Whales Inc. just invested in revolutionary electrical shock technology that is guaranteed to exterminate any flying insect. The equipment cost $16,250 and has a four-year usable life. The equipment will generate $6,500 in revenue each year. The cost of operating the machine is projected to be $500 the first year and $250 per year after that. When the equipment is disposed of, it is estimated to be worth $800. The company set the MARR at 8%. a. The Net Future Worth of this investment = $ Blank 1 b. Is this purchase a wise investment (type only Yes or No) = Blank 2 Note: Round final answer in two decimal places. No need to write the Unit of Measure. No need to put a comma. Blank 1 Add your answer Blank 2 Add your answer

Whales Inc. just invested in revolutionary electrical shock technology that is guaranteed to exterminate any flying insect. The equipment cost $16,250 and has a four-year usable life. The equipment will generate $6,500 in revenue each year. The cost of operating the machine is projected to be $500 the first year and $250 per year after that. When the equipment is disposed of, it is estimated to be worth $800. The company set the MARR at 8%. a. The Net Future Worth of this investment = $ Blank 1 b. Is this purchase a wise investment (type only Yes or No) = Blank 2 Note: Round final answer in two decimal places. No need to write the Unit of Measure. No need to put a comma. Blank 1 Add your answer Blank 2 Add your answer

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 13P

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The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $55,000. The machine would replace an old piece of equipment that costs $14,000 per year to operate. The new machine would cost $6,000 per year to operate. The old machine currently in use could be sold now for a salvage value of $20,000. The new machine would have a useful life of 10 years with no salvage value. Required: 1. What is the annual depreciation expense associated with the new bottling machine? 2. What is the annual incremental net operating income provided by the new bottling machine? 3. What is the amount of the initial investment associated with this project that should be used for calculating the simple rate of return? 4. What is the simple rate of return on the new bottling machine? (Round your answer to 1 decimal place i.e. 0.123 should be considered as 12.3%.)
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QUESTION 4 You are considering starting a new factory producing small electric heaters. Each unit will sell at a price of $55. The production cost of each heater is $35. You are expecting to sell 9000 units per year. This project has an economic life of 6 years. The project requires an investment of $700000 in plants and equipment. This equipment will be depreciated to zero salvage value based on 5-year MACRS schedule. The depreciation rates from year 1 to 6 are 20 % , 32 %, 19.2 %, 11.52 %, 11.52 %, and 5.76 percent, respectively. The required rate of return for the project is 12 percent, the working capital requirement is 10 percent of the next year's sales revenue. The company will sell its old equipment for $100,000. The old machine is fully depreciated. The marginal corporate tax rate is 20 percent. At the termination of the project, the plant and equipment will be sold for an estimated value of $50000. Based on these assumptions, estimate the total cash flows for the project.…
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Give me right solution according to the question.... Help me urgenttttttttt Installing an automated production system costing $278,000 is initially expected to save Zia corporation $52,000 in expenses annually. If the system needs $5000 in operating and maintenance costs each year and has a salvage values of $25,000 at Year 10, what is the IRR of this system? If the company wants to earn at least 12% on all investments, should this system be purchased?
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