Your boss has told you to evaluate the cost of two machines.After some questioning, you are assured that they have thecosts shown at the right. Assume:a) The life of each machine is 3 years.b) The company thinks it knows how to make 14% oninvestments no riskier than this one.Determine via the present value method which machine topurchase. MACHINE A MACHINE BOriginal cost $13,000 $20,000Labor cost per year 2,000 3,000Floor space per year 500 600Energy (electricity) per year 1,000 900Maintenance per year 2,500 500Total annual cost $ 6,000 $ 5,000Salvage value $ 2,000 $ 7,000

Q: Payback, Accounting Rate of Return, Net Present Value, Internal Rate of Return Follow the format…

A: Net present value is a project appraisal technique based on the concept of time value of money. It…

Q: 2. A company can manufacture a product using hand tools. Tools will cost $ 1,000, and the…

A: Here,

Q: Dexcon Technologies, Inc., is evaluating two alternatives to produce its new plastic filament with…

A: Present worth, also known as present value, is the current monetary value of future cash flows or…

Q: Turner Printing is looking to invest in a printer, which costs $60,000. Turner expects a 15% rate of…

A: Accounting rate of return in simple words is how much a project can earn from its initial investment…

Q: The plant manager at a company would like to perform an analysis for a new $250,000 machine. If she…

A: Payback period method is a traditional method used in capital budgeting decisions which is used to…

Q: The costs and revenues of 2 alternatives for a machine are given below. Determine which alternative…

A: Net present value shows the difference between the cash inflow and cash outflow of present value…

Q: The Uzman Rolling Mill wants to buy a new drill to use in the workshop. As a result of the studies,…

A: Given Purchase Cost= 5000 Annual Operating Expense= 4000 Scrap Value= 1000 Economic Life= 2 Capital…

Q: You have a opportunity to make a real estate investment that has 10.000,000 dolar landing, 1.500,000…

A: Net present value is present value of cash flow minus initial investment.When net present value is…

Q: A precision lathe costs $20,000 and will cost $30,000 a year to operate and maintain. If the…

A: Equivalent annual cost is a financial metric used to calculate the equivalent yearly cost of owning,…

Q: era y enough money to provide for her living. 1s that $3000 a month will amply provide fo eds. She…

A: The given problem relates to perpetuity. A perpetuity is a series of uniform cash flows over an…

Q: A mining company need to decide which of the equipment models to use in a project that will last for…

A: Using excel

Q: You need to decide if you make or buy subassemblies for your airplane manufacturing company. You are…

A: Break even Point - It is the point or level of production at which the revenue is equal to the cost…

Q: What is the actual ROR of this investment? MARR is 15%. (HINT: MARR may be a good first guess.)…

A: To determine the rate of returns (ROR) we will need to determine the internal rate of return (IRR)…

Q: 1) A manufacturing plant manager has purchased a new bologna slicing machine for $24,500. The new…

A: Present worth (PW) means the actual amount is adjusted with the interest rate so as to get the…

Q: A machine, costing $25000 to buy and $ 3000 per year to operate, will save mainly labor expenses in…

A: Net cash flow is calculated by PMT function in excel, where PV is the first cost, FV is salvage…

Q: 350 380 400 500 450 Cost (U) Revenue 0 0 500 1000 770 450 880 660 890 770 (U) Year 1 2 3 4 5 6 7 8 9…

A: NET PRESENT VALUE = PRESENT VALUE OF CASH INFLOWS - PRESENT VALUE OF CASH OUTFLOWS

Q: A new machine is expected to save $33,400 annually in labor can be justified for the purchase of…

A: In this we need to find out the Present value of savings.

Q: aleulating Cash Flews. The onner of a bicycle repair sop forecasts revasues of Sls0,000 a pear.…

A: Answer -  Part 1 - Income Statement - Income Statement For the Period     Particulars…

Q: A company is going to buy a new machine for manufacturing its products. Three machines are…

A: Cash Flows:   Year Cash Flow - A Cash Flow - B Cash Flow - C Working 0 -24720 -30900 -51088…

Q: a) Laser beams are being used in a large construction project to achieve the exact alignment of…

A: MARR = 15% N = 4 years

Q: an improvement to the process in a men's shirt factory will cost $1 million but will result in net…

A: NPV is the difference between present value all cash inflows and initial investment.  NPV = present…

Q: PARC Co. has asked you to recommend a new nutcracker machine. After months of hard research, you…

A: Capital Budgeting techniques are used by firms to understand the feasibility of the project. A…

Q: A machine has an initial investment of $1,300,000, annual revenue will be $500,000 and the annual…

A: Net present value or present worth of a project is the present value of cash inflows less present…

Q: Tim Smunt has been asked to evaluate two machines. After some investigation, he determines that they…

A: Original cost of A = $12,000Original cost of B = $24,000Labor per year for A = $2,000Labor per year…

Q: below: The initial cost is $500,000. The tire cost is $20,000, and the estimate tire life is 4,000…

A: This is the expense of repairing and maintaining construction equipment that has been subjected to…

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 warchouse manager is evaluating 2 different robotic systems to be installed in his warehouse.…

A: Present worth analysis is an analysis in which we convert all the cash flows to present worth using…

Q: about 5 years before it needs replaced. The operating cost per machine is $16,000 a year. What is…

A: We can determine the EAC by converting the cost of the machine into an annual periodic cost and…

Q: Which one will you recommend?

A: MARR is the Minimum Rate of return. It is the return a company least expects to earn out of the…

Q: A large textile company is trying to decide which sludge dewatering process it should use ahead of…

A: The problem is asking us to compare two systems, a centrifuge and a belt press, based on their…

Q: A consulting engineer is analysing to determine which machine should be invested to increase the…

A: When evaluating the investment in either a manually or automatically operated machine to increase…

Q: The Manager of a canned food processing plant is trying to decide between two labelling machines.…

A: Equivalent Annual CostEquivalent Annual Cost (EAC) is a financial measurement employed to assess and…

Q: A company received from a dealer who wishes to offer a new generator to power strial hoist for the…

A: Present value of equipment should be same as per existing to make them equal.

Q: Dexcon Technologies, Inc., is evaluating two alternatives to produce its new plastic filament with…

A: The company may require to evaluate which alternative I beneficial to the company and has low costs.…

Q: You need to select a machine for the robotized welding process at your factory. There are two…

A: The net present value is the difference between the present value of cash inflows and the present…

Q: None

A: Part A: Calculation of Payback PeriodsMachine 1:Initial Investment: $4,500Annual Net Income:…

Q: Using an interest rate of 10% per year, determine which alternative should be selected on the basis…

A: Future Worth: It is the future value of the project's cashflows made over the period.  It is…

Q: $8000 will cost now for installing a printing machine, but it will save $2200/year for 5 years. The…

A: The concept of money's time worth indicates that any sum of money today is more as compared to its…

Q: You must recommend one of two machines into an upgraded manufacturing line. You obtain estimates…

A: The PW evaluation of alternatives with comparable lifestyles is simple. PW of the alternative is…

Q: A machine costing $30,000 to buy and $2,500 per year to operate. It will save $8,390 in annual labor…

A: IRR is the rate of return a project generates through its lifetime expressed in annual terms. It is…

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.