after-tax income of $195,000 each year after deducting its…