You are considering buying a piece of industrial equipment to automate a part of your production process. This automation will save labor costsby as much as $42,000 per year over 12 years. Theequipment costs $270,000. Should you purchase theequipment if your interest rate is 10%?

Q: It’s time to get a new laptop that is $2500. If you save up for it each month it will take one year…

A: Given information: Purchase price = $2,500 i.e. the amount which is required at the end of one year…

Q: You buy a house that costs $10,000. Its annual maintenance cost = $100/year. After 5 years, you can…

A: Given: Initial cost = $10,000 Maintenance cost = $100 Years = 5 Year 5 sale value = $20,000

Q: find annual profit. That is, find annual profit for each of these combinations of charge per copy…

A: Fixed Costs are those costs which remain fixed irrespective of the level of activity. Variable Cost…

Q: You are planning on buying a new vehicle in 5 years after you receive your PhD. You plan on…

A: You will buy the car after 5 years.The car costs = $35,600henceYou need $35,600 after 5 years.You…

Q: You are trying to decide between two mobile phone carriers. Carrier A requires you to pay $200 for…

A: Step 1:Equivalent Monthly Cost=Initial Cost*(r/12)/(1-1/(1+r/12)^n)+Monthly charges  Step 2:Carrier…

Q: Apple is planning to incorporate new software for the price of $600000 today in order to produce a…

A: NPV is also known as Net Present Value. It is a capital budgeting technique which helps in decision…

Q: You're thinking of buying a car to travel around in, rather than paying $2,788 at the end of every…

A: We first need to determine the NPV of the cost of owning the car for 14 years. Once we have…

Q: You are going to buy a new rooftop tent for your SUV/Truck. You can either pay $2,100 today for the…

A: We have to calculate present value of both option to compare which option is preferable.

Q: We purchase a machine with a price of $400,000. We pay 20% up front, and will finance the rest over…

A: A note payable is the note payable which has to be paid by the borrower as this is the amount which…

Q: Your company is trying to decide whether it should purchase a copier from Xerox or lease it. The…

A: Here,Purchase Cost is $145,000Annual Service Charge is $8,000Annual Lease Payments is…

Q: rulovia Manufacturing is looking to purchase a machine that will increase its efficiency in their…

A: Scenario 2Cost of equipment=$147500Period=10 yearsInterest rate=5%

Q: A new transmission in your truck will cost $5,000. Luckily, it should reduce maintenance expense by…

A: Profitability Index is a financial tool which tells whether an investment should be accepted or…

Q: Suppose you have an internship at a chemical factory. Your supervisor asks you to calculate the net…

A: NPV is the difference between the present value of cash inflows and the present value of outflows. A…

Q: You are trying to decide between two mobile phone carriers. Carrier A requires you to pay   $210…

A: Time value of money (TVM) refers to the method used to measure the amount of money at different…

Q: Your company is deciding whether to purchase a durable delivery vehicle or a short-term vehicle. The…

A: In the world of finance in general and in the domain of capital budgeting in particular equivalent…

Q: You are evaluating two different machines. Machine A costs $10,000, has a five-year life, and has an…

A: Equivalent annual cost (EAC) is a financial method employed to compare the annualized costs of…

Q: Fantastic Footwear can invest in one of two different automated clicker cutters. The first, A, has a…

A: The IRR of a project is used to measure the project’s profitability. It equates the NPV to zero to…

Q: You have purchased a canning machine for $7,000. You expect the machine to save your company $3,775…

A: The profitability index (PI) is a financial metric used to evaluate the attractiveness of an…

Q: NPV

A: Formula to calculate the NPV is: NPV = Cash flows/(1+i)^n - Initial investment

Q: You have an opportunity to purchase a piece of vacant land for $30,000 cash. If you plan to hold it…

A: Future value refers to the value of the amount to be received in lump sum in the future or in…

Q: t’s time to get a new laptop that is $2500. If you save up for it each month it will take one year…

A: monthly payment formula: pmt=p×rm1-1+rm-m×n where, p = principal amount r = rate of interest m =…

Q: A new electronic process monitor costs $990,000. This cost could be depreciated at 30% per year (…

A: Cost of monitor = 990,000depreciation rate = 30%savings in operating cost before taxes =…

Q: The price of a car you want is $36,000 today. Its price is expected to increase by $1000 each year.…

A: TVM refers to the capacity of money to earn interest because money earned earlier is considered more…

Q: You have to buy a new copier. The cost of the copier is​ $2,075​, plus ​$410 per year in maintenance…

A:

Q: It will cost $6,000 to acquire an ice cream cart Cart sales are expected to be $3.000 a year for…

A: Here,Cost is $6,000Annual Sales is $3,000Time Period is 4 yearsCut off Period is 3 years

Q: You are trying to decide between two mobile phone carriers. Carrier A requires you to pay​$185 for…

A: Step 1: Calculate the Equivalent Annual Annuity (EAA) for Carrier A's plan.The Equivalent Annual…

Q: A new electronic process monitor costs $990,000. This cost could be depreciated at 30 percent per…

A: NPV gives a clear picture of whether an investment is projected to make money or lose money. Whereas…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.