Homework Answers
Answer:
A.
| Particulars | Model 127B | Model 334A | |
| Initial Investment | $ 55,000.00 | $ 85,000.00 | |
| Useful Life | 10 Years | 15 Years | |
| Annual Income | 19,400.00 | 26,000.00 | |
| Annual Expenses | $ 10,000.00 | $ 6,000.00 | |
| Net Cash flow | $ 9,400.00 | $ 20,000.00 | |
| Cash inflow per Annuam | $ 9,400.00 | $ 20,000.00 | |
| Salvage Value | $ 10,000.00 | $ - | |
| Depreciation per annuam = (Cost - Salvage )/ Useful life | $ 4,500.00 | $ 5,666.67 | |
| Annuity Factor at 10% for 10 years & 15 Years | $ 6.14 | $ 7.61 | |
| Present Value of Inflow | $ 61,614.36 | $ 152,121.59 | |
| Present Value of Outflow | $ 55,000.00 | $ 85,000.00 | |
| NPV = PVI - PVO | $ 6,614.36 | $ 67,121.59 | |
| Equivalent Annual Benefit | $ 1,076.46 | $ 8,824.73 | |
| Decision: Since Model 334A has the Most EAB ( Equated Annual Benefit ), it may be selected. | |||
Working Notes:
| Cash flow diagram | b | a | a-b | |||||
| Year | Model 127B | Model 334A | PVF @ 10% | DCF - Model 127B | DCF - Model 334A | Incremental flow | DCF | |
| 0 | Initial Cost | $ (55,000.00) | $ (85,000.00) | 1.000 | (55,000.00) | (85,000.00) | $ (30,000.00) | (30,000.00) |
| 1 | Net Income | $ 9,400.00 | $ 20,000.00 | 0.909 | 8,545.45 | 18,181.82 | $ (10,600.00) | 10,600.00 |
| 2 | Net Income | $ 9,400.00 | $ 20,000.00 | 0.826 | 7,768.60 | 16,528.93 | $ (10,600.00) | 10,600.00 |
| 3 | Net Income | $ 9,400.00 | $ 20,000.00 | 0.751 | 7,062.36 | 15,026.30 | $ (10,600.00) | 10,600.00 |
| 4 | Net Income | $ 9,400.00 | $ 20,000.00 | 0.683 | 6,420.33 | 13,660.27 | $ (10,600.00) | 10,600.00 |
| 5 | Net Income | $ 9,400.00 | $ 20,000.00 | 0.621 | 5,836.66 | 12,418.43 | $ (10,600.00) | 10,600.00 |
| 6 | Net Income | $ 9,400.00 | $ 20,000.00 | 0.564 | 5,306.05 | 11,289.48 | $ (10,600.00) | 10,600.00 |
| 7 | Net Income | $ 9,400.00 | $ 20,000.00 | 0.513 | 4,823.69 | 10,263.16 | $ (10,600.00) | 10,600.00 |
| 8 | Net Income | $ 9,400.00 | $ 20,000.00 | 0.467 | 4,385.17 | 9,330.15 | $ (10,600.00) | 10,600.00 |
| 9 | Net Income | $ 9,400.00 | $ 20,000.00 | 0.424 | 3,986.52 | 8,481.95 | $ (10,600.00) | 10,600.00 |
| 10 | Net Income | $ 19,400.00 | $ 20,000.00 | 0.386 | 7,479.54 | 7,710.87 | $ (600.00) | 600.00 |
| 11 | Net Income | $ - | $ 20,000.00 | 0.350 | - | 7,009.88 | $ (20,000.00) | 20,000.00 |
| 12 | Net Income | $ - | $ 20,000.00 | 0.319 | - | 6,372.62 | $ (20,000.00) | 20,000.00 |
| 13 | Net Income | $ - | $ 20,000.00 | 0.290 | - | 5,793.29 | $ (20,000.00) | 20,000.00 |
| 14 | Net Income | $ - | $ 20,000.00 | 0.263 | - | 5,266.63 | $ (20,000.00) | 20,000.00 |
| 15 | Net Income | $ - | $ 20,000.00 | 0.239 | - | 4,787.84 | $ (20,000.00) | 20,000.00 |
| Present value of out flow | (55,000.00) | (85,000.00) | (30,000.00) | |||||
| Present value of inflow | 61,614.36 | 152,121.59 | 196,000.00 | |||||
| NPV | 6,614.36 | 67,121.59 | 166,000.00 | |||||
| Annuity Factor at 10% for 10 years & 15 Years | $ 6.14 | $ 7.61 | ||||||
| Equivalent Annual Benefit | 1,076.46 | 8,824.73 | ||||||
B.
Oven Model 334A Should purchase since Equated Annual Benefit of Oven Model 334A is more than Oven Model 127B.
Add Answer to:
Octavia bakery is planning to purchase one of two ovens. The
expected cash flows for each...
Question 2: Octavia Bakery is planning to purchase one of two ovens. The expected cash flows...
