Your company is deciding whether to invest in a new machine. The new machine w flow by $485, 000 per year. You believe the technology used in the machine has a 1 other words, no matter when you purchase the machine, it will be obsolete 10 year machine is currently priced at $2.95 million. The cost of the machine will decline by year until it reaches $1.375 million, where it will remain. 1. If your required return is

Your company is deciding whether to invest in a new machine. The new machine w flow by $485, 000 per year. You believe the technology used in the machine has a 1 other words, no matter when you purchase the machine, it will be obsolete 10 year machine is currently priced at $2.95 million. The cost of the machine will decline by year until it reaches $1.375 million, where it will remain. 1. If your required return is

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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You have just been offered a contract worth $1.02 million per year for 6 years. However, to take the contract, you will need to purchase some new equipment. Your discount rate for this project is 11.7% You are still negotiating the purchase price of the equipment. What is the most you can pay for the equipment and still have a positive NPV? CEED The most you can pay for the equipment and achieve the 11.7% annual return is $ million (Round to two decimal places)
ROR Using Present Worth, Future Worth or Annual Worth: An investment of $20000 in a certain machine will generate income of $7000 per year for 3 years, at which time the machine can be sold for $8000. If the company's MARR is 15% per year, should it buy the machine?
Van Nuys Company is considering the purchase of a new machine which will cost $7.370. The machine will provide revenues of $4,000 per year. The cash operating costs will be $2,000 per year. The new machine will have a useful life of six years. The company's cost of capital is 12 percent. Ignore income taxes. Should the company buy the new machine? Yes, because NPV=0 and IRR0 and IRR>Cost of Capital No, because NPV>0 and IRR0 and IRR>Cost of Capital O Yes, because NPV = IRR Question 4
A mini-mart needs a new freezer and the initial investment will cost $310,000. Incremental revenues, including cost savings, are $198,000, and incremental expenses, including depreciation, are $125,000. There is no salvage value. What is the accounting rate of return (ARR)? How much must be invested now to receive $30,000 for 10 years if the first $30,000 is received one year from now and the rate is 8%?
Elijah Enterprises will need to upgrade the computer system in 5 years. They anticipate the upgrade to cost $98,900. If the discount rate is 15%, what will be the required yearly investment needed to obtain the money for the upgrade?Round your (1+R)^n value to 2 decimal places and use that number for your final amount required rounded to the nearest dollar.
Consider a 200,000 SF office building complex, with NOI of $25/SF/year with rents and operating expenses paid in arrears (at the end of the year) annually, and no capital expenditures. The rent will increase by 3% per year. The discount rate is 10%/year. a. What is the value of this office building, assuming that the building is sold at the end of year 10 and the cap rate at that time is expected to be 10%? What is the cap rate at time 0? b. What is the value of this office building, assuming that the building will be held and rented indefinitely (perpetually)? What is the implied cap rate at time 0? c. What is the value if the rents are paid in advance (at the beginning of the year) and the building is rented perpetually?
Account
12. You can purchase a office building for $1.7 million. You expect the cash flow on the building to be $95,000 next year and believe it will grow by 5% each year. You expect to hold the building for 5 years and then sell it for $2 million. What do you expect the yield 10 on the building to be? If your required rate of return is 10%, should you buy the building? If your answer is not the buy the building for $1.7 million, what price would you pay? If your answer is to buy the building, how much more could you pay?
Elijah Enterprises will need to upgrade the computer system in 6 years. They anticipate the upgrade to cost $95,300. If the discount rate is 15%, what will be the required yearly investment needed to obtain the money for the upgrade?Round your (1+R)^n value to 2 decimal places and use that number for your final amount required rounded to the nearest dollar. Future Value / (1+R)^n = Amount Required / = What would be required if the discount rate was 8%? Future Value / (1+R)^n = Amount Required / =
You have just been offered a contract worth $1.21 million per year for 7 years. However, to take the contract, you will need to purchase some new equipment. Your discount rate for this project is 11.7%. You are still negotiating the purchase price of the equipment. What is the most you can pay for the equipment and still have a positive NPV? The most you can pay for the equipment and achieve the 11.7% annual return is $ 6.99 million. (Round to two decimal places.)
A new electronic process monitor costs $990,000. This cost could be depreciated at 30% per year (Class 10). The monitor would actually be worth $100,000 in five years. The new monitor would save $460,000 per year before taxes and operating costs. The new monitor requires us to increase net working capital by $47,200 when we buy it. Assume a tax rate of 40% and a 15% return. a. Suppose the monitor was assigned a 25% CCA rate. Calculate the new NPV. (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) ***NOTE*** Hello, I found an answer key saying the answer is $180,108.50. Hopefully this helps for reference when solving for it. Thanks:)
Raghubhai

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