1) Your company currently owns a used pump that has been damaged. A contractor has said...
1) Your company currently owns a used pump that has been damaged. A contractor has said that the pump could be repaired at a cost of $35,000, which would make the pump workable for the next five years. If you instead sell the damaged pump for scrap, you can get $5,000 for it. A brand-new pump would cost $80,000, and would last for seven years. If your company's minimum acceptable rate of return is 10% per year before taxes, which option would you recommend?
Homework Answers
EUAC of repair = 35000 * (A/P, 10%,5)
= 35000 * 0.263797
= 9232.91
EUAC of new pump = (80000 - 5000)* (A/P, 10%,7)
= 75000 * 0.205405
= 15405.41
As EUAC of repair is less, old pump should be repaired
Add Answer to:
1) Your company currently owns a used pump that has been
damaged. A contractor has said...
1) Your old pump has annual operating costs of $40,000, which you consider excessive. You are...
1) Your old pump has annual operating costs of $40,000, which you consider excessive. You are thinking about buying a new pump, which would have operating costs of only $20,000 per year. Either option could last for three years, with no salvage value. Your minimum acceptable rate of return is 12% per year. Determine whether the decision of whether to replace your old pump is sensitive to the cost of the new pump, if that cost can range from $30,000...
Please use a sensitivity analysis to solve this! thanks! 1) Your old pump has annual operating...
Please use a sensitivity analysis to solve
this! thanks!
1) Your old pump has annual operating costs of $40,000, which you consider excessive. You are thinking about buying a new pump, which would have operating costs of only $20,000 per year. Either option could last for three years, with no salvage value. Your minimum acceptable rate of return is 12% per year. Determine whether the decision of whether to replace your old pump is sensitive to the cost of the...
Green Glassfiber Inc. are producing wings for windmills and has a manufacturing machine that needs attention....
Green Glassfiber Inc. are producing wings for windmills and has a manufacturing machine that needs attention. The company is considering two options. Option A is to refurbish the current machine at a cost of € 10,000,000. If refurbished Green Glassfiber expects the machine to last another 8 years with no residual/scrap value left. Option B is to replace the machine at a cost of € 20,000,000. A new machine would last 10 years with no residual/scrap value left. Green Glassfiber...
I'm not sure we should lay out $280,000 for that automated welding machine." said Jim Alder,...
I'm not sure we should lay out $280,000 for that automated welding machine." said Jim Alder, president of the Superior Equipment Company. "That's a lot of money, and it would cost us $80,000 for software and installation, and another $43,200 per year just to maintain the thing. In addition, the manufacturer admits it would cost $43,000 more at the end of three years to replace worn out parts. admit it's a lot of money." said Franci Rogers, the controller. "But...
1. Your company plans to buy a new machine with a cost of $80,000. It is...
1. Your company plans to buy a new machine with a cost of $80,000. It is expected to operate for 12 years, with no salvage value at the end of that time. You have estimated that the purchase of this machine will enhance your company's net before-tax cash flow by $20,000 per year. The tax rate is 40%, and the company's after-tax minimum acceptable rate of return is 10% There are two financing options for the machine. The first would...
Net Present Value Analysis; Uncertain Cash Flows“I’m not sure we should lay out $500,000 for that...
Net Present Value Analysis; Uncertain Cash Flows“I’m not sure we should lay out $500,000 for that automated welding machine,” said Jim Alder, president of the Superior Equipment Company. “That’s a lot of money, and it would cost us $80,000 for software and installation, and another $3,000 every month just to maintain the thing. In addition, the manufacturer admits that it would cost $45,000 more at the end of seven years to replace worn-out parts.” “I admit it’s a lot of...
Simon Lee, the president of Superior Equipment Company, is considering to buy an automated welding machine....
Simon Lee, the president of Superior Equipment Company, is considering to buy an automated welding machine. He is discussing with his financial controller with the following conversation. “I'm not sure if we should spend $150,000 for that automated welding machine”, said Simon Lee, president of the Superior Equipment Company. “That's a lot of money, and it would cost us $80,000 for software and installment, and another $3,000 every month just to maintain the thing. In addition, the manufacturer admits that...