Question 2: Octavia Bakery is planning to purchase one of two ovens. The expected cash flows for each oven are shown below. MARR is 8 percent/year. Initial Investment Estimated Life End of Life Salvage Annual Income Annual Expense Model 127B $50,000 10 $10,000 $19,400 $10,000 Model 334A $80,000 5 $0 $26,000 $6,000 Based on a 10-vear planning horizon. what is the present worth of each investment? Which oven should Octavia purchase? Hint: - 245$, and 17707$
Octavia Bakery is planning to purchase one of two ovens. The expected cash flows for each...
Octavia Bakery is planning to purchase one of two ovens. The expected cash flows for each oven are shown below. MARR is 8%/ year. Model 127B Model 334A $50,000 $74,000 10 S Initial Investment Estimated Life End of Life Salvage Annual Income Annual Expense $11,000 $19,300 $10,500 $0 $27,000 $6,500 Click here to access the TVM Factor Table calculator. Part a Step 1 X] your answer is incorrect. Try again. What is the discounted payback period for Model 127B? :...
What is the discounted payback period for Model 334A? Octavia Bakery is planning to purchase one...
What is the discounted payback period for
Model 334A?
Octavia Bakery is planning to purchase one of two ovens. The expected cash flows for each oven are shown below. MARR is 10%/ year. Model 127B Model 334A Initial Investment $48,000 $74,000 Estimated Life 10 5 End of Life Salvage $12,000 $0 Annual Income $19,100 $28,500 Annual Expense $9,600 $6,200 We were unable to transcribe this image
Please solve this for MODEL 127B Chapter 04, Problem 050 Octavia Bakery is planning to purchase...
Please solve this for MODEL 127B
Chapter 04, Problem 050 Octavia Bakery is planning to purchase one of two ovens. The expected cash flows for each oven are shown below. MARR is 8%/ year. Initial Investment Estimated Life End of Life Salvage Annual Income Annual Expense Model 127B Model 334A $50,000 $74,000 10 5 $8,000 $0 $19,700 $27,000 $10,200 $6,700 Click here to access the TVM Factor Table calculator. Part a Step 1 What is the discounted payback period for...
Chapter 04, Problem 050 oven are shown below. MARR is 10%/ year. Octavia Bakery is planning...
Chapter 04, Problem 050 oven are shown below. MARR is 10%/ year. Octavia Bakery is planning to purchase one of two ovens. The expected cash flows for each Model 1278 Model 334A $71 Initial Investment $49,000 Estimated Life End of Life Salvage$9,000 Annual Income Annual Expense 10 $0 s19,500 $29,000 $9,600 $6,800 Click bere to access the TVM Factor Table calculator. v Part a Step What is the discounted payback period for Model 12787 years
04.02-PR032 WP Technology Innovations is planning to purchase one of two chip insertion machines. Due to...
04.02-PR032 WP Technology Innovations is planning to purchase one of two chip insertion machines. Due to the pace of technological change in this area, it is realistic to assume that these are one-shot investments. The expected cash flows for each machine are shown below. MARR is 8%/year. Based on a present worth analysis, which machine is preferred? M Series $60,000 5 E Series Initial Investment $40,000 Estimated Life 7 End of Life Salvage $10,000 Annual Income $19,400 Annual Expense $10,000...
Question 1. (24 points) One of the four ovens at a bakery is being considered for...
Question 1. (24 points) One of the four ovens at a bakery is being considered for replacement. Its market value and maintenance costs are given in the table below for several years. A new oven costs $80,000 and this price includes a complete guarantee of the maintenance costs for the first two years, and it covers a good propo maintenance costs for years 3 and 4. The m table rtion of the arket value and maintenance costs are also summarized...
USE ANNUAL WORTH Analysis Two mutually exclusive design alternatives are being considered. The estimated cash flows...
USE
ANNUAL WORTH Analysis
Two mutually exclusive design alternatives are being considered. The estimated cash flows for each alternative are given in the following table with MARR = 10% per year. Suggest your recommendation by using multiple attribute annual worth AW analysis. Design A Design B Investment cost (RM) 28,000 55,000 One-off expenses 10,000 13,000 In year 4 (RM) Annual revenues (RM) 22,000 28,000 Market value (RM) 6,000 8,000 Useful life 10 years 6 years
Question 1 The cash flows given in table below are for two different alternatives. MARR =10%...
Question 1 The cash flows given in table below are for two different alternatives. MARR =10% Data IN Initial Cost Annual Benefits Salvage Value Useful Life in years M $20,000 $6,000 $5,000 $80,000 $10,000 $20,000 a) Determine the annual worth of alternative M b) Determine the annual worth of alternative N
ABC Company is planning to purchase an equipment. The purchase price of the equipment is $350,000....
ABC Company is planning to purchase an equipment. The purchase price of the equipment is $350,000. The company plans to make a down payment of 25% of the first cost, and for the remainder of the cost of the equipment, they plan to take a loan. The company will pay off this loan in 7 years at 10% in equal annual payments. ABC believes that the equipment can be sold for $75,000 at the end of its 15-year service life....
