Answered: The cash flows for 2 mutually exclusive…

The cash flows for 2 mutually exclusive alternatives are shown below. Determine which should be selected using annual worth analysis and 6% MARR per year.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The cash flow estimates of a project are shown in the table below, and the MARR is 6% per year. Of the following three relations, the correct one to calculate the annual worth of this project is: Cash Flow First cost, S Annual cost, S per year Revenue, S per year Salvage value, S Life, years -200 -50 120 25 10 Relation 1: AW=-200(A/P,6%,10)+70+25(A/F,6%,10) Relation 2: AW=[-200-50(P/A,6%,10)+120(P/A,6%,10)+25(P/F,6%,10)|(A/P,6%,10) Relation 3: AW=-200(F/P,6%,10)+25+(-50+120)(A/P,6%,10) O Relation 1 and 3 OARelation 1 and 2 O Only Relation 1 O Only Relation 3
Two mutually exclusive projects have the estimated cash flows shown. Use a present worth analysis to determine which should be selected at an interest rate of 10% per year.
Given the financial data for three mutually exclusive alternatives in the table below, determine the best alternative using the annual cash flow analysis for a interest rate of 8% per year. A B c First cost $45,000 $25.000 $20,000 O &M Cost/ year 10,000 4,000 1,900 Benefit/year 18,000 13,000 9,000 Salvage value 3,000 6,000 4,600 Life in years 5 for all 3 alternatives
Compute the annual-equivalence amount for the following cash flow series at i = 12% $1.600 S1.600 $800 SH00 S800 $500 $500 $1.000 You invest in a piece of equipment costing $50,000. The equipment will be used for two years, and it will be worth $20,000 at the end of three years. The machine will be used for 4,000 hours during the first year, 6,000 hours during the second year, and 5,000 hours during the third year. The expected savings associated with the use of the piece of equipment will be $28,000 during the first year, $40,000 during the second year, and $35,000 during the third year. Your interest rate is 12%. (a) What is the capital recovery cost? (b) What is the annual equivalent worth? (c) What is net savings generated per machine-hour?
The cash flows for two alternatives are shown. The correct equation for computing the AW of Alternative B at 10% per year interest is: A B First Cost, $ |-25,000 |-17000 Annual cost, $ per year -3000 |-3200 Salvage Value, $ |1100 2100 Life, years 3 5 O AW(B)=-17,000(A/P, 10%, 5) -3200 (A/P, 10%, 5)+2100(A/F, 10%, 5) AW(B)=-17,000 (A/P, 10%, 5)-3200-2100(A/F, 10%, 5) AW(B)=-17,000 (A/P, 10%, 15)-3200+2100(A/F, 10%, 15) O AW(B)=-17,000 (A/P, 10%, 5)-3200+2100(A/F, 10%, 5)
Consider the cash flow diagram below of two alternatives using an interest rate of 8% and select the better one using the EUAC method. Alternative A Alternative B Initial Cost, $ -15,000 -20,000 Annual M&O, $/year -6,000 -9,000 Refurbishment cost, $ 0 2,000 Salvage Value, % of P 20 40 Estimated Life, years 4 12
Solve it correctly please. I will rate accordingly.
Juliana is considering an investment proposal with the following cash flows: Initial investment-depreciable assets $55,000 Net cash inflows from operations (per year for 10 years) 11,000 Disinvestment 0 a. Determine the payback period. Round your answer to one decimal place; for example, enter 1.4 for 1.44 or 1.5 for 1.45. Answer years For parts b. and c., round your answers to three decimal places if applicable. For example, enter 0.084 for 0.0844 or 0.085 for 0.0845. b. Determine the accounting rate of return on initial investment. Answer c. Determine the accounting rate of return on average investment.
PLEASE PROVIDE EXCEL SOLTION Consider the following EOY cash flows for two mutually exclusive types of microscope for a geoscience lab (one must be chosen, assume that annual benefits of both types are similar). The MARR is 5% per year. Microscope A Microscope B Capital investment Annual expenses Useful life Market value at end of useful life $60,000 $85,000 $1,400 $1,500 18 years $12,000 12 years $0 a. Determine which alternative should be selected if the repeatability assumption applies. b. Determine which alternative should be selected if the analysis period is 18 years, the repeatability assumption does not apply, and a microscope can be leased (i.e. borrowed) for $10,000 per year after the useful life of either microscope is over.
What is the annual equivalent cost of purchasing a lift truck that has an initial cost of $85,000, an annual operating cost of $13,500, and an estimated salvage value of $23,000 after six years of use at an annual interest rate of 6%? X More Info Equal Payment Series Single Payment Compound Present Amount Worth Compound Amount Factor (F/A, I, N) Sinking Present Fund Worth Factor Factor Capital Recovery Factor (A/P, i, N) Factor Factor (F/P, i, N) (P/F, i, N) (A/F, i, N) (P/A, i, N) 1.0800 0.9434 1.0000 1.0000 0.9434 1.0800 1.1238 0.8900 2.0800 0.4854 1.8334 0.5454 1.1910 0.8396 3.1836 0.3141 2.6730 0.3741 1.2625 0.7921 4.3746 0.2288 3.4861 0.2886 1.3382 0.7473 5.6371 0.1774 4.2124 0.2374 1.4185 0.7050 6.9753 0.1434 4.9173 0.2034 0.6851 8.3938 0.1191 5.5824 0.1791 1.5038 1.5938 1.6895 0.6274 9.8975 0.1010 6.2098 0.1610 0.5919 11.4913 0.0870 6.8017 0.1470 1.7908 0.5584 13.1808 0.0759 7.3801 0.1359 SAWNIN 1 2 3 4 5 67899 10
Assignment equipment, the useful life of which is four years. The net cash flows for the two projects are provided in the table below: Net Cash Flow (GH¢) Project Year 1 Year 2 Year 3 Year 4 1 2,550 2,450 1,700 1,400 1,240 1,550 2,100 3,800 end of its life. i. Find the payback period for each project. Establish the net present value for each project using discount rate of 20%. Establish the net present value for each project using discount rate of 25%. Determine the internal rate of return for each project. iii. iv. Using the payback criterion and the internal rate of return criterion advice the proprietor on the project he should undertake, giving reasons for your choice of project. V. 70
Masulis Inc. is considering a project that has the following cash flow and WACC data. What is the project's discounted payback? WACC Year Cash flows Ⓒa 1.58 years Ob. 220 years OC 1.68 years Od 193 years O e 2.24 years 10.00% 0 -$850 T 5525 $485 $445 $405