You bought a second-hand Nike pair of shoes for P2500, expecting that you could still use it for another 2 years. Unfortunately, it disintegrated beyond repair after six months of use. Assuming MARR is 0.5% per month, the sunk cost for this investment is close to:

You bought a second-hand Nike pair of shoes for P2500, expecting that you could still use it for another 2 years. Unfortunately, it disintegrated beyond repair after six months of use. Assuming MARR is 0.5% per month, the sunk cost for this investment is close to:

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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Lopez Company is considering replacing one of its old manufacturing machines. The old machine has a book value of $46,000 and a remaining useful life of five years. It can be sold now for $56,000. Variable manufacturing costs are $43,000 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 Machine A $ 123,000 19,000 Machine B $136,000 15,000 (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? Complete this question by entering your answers in the tabs below. Req A Req B Req C and D Compute the income increase or decrease from replacing the old machine with Machine B. Note:…
A semi-tractor costs $230,000. The driver of the truck plans to use the truck for 4 years, after which point it will have a salvage value of $35,000. The cost to operate and maintain the truck each year is $10,000. If the driver has a MARR of 6%, what is the capital recovery cost of the semi-tractor?
Modern Artifacts can produce keepsakes that will be sold for $50 each. Nondepreciation fixed costs are $2,500 per year, and variable costs are $30 per unit. The initial investment of $2,000 will be depreciated straight-line over its useful life of 5 years to a final value of zero, and the discount rate is 10%. Note: For all the requirements, do not round intermediate calculations. Round your answer up to the nearest whole unit. a. What is the accounting break-even level of sales if the firm pays no taxes? b. What is the NPV break-even level of sales if the firm pays no taxes? c. What is the accounting break-even level of sales if the firm's tax rate is 40%? d. What is the NPV break-even level of sales if the firm's tax rate is 40%? a. Acounting break-even level of sales b. NPV break-even level of sales c. Acounting break-even level of sales d. NPV break-even level of sales units units units units
Janko Wellspring Incorporated has a pump with a book value of $26,000 and a four-year remaining life. A new, more efficient pump is available at a cost of $47,000. Janko can receive $8,200 for trading in the old pump. The old machine has variable manufacturing costs of $27,000 per year. The new pump will reduce variable costs by $11,100 per year over its four-year life. Should the pump be replaced? Multiple Choice No, because the company will be $5,600 worse off in total. Yes, because income will increase by $5.500 per year No, because income wit decrease by $100 per year. Yes, because income will increase by $5.600 in total No, Janko will record a loss of $16,400 r they replace the pump
Salty Nuts, Inc. must buy a new nut-shelling machine. The industrial engineer has collected the following information concerning the apparent best alternative. Calculate the net future worth of the alternative if the MARR is 6%.
ASAP
Oriole Manufacturing is considering the purchase of new computerized equipment. The machine costs $66000 and would generate $19360 in annual cost savings over its 5-year life. At the end of 5 years, the equipment would have a $4400 salvage value. Oriole's required rate of return is 12%. Click here to view the factor table. Using the present value tables, the machine's net present value is (round to the nearest dollar) O $466. O $3789. O $6286. O $69789.

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