YOLO Construction Co. is planning to purchase a new truck Company uses MARR as 10% peryear. Evaluate following two alternatives by Present Worth Analysis (PW) using Use LeastCommon Multiple (LCM) technique. Select the PW of best alternative.ABFirst Cost($)-175000-15000022000 in year 1and increasingby $500 eachAnnual Income ($/year)15000year-9000 in year 1and decreasingby $300 eachAnnual Cost ($/year)-7000yearMajor Maintenance cost(every 2 years)Salvage Value ($)Life-2000-35003000025000Select one:

The Least Common Method of assessing investments with unequal lives: While assessing the Present…

YOLO Construction Co. is planning to purchase a new truck Company uses MARR as 10% per year. Evaluate following two alternatives by Present Worth Analysis (PW) using Use Least Common Multiple (LCM) technique. Select the PW of best alternative. A First Cost($) -175000 22000 in year 1 and increasing by $500 each -150000 Annual Income ($/year) 15000 year -9000 in year 1 and decreasing by $300 each Annual Cost ($/year) -7000 year Major Maintenance cost (every 2 years) Salvage Value ($) Life -2000 -3500 30000 25000

YOLO Construction Co. is planning to purchase a new truck Company uses MARR as 10% per year. Evaluate following two alternatives by Present Worth Analysis (PW) using Use Least Common Multiple (LCM) technique. Select the PW of best alternative. A First Cost($) -175000 22000 in year 1 and increasing by $500 each -150000 Annual Income ($/year) 15000 year -9000 in year 1 and decreasing by $300 each Annual Cost ($/year) -7000 year Major Maintenance cost (every 2 years) Salvage Value ($) Life -2000 -3500 30000 25000

