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 $48,000 11,600 11,600 11,600+ replace Machine A Machine B Machine B $58,000 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.) Annual Rental Payment 11,200 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 1 2 3 4 $48,000 11,600 11,600 11,600+ replace Machine A Machine B Machine B $58,000 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.) Annual Rental Payment 11,200 11,200 11,200 replace

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 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 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…
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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 $ 0 40,000.00 50,000.00 1 10,000.00 8,000.00 2 10,000.00 8,000.00 3 10,000.00 + replacement 8,000.00 4 8,000.00 + replacement These costs are expressed in real terms. 1. 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 the machine’s economic life, what annual rental payment would you have to charge? Assume a 6% real discount rate and ignore taxes. 2. Which machines should Borstal buy? 3. Suppose you actually do buy one of the machines and rent it to the production manager. How much would you actually have to charge in each future year if there is steady 8% per year inflation?
Tate Inc. and Booth Inc. are two small manufacturing companies that are considering leasing a cutting machine together. If Tate rents the machine on its own, it will cost $26,000. If Booth rents the machine alone, it will cost $14,000. If they rent the machine together, the cost will decrease to $36,000. Q. Calculate Tate’s and Booth’s respective share of fees using the incremental cost-allocation method assuming (a) Tate is the primary party and (b) Booth is the primary party.
A small company manufactures a certain item and sells it online. The company has a business model where the cost, C in dollars, to make x items is given by the equation C = 20/3 x + 50. The revenue R , in dollars , made by selling x items is given by the equation R = 10x. How many items must the company sell in order for the cost to equal their revenue?
An operations manager is deciding on the level of automation for a new process. The fixed cost for automation includes the equipment purchase price, installation, and initial spare parts. The variable costs per unit for each level of automation are primarily labor related. Each unit can be sold for $90. As in many cases, you have the default alternative of doing nothing ($0 fixed cost, $0 variable costs). Hint: For these questions, also consider the "Do Nothing" option as a viable option when making your decision. Alternative Fixed Costs A B C $100,000 $268,000 $560,000 Variable Costs per Unit $54 $30 $20 Recommended: graph each alternative with units on the x-axis and $ on the y-axis. Also, include revenue on the chart. Identify the break-even points and points of indifference. For help on this, see the video posted in Moodle. When comparing Alternative B to Alternative C, C is the most attractive option above units. DO NOT INCLUDE A COMMA. Round your answer to the nearest whole…
InteliSystems needs 79,000 optical switches next year . By outsourcing them, InteliSystems can use its idle facilities to manufacture another product that will contribute $140,000 to operating income, but none of the fixed costs will be avoidable. Should InteliSystems make or buy the switches? Show your analysis based on the information in the table below for making 70,000 switches.
What is the answer for this number please? Also provide solution as possible. Thank you!

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