Question 2: Octavia Bakery is planning to purchase one of two ovens. The expected cash flows for each oven are shown below. MARR is 8 percent/year. Initial Investment Estimated Life End of Life Salvage Annual Income Annual Expense Model 127B $50,000 10 $10,000 $19,400 $10,000 Model 334A $80,000 5 $0 $26,000 $6,000 Based on a 10-vear planning horizon. what is the present worth of each investment? Which oven should Octavia purchase? Hint: - 245$, and 17707$
Octavia Bakery is planning to purchase one of two ovens. The expected cash flows for each oven are shown below. MARR is 8%/ year. Model 127B Model 334A $50,000 $74,000 10 S Initial Investment Estimated Life End of Life Salvage Annual Income Annual Expense $11,000 $19,300 $10,500 $0 $27,000 $6,500 Click here to access the TVM Factor Table calculator. Part a Step 1 X] your answer is incorrect. Try again. What is the discounted payback period for Model 127B? :...
What is the discounted payback period for
Model 334A?
Octavia Bakery is planning to purchase one of two ovens. The expected cash flows for each oven are shown below. MARR is 10%/ year. Model 127B Model 334A Initial Investment $48,000 $74,000 Estimated Life 10 5 End of Life Salvage $12,000 $0 Annual Income $19,100 $28,500 Annual Expense $9,600 $6,200 We were unable to transcribe this image
Please solve this for MODEL 127B
Chapter 04, Problem 050 Octavia Bakery is planning to purchase one of two ovens. The expected cash flows for each oven are shown below. MARR is 8%/ year. Initial Investment Estimated Life End of Life Salvage Annual Income Annual Expense Model 127B Model 334A $50,000 $74,000 10 5 $8,000 $0 $19,700 $27,000 $10,200 $6,700 Click here to access the TVM Factor Table calculator. Part a Step 1 What is the discounted payback period for...
Chapter 04, Problem 050 oven are shown below. MARR is 10%/ year. Octavia Bakery is planning to purchase one of two ovens. The expected cash flows for each Model 1278 Model 334A $71 Initial Investment $49,000 Estimated Life End of Life Salvage$9,000 Annual Income Annual Expense 10 $0 s19,500 $29,000 $9,600 $6,800 Click bere to access the TVM Factor Table calculator. v Part a Step What is the discounted payback period for Model 12787 years
04.02-PR032 WP Technology Innovations is planning to purchase one of two chip insertion machines. Due to the pace of technological change in this area, it is realistic to assume that these are one-shot investments. The expected cash flows for each machine are shown below. MARR is 8%/year. Based on a present worth analysis, which machine is preferred? M Series $60,000 5 E Series Initial Investment $40,000 Estimated Life 7 End of Life Salvage $10,000 Annual Income $19,400 Annual Expense $10,000...
Question 1. (24 points) One of the four ovens at a bakery is being considered for replacement. Its market value and maintenance costs are given in the table below for several years. A new oven costs $80,000 and this price includes a complete guarantee of the maintenance costs for the first two years, and it covers a good propo maintenance costs for years 3 and 4. The m table rtion of the arket value and maintenance costs are also summarized...
USE
ANNUAL WORTH Analysis
Two mutually exclusive design alternatives are being considered. The estimated cash flows for each alternative are given in the following table with MARR = 10% per year. Suggest your recommendation by using multiple attribute annual worth AW analysis. Design A Design B Investment cost (RM) 28,000 55,000 One-off expenses 10,000 13,000 In year 4 (RM) Annual revenues (RM) 22,000 28,000 Market value (RM) 6,000 8,000 Useful life 10 years 6 years
Question 1 The cash flows given in table below are for two different alternatives. MARR =10% Data IN Initial Cost Annual Benefits Salvage Value Useful Life in years M $20,000 $6,000 $5,000 $80,000 $10,000 $20,000 a) Determine the annual worth of alternative M b) Determine the annual worth of alternative N
Most questions answered within 3 hours.
-
1. What is the present value of $400, three years in the future
if the interest...
asked 42 minutes ago -
For the following reaction, 0.128 moles of
potassium hydrogen sulfateare mixed with
0.504 moles of potassium...
asked 9 minutes ago -
The labor force minus the number of employed equals the number
of unemployed.
a. True
b....
asked 2 hours ago -
Determine the mass in units of grams​ [g] of 0.49 moles​ [mol]
of a new fictitious...
asked 3 hours ago -
A horizontal mass of M=5kg is on a spring and stretched to
x=0.5m when released from...
asked 4 hours ago -
26 of 50
"I have worked at the Arizona Humane Society for ten years, and
have...
asked 4 hours ago -
Compare and contrast zero based budgeting and incremental (or
base year) budgeting.
asked 4 hours ago -
4 pts 10. Which of the following hypothesis would be MOST
difficult to test experimentally? Group...
asked 4 hours ago -
A business owner makes 1,000 items a day. Each day he or she
contributes eight hours...
asked 4 hours ago -
A
circular loop in the plane of a paper lies inca0.65 T magnetic
field pointing into...
asked 5 hours ago -
A business owner is trying to decide whether to buy, rent, or
lease office space and...
asked 5 hours ago -
Thermal Storage Solar heating of a house is much more efficient
if there is a way...
asked 5 hours ago