11500216003Year52500607Cost of18002100290034004000operationRescue350025001700800800600500500ValueCost charges are assumed to occur in the middle of the year and are discounted from thebeginning of the year, so they must be multiplied by a factor V'/2 = (1 + i)-/2,We want to find the optimal replacement period. Use 12% annual interest and a newmachine value of $5,000.00

An asset's usage or maintenance cost increase with the period of time, then the assets need to be…

Answered: Year 2 3 5 2500 7 8 Cost of 1500 1600…

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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D-74 Your company is considering two alternatives: Alt. I Alt. II First cost $42,500 $70,000 Annual maintenance 6,000 4,000 Annual savings if implemented 18,500 20,000 Salvage value 12,000 25,000 Useful life of alternative 3 years 6 years What is the annual dollar advantage of Alt. II over Alt. I at an interest rate of 15%? (a) Alt. II has no annual advantage over Alt I. (b) $3020 (c) $3500 (d) $7436
1
1. Each aiternative has a 10-year useful life and have no salvage value. If the MARR is 8%, which alternative would you select? You must use incremental analysis (incremental internal rate of return). Please show step by step calculations. R Initial Cost 15000 22000 35000 Annual Costs 3500 3100 2750 Annual Revenues 8000 9575 11500
Suppose a machine has a current resale price of $6000 and an annual operating and maintenance cost of $2000. Each additional year thereafter, the operating and maintenance cost increases by five hundred and the resale value falls by thirty percent. The firm has a MARR of 9%. Using marginal analysis, find the cost of keeping the machine for its fourth year of service. The answer is with $20 of 4182 4222 4262 4302 4342
Payback comparisons Nova Products has a 4-year maximum acceptable payback period. The firm is considering the purchase of a new machine and must choose between two alternatives. The first machine requires an initial investment of $11,000 and generates annual cash inflows of $2,000 for each of the next 7 years. The second machine requires an initial investment of $10,000 and provides an annual cash inflow of $3,000 for 20 years. a. Determine the payback period for each machine. b. Comment on the acceptability of the machines, assuming that they are independent projects. c. Which machine should the firm buy? Why? d. Does this problem illustrate any of the payback method's weaknesses? a. The payback period for the first machine is The payback period for the second machine is b. Is the first machine acceptable? (Select the best answer below.) Yes No Is the second machine acceptable? (Select the best answer below.) No Yes years. (Round to two decimal places.) years. (Round to two decimal…
Soru 1 Henüz cevaplanmadi 1,00 0zerinden işaretlenmiş P Soruyu işaretle New digital scanning graphics equipment is expected to cost 550023, to be used for 6 years, and to have an annual operating cost (AOC) of $10071. Determine the AW values for one and three life cycles at i 10% per year.
A labor saving device system save $2.000 per year for five (5) years. It can be installed at a cost of $8,000. The rate of return on this planned investment is most nearly a. 12.36% b.i 10.36% Oc 10% Od. 9.36%
pm.9
i 4 ances Lopez Company is considering replacing one of its old manufacturing machines. The old machine has a book value of $47,000 and a remaining useful life of five years. It can be sold now for $57,000. Variable manufacturing costs are $50,000 per year for this old machine. Information on two alternative replacement machines follows. The expected useful life of each replacement machine is five years. Purchase price Variable manufacturing costs per year (a) Compute the income increase or decrease from replacing the old machine with Machine A (b) Compute the income increase or decrease from replacing the old machine with Machine B. (c) Should Lopez keep or replace its old machine? (d) if the machine should be replaced, which new machine should Lopez purchase? Req A Complete this question by entering your answers in the tabs below. Revenues Machine A: Keep or Replace Analysis Req B Compute the income increase or decrease from replacing the old machine with Machine A. (Amounts to be…
Finance There are three mutually exclusive alternatives and do-nothing is also an option. If all machines have useful life of 4 years, find the best machine using the ROR analysis. (a) When MARR = 20% per year. (b) When MARR = 25% per year. (c) When MARR = 30% per year.

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