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

See similar textbooks

Similar questions

An asset is planned to be purchased with an initial value of $400,000 and an estimatedsalvage value of $50,000 after 5 years of use. It will be depreciated using the straight-line method.With this asset $500,000 of annual income will be generated and there will beannual costs of $100,000The trem (minimum acceptable rate of return), m = 10% per yearThe annual tax rate is 40%Calculate the present value of this investment and make a recommendation. Please show your work
Bartlett Car Wash Company is considering the purchase of a new facility. It would allow Bartlett to increase its net income by $96,579 per year. Other information about this proposed project follows Initial investment $468,810 9 years Selvage value $ 47,000 Assume straight line depreciation method is used. Required: 1. Calculate the accounting rate of return for Bartlett Note: Round your percentage answer to 2 decimal places. 2. Calculate the payback period for Bartlett Note: Round your answer to 2 decimal places. 1. Accounting Rate of Retu 2. Payback Period years
A construction company is evaluating two similar pieces of equipment for their gravel pit operation. If the company policy is to use a MARR = 12%, determine which alternative is economically the better option. Use the EAC method: Option B $75,000 Item Option A $40,000 Initial Purchase Cost Operating Cost (1st year) $25,000 $15,000 Annual increase in Operating Cost No increase 2%/yr Lifespan Salvage Value @ end-of-life 4 years 6 years $10,000 $7,000 Do this question by hand.
A company is considering purchasing a new piece of machinery at a cost $60,000. It is expected to generate revenues of $20,000 per year for 4 years against $3,000 of annual operating expenses. The machinery is MACRS 3-year property. The income tax rate is 25%. MARR is 10%. What is the EVA for year 3?
A firm is considering two alternatives that have no salvage value. At the end of 4 years, another B may be purchased with the same cost, benefits and so forth. a. Construct a choice table for interest rates from 0% to 100%. b. If the MARR is 10%, which alternative should be selected? Item Initial Cost Uniform Annual Benefits Useful Life, in years A -$10,700 2,100 8 B -$5,500 1,800 4
A CNC mill was purchased 4 years ago for $50,000. The current market value is $26,000, which will decline as follows over the next 5 years: $20,000, $16,250, $ 14,000, $12,000, and $8500. The O&M costs are estimated to be $6000 this year. These costs are expected to increase by $2000 per year starting year 2. MARR = 10% The marginal cost for defender in year 2 Group of answer choices $13,750 $ is 14,600 $ 13,875 $15,400 $12,400
A fleet manager must choose between two trucks to purchase for a company's fleet. The company uses an interest rate of 6% and will keep either truck for 3 years. Truck A costs $29,000 and has a market value of $18,000 after 3 years. Truck B costs $33,000 and has a market value of $20,000 after 3 years. Determine the equivalent uniform annual cost (EUAC) for the truck the fleet manager should buy. Express your answer as a positive number is $ to the nearest $10.
Show the complete solution. Do not used Excel. Use manual method/handwritten The maintenance costs of a new boiler are estimated as follows: P 600 per year for the first 3 years, P X at the 4th year, and P 1,800 per year starting at the 5th year up to the end of its 10 - year life. If the future value of all the maintenance is P 20,000, find the value of X. Money is 6% compounded annually.
Two altemnative machines will produce the same product, but one is capable of higher-quality work, which can be expected to return greater revenue. The following are relevant data. Determine which is the better alternative, assuming repeatability and using SL depreciation, an income-tax rate of 25%, and an after-tax MARR of 10%. Capital investment Life Machine A $20,000 12 years $3,500 Calculate the AW value for the Machine A. AWA (10%) = $(Round to the nearest dollar.) Terminal BV (and MV) Annual receipts Annual expenses Click the icon to view the interest and annuity table for discrete compounding when the MARR is 10% per year. Machine B $34,000 9 years $2,000 $144,000 $142,000 $190,000 $163,000
Perform a present worth (PW)-based evaluation of the two alternatives below using a spreadsheet. The after-tax minimum acceptable rate of return (MARR) is 8% per year, Modified Accelerated Cost Recovery System (MACRS) depreciation applies, and Te=40%. The (GI -OE) estimate is made for the first 3 years; it is zero in year 4 when each asset is sold. Alternative First Cost, $ Salvage Value, Year 4, $ GI-OE, $ per Year Recovery Period, Years X -8,000 0 3,500 3 Y -13,000 2,000 5,000 3 The PW for alternative X is determined to be $ The PW for alternative Yis determined to be $ Alternative (Click to select) is selected.
Esc You consider purchasing a new piece of equipment (7yr MACRS property) for your manufacturing process for $120,000. The equipment has a 6-year useful life and no salvage value. The equipment is expected to generate an additional $40,000 of net income before taxes and depreciation each year by using this upgraded system. The combined federal and state income tax rate= 35%. Annual inflation = 4%. a. Fill in the following table assuming MACRS depreciation rates Year 46°F Rain showers 0 1 F1 2 O 2 3 4 5 Pretax income 6 MACRS Taxable Depreciation income F2 - F3 + F4 Ⓡ b. If your MARR = 12%, should you purchase this system based on your real after-tax income? Why or why not? F5 8 C B Tax owed F6 Q Search G After tax income F7 Ca 7 F8 O Inflation adjustment factor O F9 ala LG F10 Real after tax income 0 A I THE F11 - 0 1 asod F12 + Prt Sc ScrLk Post-it sod Ins Post-it Del Backspace Post-it PgUp Home asod> Post-it Mumi 1-10 PgOn End Pause Break 11-15 11-15 C
Bartlett Car Wash Company is considering the purchase of a new facility. It would allow Bartlett to increase its net income by $98,389 per year. Other information about this proposed project follows: Initial investment $461,920 Useful life Salvage value 9 years $40,000 Assume straight line depreciation method is used. Required: 1. Calculate the accounting rate of return for Bartlett. Note: Round your percentage answer to 2 decimal places. 2. Calculate the payback period for Bartlett. Note: Round your answer to 2 decimal places. Answer is complete but not entirely correct. 20.52 X % 4.90 x years 1. Accounting Rate of Return 2. Payback Period

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS