Homework Answers
| NPV for Renting the Machine | |||||||||||
| Year | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
| Rent | -$54,000 | -$54,000 | -$54,000 | -$54,000 | -$54,000 | -$54,000 | -$54,000 | -$54,000 | -$54,000 | -$54,000 | |
| Tax Benefit ( aX 20%) | $10,800 | $10,800 | $10,800 | $10,800 | $10,800 | $10,800 | $10,800 | $10,800 | $10,800 | $10,800 | |
| FCF (b) | -$43,200 | -$43,200 | -$43,200 | -$43,200 | -$43,200 | -$43,200 | -$43,200 | -$43,200 | -$43,200 | -$43,200 | |
| PVF @ 9% (c ) | 1 | 0.917 | 0.842 | 0.772 | 0.708 | 0.65 | 0.596 | 0.547 | 0.502 | 0.46 | 0.4224 |
| Net Present Value (d=bxc) | -$39,614 | -$36,374 | -$33,350 | -$30,586 | -$28,080 | -$25,747 | -$23,630 | -$21,686 | -$19,872 | -$18,248 | |
| NPV at 9% | -$277,188 | ||||||||||
| NPV for Purchase Current Machine | |||||||||||
| Year | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
| Maintenance | -$24,000 | -$24,000 | -$24,000 | -$24,000 | -$24,000 | -$24,000 | -$24,000 | -$24,000 | -$24,000 | -$24,000 | |
| Depreciation (155000/7) | -$22,143 | -$22,143 | -$22,143 | -$22,143 | -$22,143 | -$22,143 | -$22,143 | ||||
| Total Revenue nature Expense (a) | -$46,143 | -$46,143 | -$46,143 | -$46,143 | -$46,143 | -$46,143 | -$46,143 | -$24,000 | -$24,000 | -$24,000 | |
| Tax Benefit ( aX 20%) (b) | $9,229 | $9,229 | $9,229 | $9,229 | $9,229 | $9,229 | $9,229 | $4,800 | $4,800 | $4,800 | |
| Depreciation (155000/7) © | $22,143 | $22,143 | $22,143 | $22,143 | $22,143 | $22,143 | $22,143 | ||||
| Capital Expenditure (d) | -$155,000 | ||||||||||
| FCF (e=a+b+c+d) | -$155,000 | -$14,771 | -$14,771 | -$14,771 | -$14,771 | -$14,771 | -$14,771 | -$14,771 | -$19,200 | -$19,200 | -$19,200 |
| PVF at 9% (f) | 1 | 0.917 | 0.842 | 0.772 | 0.708 | 0.65 | 0.596 | 0.547 | 0.502 | 0.46 | 0.4224 |
| Net Presetn value(exf) | -$155,000 | -$13,545 | -$12,438 | -$11,404 | -$10,458 | -$9,601 | -$8,804 | -$8,080 | -$9,638 | -$8,832 | -$8,110 |
| NPV | -$255,910 | ||||||||||
| NPV for Purchase of Advanced Machine | |||||||||||
| Particulars/years | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
| Other cost | -36000 | 14000 | 14000 | 14000 | 14000 | 14000 | 14000 | 14000 | 14000 | 14000 | 14000 |
| Maintenance | -20000 | -20000 | -20000 | -20000 | -20000 | -20000 | -20000 | -20000 | -20000 | -20000 | |
| Depreciation (265000/7) | -$37,857 | -$37,857 | -$37,857 | -$37,857 | -$37,857 | -$37,857 | -$37,857 | ||||
| Total Revenue nature Expense (a) | -$36,000 | -$43,857 | -$43,857 | -$43,857 | -$43,857 | -$43,857 | -$43,857 | -$43,857 | -$6,000 | -$6,000 | -$6,000 |
| Tax Benefit ( aX 20%) (b) | -$7,200 | $8,771 | $8,771 | $8,771 | $8,771 | $8,771 | $8,771 | $8,771 | $1,200 | $1,200 | $1,200 |
| Depreciation (265000/7) © | $37,857 | $37,857 | $37,857 | $37,857 | $37,857 | $37,857 | $37,857 | ||||
| Capital Expenditure (d) | -265000 | ||||||||||
| FCF (e=a+b+c+d) | -$308,200 | $2,771 | $2,771 | $2,771 | $2,771 | $2,771 | $2,771 | $2,771 | -$4,800 | -$4,800 | -$4,800 |
| PVF at 9% (f) | 1 | 0.917 | 0.842 | 0.772 | 0.708 | 0.65 | 0.596 | 0.547 | 0.502 | 0.46 | 0.4224 |
| Net Presetn value(exf) | -$308,200 | $2,541 | $2,334 | $2,140 | $1,962 | $1,801 | $1,652 | $1,516 | -$2,410 | -$2,208 | -$2,028 |
| Total NPV | -$300,899 | ||||||||||
Correct answer is purchase current machine
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Beryl's Iced Tea currently rents a bottling machine for $54,000 per year, including all maintenance expenses....
Thank you！ Beryl's Iced Tea currently rents a bottling machine for $54,000 per year, including all...
Thank you！
Beryl's Iced Tea currently rents a bottling machine for $54,000 per year, including all maintenance expenses. It is considering purchasing a machine instead, and is comparing two options: a. Purchase the machine it is currently renting for $155,000. This machine will require $25,000 per year in ongoing maintenance expenses b. Purchase a new, more advanced machine for $265,000. This machine will require $18,000 per year in ongoing maintenance expenses and will lower bottling costs by $11,000 per year....
Beryl's Iced Tea currently rents a bottling machine for $50,000 per year, including all maintenance expenses....
Beryl's Iced Tea currently rents a bottling machine for $50,000 per year, including all maintenance expenses. It is considering purchasing a machine instead, and is comparing two options: A. Purchase the machine it is currently renting for $160,000. This machine will require $24,000 per year in ongoing maintenance expenses. B. Purchase a new, more advanced machine for $265,000. This machine will require $15,000 per year in ongoing maintenance expenses and will lower bottling costs by $15,000 per year. Also, $37,000...
Beryl's Iced Tea currently rents a bottling machine for $50,000 per year, including all maintenance expenses....
Beryl's Iced Tea currently rents a bottling machine for $50,000 per year, including all maintenance expenses. It is considering purchasing a machine instead and is comparing two options: a. Purchase the machine it is currently renting for $155,000. This machine will require $24,000 per year in ongoing maintenance expenses. b. Purchase a new, more advanced machine for $260,000. This machine will require $ 16,000 per year in ongoing maintenance expenses and will lower bottling costs by $12,000 per year. Also,...
Beryl's Iced Tea currently rents a bottling machine for $55,000 per year, including all maintenance expenses. It is con...
Beryl's Iced Tea currently rents a bottling machine for $55,000 per year, including all maintenance expenses. It is considering purchasing a machine instead and is comparing two options: a. Purchase the machine it is currently renting for $165,000. This machine will require $24,000 per year in ongoing maintenance expenses. b. Purchase a new, more advanced machine for $255,000. This machine will require $18,000 per year in ongoing maintenance expenses and will lower bottling costs by $11,000 per year. Also, $39,000...
Beryl's Iced Tea currently rents a bottling machine for $50,000 per year, including all maintenance expenses....
Beryl's Iced Tea currently rents a bottling machine for $50,000 per year, including all maintenance expenses. It is considering purchasing a machine instead and is comparing two options: a. Purchase the machine it is currently renting for $165,000. This machine will require $24,000 per year in ongoing maintenance expenses. b. Purchase a new, more advanced machine for $260,000. This machine will require $17,000 per year in ongoing maintenance expenses and will lower bottling costs by $12,000 per year. Also, $36,000...
Beryl's Iced Tea currently rents a bottling machine for $50,000 per year, including all maintenance expenses. It is...
Beryl's Iced Tea currently rents a bottling machine for $50,000 per year, including all maintenance expenses. It is considering purchasing a machine instead and is comparing two options: a. Purchase the machine it is currently renting for $150,000. This machine will require $24.000 per year in ongoing maintenance expenses. b. Purchase a new, more advanced machine for $265,000. This machine will require $18,000 per year in ongoing maintenance expenses and will lower bottling costs by $10.000 per year. Also, $38,000...
Beryl's Iced Tea currently rents a bottling machine for $53,000 per year, including all maintenance expenses. It is...
Beryl's Iced Tea currently rents a bottling machine for $53,000 per year, including all maintenance expenses. It is considering purchasing a machine instead and is comparing two options: a. Purchase the machine it is currently renting for $155.000. This machine will require $22.000 per year in ongoing maintenance expenses. b. Purchase a new more advanced machine for $250.000. This machine will require $18,000 per year in ongoing maintenance expenses and will lower bottling costs by $12.000 per year. Also, $37.000...
Beryl's Iced Tea currently rents a bottling machine for $53,000 per year, including all maintenance...
Beryl's Iced Tea currently rents a bottling machine for $53,000 per year, including all maintenance expenses. It is considering purchasing a machine instead and is comparing two options: a. Purchase the machine it is currently renting for $150,000. This machine will require $21,000 per year in ongoing maintenance expenses. b. Purchase a new, more advanced machine for $250,000. This machine will require $18,000 per year in ongoing maintenance expenses and will lower bottling costs by $13,000 per year. Also,...
Beryl's Iced Tea currently rents a bottling machine for $54,000 per year, including all maintenance expenses....
Beryl's Iced Tea currently rents a bottling machine for $54,000 per year, including all maintenance expenses. It is considering purchasing a machine instead and is comparing two options a. Purchase the machine it is currently renting for $165,000. This machine will require $21,000 per year in ongoing maintenance expenses b. Purchase a new, more advanced machine for $260,000. This machine will require $16,000 per year in ongoing maintenance expenses and will lower bottling costs by $13,000 per year. Also, S38,000...
Beryl's Iced Tea currently rents a bottling machine for $53,000 per year, including all maintenance expenses....
Beryl's Iced Tea currently rents a bottling machine for $53,000 per year, including all maintenance expenses. It is considering purchasing a machine instead, and is comparing two options: A. Purchase the machine it is currently renting for $155,000. This machine will require $24,000 per year in ongoing maintenance expenses. B. Purchase a new, more advanced machine for $250,000. This machine will require $20,000 per year in ongoing maintenance expenses and will lower bottling costs by $13,000 per year. Also, $38,000...
Thank you！
Beryl's Iced Tea currently rents a bottling machine for $54,000 per year, including all maintenance expenses. It is considering purchasing a machine instead, and is comparing two options: a. Purchase the machine it is currently renting for $155,000. This machine will require $25,000 per year in ongoing maintenance expenses b. Purchase a new, more advanced machine for $265,000. This machine will require $18,000 per year in ongoing maintenance expenses and will lower bottling costs by $11,000 per year....
Beryl's Iced Tea currently rents a bottling machine for $50,000 per year, including all maintenance expenses. It is considering purchasing a machine instead, and is comparing two options: A. Purchase the machine it is currently renting for $160,000. This machine will require $24,000 per year in ongoing maintenance expenses. B. Purchase a new, more advanced machine for $265,000. This machine will require $15,000 per year in ongoing maintenance expenses and will lower bottling costs by $15,000 per year. Also, $37,000...
Beryl's Iced Tea currently rents a bottling machine for $50,000 per year, including all maintenance expenses. It is considering purchasing a machine instead and is comparing two options: a. Purchase the machine it is currently renting for $155,000. This machine will require $24,000 per year in ongoing maintenance expenses. b. Purchase a new, more advanced machine for $260,000. This machine will require $ 16,000 per year in ongoing maintenance expenses and will lower bottling costs by $12,000 per year. Also,...
Beryl's Iced Tea currently rents a bottling machine for $55,000 per year, including all maintenance expenses. It is considering purchasing a machine instead and is comparing two options: a. Purchase the machine it is currently renting for $165,000. This machine will require $24,000 per year in ongoing maintenance expenses. b. Purchase a new, more advanced machine for $255,000. This machine will require $18,000 per year in ongoing maintenance expenses and will lower bottling costs by $11,000 per year. Also, $39,000...
Beryl's Iced Tea currently rents a bottling machine for $50,000 per year, including all maintenance expenses. It is considering purchasing a machine instead and is comparing two options: a. Purchase the machine it is currently renting for $165,000. This machine will require $24,000 per year in ongoing maintenance expenses. b. Purchase a new, more advanced machine for $260,000. This machine will require $17,000 per year in ongoing maintenance expenses and will lower bottling costs by $12,000 per year. Also, $36,000...
Beryl's Iced Tea currently rents a bottling machine for $50,000 per year, including all maintenance expenses. It is considering purchasing a machine instead and is comparing two options: a. Purchase the machine it is currently renting for $150,000. This machine will require $24.000 per year in ongoing maintenance expenses. b. Purchase a new, more advanced machine for $265,000. This machine will require $18,000 per year in ongoing maintenance expenses and will lower bottling costs by $10.000 per year. Also, $38,000...
Beryl's Iced Tea currently rents a bottling machine for $53,000 per year, including all maintenance expenses. It is considering purchasing a machine instead and is comparing two options: a. Purchase the machine it is currently renting for $155.000. This machine will require $22.000 per year in ongoing maintenance expenses. b. Purchase a new more advanced machine for $250.000. This machine will require $18,000 per year in ongoing maintenance expenses and will lower bottling costs by $12.000 per year. Also, $37.000...
Beryl's Iced Tea currently rents a bottling machine for $53,000 per year, including all maintenance expenses. It is considering purchasing a machine instead and is comparing two options: a. Purchase the machine it is currently renting for $150,000. This machine will require $21,000 per year in ongoing maintenance expenses. b. Purchase a new, more advanced machine for $250,000. This machine will require $18,000 per year in ongoing maintenance expenses and will lower bottling costs by $13,000 per year. Also,...
Beryl's Iced Tea currently rents a bottling machine for $54,000 per year, including all maintenance expenses. It is considering purchasing a machine instead and is comparing two options a. Purchase the machine it is currently renting for $165,000. This machine will require $21,000 per year in ongoing maintenance expenses b. Purchase a new, more advanced machine for $260,000. This machine will require $16,000 per year in ongoing maintenance expenses and will lower bottling costs by $13,000 per year. Also, S38,000...
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