poi The Borstal Company has to choose between two machines that do the same job but have different lives. The two machines have thefollowing costs:YearMachine AMachine B0$ 50,000$ 60,000112,00011,700212,00011,7003412,000+ replace11,70011,700+ replaceThese costs are expressed in real terms.a. Suppose you are Borstal's financial manager. If you had to buy one or the other machine and rent it to the production managerfor that machine's economic life, what annual rental payment would you have to charge? Assume a 10% real discount rate andignore taxes.Note: Do not round intermediate calculations. Enter your answers as a positive value rounded to 2 decimal places.b. Which machine should Borstal buy?c. If there is steady 4% per year inflation, what will be the annual rental payment for machine B for the second year?Note: Enter your answer as a positive value rounded to 2 decimal places.> Answer is complete but not entirely correct.Annual RentalPaymenta. Machine A$27,773.54 xa. Machine B$50,419.03 ×b. Which machine should Borstal buy?Machine Bc. Year 2 rental payment$33,127.51 X

a. To calculate the annual rental payment, we need to determine the equivalent annual cost (EAC) for…

Answered: The Borstal Company has to choose…

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

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The Borstal Company has to choose between two machines that do the same job but have different lives. The two machines have the following costs: Year Machine A Machine B $51,000 0 $41,000 1 10,200 8,400 2 10,200 8,400 3 10,200+ replace 8,400 4 8,400 + replace These costs are expressed in real terms. a. Suppose you are Borstal's financial manager. If you had to buy one or the other machine and rent it to the production manager for that machine's economic life, what annual rental payment would you have to charge? Assume a 8% real discount rate and ignore taxes. (Do not round intermediate calculations. Enter your answers as a positive value rounded to 2 decimal places.) Answer is complete but not entirely correct. Annual Rental Payment Machine A $ 25,108.00 Machine B $ 24,561.00 > b. Which machine should Borstal buy? Machine A Machine B
The Borstal Company has to choose between two machines that do the same job but have different lives. The two machines have the following costs: Year Machine A $48,000 11,600 11,600 11,600+ replace OLZ3+ 0 1 2 4 Machine A Machine B Machine B $58,000 Annual Rental Payment 11, 200 11, 200 These costs are expressed in real terms. a. Suppose you are Borstal's financial manager. If you had to buy one or the other machine and rent it to the production manager for that machine's economic life, what annual rental payment would you have to charge? Assume a 12% real discount rate and ignore taxes. (Do not round intermediate calculations. Enter your answers as a positive value rounded to 2 decimal places.) 11,200 11,200 replace
The Borstal Company has to choose between two machines that do the same job but have different lives. The two machines have the following costs: Year Machine A 0 OLN3+ 1 2 4 $48,000 11,600 11,600 11,600 + replace Machine A Machine B These costs are expressed in real terms. a. Suppose you are Borstal's financial manager. If you had to buy one or the other machine and rent it to the production manager for that machine's economic life, what annual rental payment would you have to charge? Assume a 12% real discount rate and ignore taxes. (Do not round intermediate calculations. Enter your answers as a positive value rounded to 2 decimal places.) Machine B $58,000 11,200 11, 200 11,200 11,200 + replace Annual Rental Payment
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The Borstal Company has to choose between two machines that do the same job but have different lives. The two machines have the following costs: Year Machine A 0 1 2 3 4 $46,000 11, 200 11,200 11,200 replace Machine A Machine B Machine B $56,000 These costs are expressed in real terms. a. Suppose you are Borstal's financial manager. If you had to buy one or the other machine and rent it to the production manager for that machine's economic life, what annual rental payment would you have to charge? Assume a 8% real discount rate and ignore taxes. (Do not round intermediate calculations. Enter your answers as a positive value rounded to 2 decimal places.) $ 29,029.46 x $ 27,318.43 x 10,400 10,400 > Answer is complete but not entirely correct. Annual Rental Payment 10,400 10,400 replace O Machine A Machine B b. Which machine should Borstal buy? c. If there is steady 4% per year inflation, what will be the annual rental payment for machine B for the second year? (Enter your answer as a…
1.Use the table below to answer the following questions. Resource Prices A B C Labor $5 5 4 3 Capital 10 2 3 5 Entrepreneur 20 1 1 1 Assume that a firm finds its profits will be maximized when it produces 50 units of product W (i.e., “widgets”). Three techniques shown in the table above will produce exactly 50 widgets. Which technique is the least expensive way of producing a widget? Suppose the firm chooses the least-cost method of production. If widgets sell for $2 each, what is the total economic profit of the firm?
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Howard Cooper, the president of Walton Computer Services, needs your help. He wonders about the potential effects on the firm's net income if he changes the service rate that the firm charges its customers. The following basic data pertain to fiscal Year 1: Standard rate and variable costs Service rate per hour Labor cost Overhead cost Selling, general, and administrative cost Expected fixed costs. Facility maintenance Selling, general, and administrative $ 65.00 30.00 5.65 3.40 $ 316,000 120,000 Required: a. Prepare the pro forma income statement that would appear in the master budget if the firm expects to provide 29,000 hours of services in Year 1. b. A marketing consultant suggests to Mr. Cooper that the service rate may affect the number of service hours that the firm can achieve. According to the consultant's analysis, if Walton charges customers $60 per hour, the firm can achieve 34,000 hours of services. Prepare a flexible budget using the consultant's assumption. c. The same…
Requirements 1. 2. 3. 4. What is the total cost of producing 1,200 mailboxes? If $18,516 of the total costs are fixed, what is the variable cost of producing each mailbox? Write Branson Mailbox's cost equation. If the plant manager uses the average cost per unit to predict total costs, what would the forecast be for 1,500 mailboxes? 5. If the plant manager uses the cost equation to predict total costs, what would the forecast be for 1,500 mailboxes? 6. What is the dollar difference between your answers to questions 4 and 5? Which approach to forecasting costs is appropriate? Why?
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