Two alterative machines will produce the same product, but one is capable of higher-quality work, which can be expected to retum greater revenue. The following are relevant data. Determine which is the better allemative, assuming repeatability and using SL depreciation, an income tax rate of 26%, and an after-tax MARR of 11% Capital investment Life Calculate the AWW value for the Machine A AW (11%) - Round to the nearest dollar) Terminal BV (and MV) Annual receipts Annual expenses Machine A $18,000 11 years $4,000 $157,000 $129.000 Click the icon to view the interest and annuity table for discrete compounding when the MARR is 11% per year. Machine $29,000 6 years 50 $178,000 $164,000

Two alterative machines will produce the same product, but one is capable of higher-quality work, which can be expected to retum greater revenue. The following are relevant data. Determine which is the better allemative, assuming repeatability and using SL depreciation, an income tax rate of 26%, and an after-tax MARR of 11% Capital investment Life Calculate the AWW value for the Machine A AW (11%) - Round to the nearest dollar) Terminal BV (and MV) Annual receipts Annual expenses Machine A $18,000 11 years $4,000 $157,000 $129.000 Click the icon to view the interest and annuity table for discrete compounding when the MARR is 11% per year. Machine $29,000 6 years 50 $178,000 $164,000

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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Pls show proper steps. Thanks! If using excel show formulas also with explanation
can you answer this question for me as Excel formula ?
2. Choose from the two machines which is more economical? Machine A Machine B P 8,000 P 14,000 15 15 0 2,000 P 3,000 P 1,200 3% First Cost Life Salvage Value Annual Operation P 2,400 Annual Maintenance P 1,000 Taxes and Insurance 3% Which will you choose if minimum required profit is 16%. Use Rate of Return on Additional Investment, Annual Cost Method and Present Worth Method
Without using exel
Appalachian Crafts is analyzing a project with expected sales of 18,900 units, ±2 percent. The expected variable cost per unit is $23 and the expected fixed costs are $52,000. Cost estimates are considered accurate within a range of ±1 percent. The depreciation expense is $18,400. The sale price is estimated at $54 a unit, ±2 percent. What is the total dollar difference between the revenue using the optimistic sale price versus the expected sale price?
Payback, Accounting Rate of Return, Net Present Value, Internal Rate of Return Follow the format shown in Exhibit 12B.1 and Exhibit 12B.2 as you complete the requirements below. Blaylock Company wants to buy a numerically controlled (NC) machine to be used in producing specially machined parts for manufacturers of tractors. The outlay required is $384,000. The NC equipment will last 5 years with no expected salvage value. The expected after-tax cash flows associated with the project follow: Year Cash Revenues Cash Expenses 1 $510,000 $360,000 2 510,000 360,000 3 510,000 360,000 4 510,000 360,000 5 510,000 360,000 Required: 1. Compute the payback period for the NC equipment. Round your answer to two decimal places.fill in the blank 1 years 2. Compute the NC equipment's ARR. Round the percentage to one decimal place. Assume straight-line depreciation.fill in the blank 2 % 3. Compute the investment's NPV, assuming a required rate of return of…
The top management required you to compute the accumulated amount of the machine that will improve the production efficiency based on your recommendation. The money is to be loaned to BPI @ 10% interest rate compounded mounthy. A) Purchase Price = P200,000. B) Period of Payment = 5 years.
Please correct answer and step by step solution
REQUIRED Use the information provided below to answer the following questions: 3.1. Calculate the Payback period for the HMC. 3.2. Calculate the Net Present Value for both the HMC and VMC. 3.3. Calculate the Internal Rate of Return (IRR) for the HMC and VMC. 3.4. Which configuration of the CNC machining centres should SMT purchase, if any? Motivate your answer by referring to the answers obtained in questions 3.3 and 3.4. INFORMATION Southern Manufacturing Tools Limited (SMT) is considering the purchase of a Computer Numerical Control (CNC) machining centre for its operations. Two configurations of the CNC machining centres are available: horizontal CNC machining centre (HMC) and vertical CNC machining centre (VMC). Both the HMC and VMC will require an initial investment of R10 000 000, will have a useful life of 7 years and a residual value of R1 500 000. SMT uses the straight-line method of depreciation. The expected net cash inflows of the VMC are expected to be R2 100 000…
Interstate Manufacturing is considering either replacing one of its old machines with a new machine or having the old machine overhauled. Information about the two alternatives follows. Management requires a 12% rate of return on its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)Alternative 1: Keep the old machine and have it overhauled. If the old machine is overhauled, it will be kept for another five years and then sold for its salvage value. Cost of old machine $ 109,000 Cost of overhaul 154,000 Annual expected revenues generated 92,000 Annual cash operating costs after overhaul 40,000 Salvage value of old machine in 5 years 24,000 Alternative 2: Sell the old machine and buy a new one. The new machine is more efficient and will yield substantial operating cost savings with more product being produced and sold. Cost of new machine $ 300,000 Salvage…
A machine with a purchase price of R1 200 000 is estimated to eliminate manual operations by R400 000 per year.The machine is expected to have a useful life of four years. Use the information provided above to calculate the Internal Rate of Return (expressed to twodecimal places) using interpolation.
Zenith Investment Company is considering the purchase of an office property. It has done an extensive market analysis and has estimated that based on current market supply or demand relationships, rents, and its estimate of operating expenses, annual NOI will be as follows: Year NOI 1 $ 1,030,000 2 1,030,000 3 1,030,000 4 1,210,000 5 1,260,000 6 1,310,000 7 1,349,000 8 1,389,170 A market that is currently oversupplied is expected to result in cash flows remaining flat for the next three years at $1,030,000. During years 4, 5, and 6, market rents are expected to be higher. It is further expected that beginning in year 7 and every year thereafter, NOI will tend to reflect a stable, balanced market and should grow at 3 percent per year indefinitely. Zenith believes that investors should earn a 12 percent return (r) on an investment of this kind.Required: a. Assuming that the investment is expected to produce NOI in years 1 to 8 and is expected to be owned for…

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