Question 1 (25 marks) You are the Chief Operating Officer (COO) of an electrical appliances company,...
Question 1 (25 marks) You are the Chief Operating Officer (COO) of an electrical appliances company, Sung-Sam. Currently you are considering replacing the existing old assembly line with a new one in order to boost the production capacity and product variety. The old assembly line was purchased seven years ago at a total cost of $2.4 million. It has a 12-year economic life with five years remaining and zero salvage value. If this assembly line was to be sold today,...
tice Exercises EE9-1 p 369 PE9-1A Lease or sell Claxon Company owns a machine with a...
tice Exercises EE9-1 p 369 PE9-1A Lease or sell Claxon Company owns a machine with a cost of $305,000 and of $65,000 that can be sold for $262,000, less a 5% sales commission. A machine can be leased by Claxon Company for end of which there is no residual value. In addition, the repair, insurance, a tax expense that would be incurred by Claxon Company on the chine $21,600 over the three years. Prepare a differential analysis on January Claxon...
8. A privately owned company manufactures metal seat frames that are used to make automobile seats....
8. A privately owned company manufactures metal seat frames that are used to make automobile seats. Its customer, the seat manufacturer, forecast that 50,000 frames will be needed next year. The seat frame manufacturer must determine which process to install. One process is more labor-intensive with fixed costs of $400,000 and variable costs of $90 per frame. The second process has fixed costs of $850,000 and variable costs of $75 per frame. Which process do you recommend? Why? 9. An...
1) Your old pump has annual operating costs of $40,000, which you consider excessive. You are thinking about buying a new pump, which would have operating costs of only $20,000 per year. Either option could last for three years, with no salvage value. Your minimum acceptable rate of return is 12% per year. Determine whether the decision of whether to replace your old pump is sensitive to the cost of the new pump, if that cost can range from $30,000...
Please use a sensitivity analysis to solve
this! thanks!
1) Your old pump has annual operating costs of $40,000, which you consider excessive. You are thinking about buying a new pump, which would have operating costs of only $20,000 per year. Either option could last for three years, with no salvage value. Your minimum acceptable rate of return is 12% per year. Determine whether the decision of whether to replace your old pump is sensitive to the cost of the...
Green Glassfiber Inc. are producing wings for windmills and has a manufacturing machine that needs attention. The company is considering two options. Option A is to refurbish the current machine at a cost of € 10,000,000. If refurbished Green Glassfiber expects the machine to last another 8 years with no residual/scrap value left. Option B is to replace the machine at a cost of € 20,000,000. A new machine would last 10 years with no residual/scrap value left. Green Glassfiber...
I'm not sure we should lay out $280,000 for that automated welding machine." said Jim Alder, president of the Superior Equipment Company. "That's a lot of money, and it would cost us $80,000 for software and installation, and another $43,200 per year just to maintain the thing. In addition, the manufacturer admits it would cost $43,000 more at the end of three years to replace worn out parts. admit it's a lot of money." said Franci Rogers, the controller. "But...
1. Your company plans to buy a new machine with a cost of $80,000. It is expected to operate for 12 years, with no salvage value at the end of that time. You have estimated that the purchase of this machine will enhance your company's net before-tax cash flow by $20,000 per year. The tax rate is 40%, and the company's after-tax minimum acceptable rate of return is 10% There are two financing options for the machine. The first would...
Net Present Value Analysis; Uncertain Cash Flows“I’m not sure we should lay out $500,000 for that automated welding machine,” said Jim Alder, president of the Superior Equipment Company. “That’s a lot of money, and it would cost us $80,000 for software and installation, and another $3,000 every month just to maintain the thing. In addition, the manufacturer admits that it would cost $45,000 more at the end of seven years to replace worn-out parts.” “I admit it’s a lot of...
Simon Lee, the president of Superior Equipment Company, is considering to buy an automated welding machine. He is discussing with his financial controller with the following conversation. “I'm not sure if we should spend $150,000 for that automated welding machine”, said Simon Lee, president of the Superior Equipment Company. “That's a lot of money, and it would cost us $80,000 for software and installment, and another $3,000 every month just to maintain the thing. In addition, the manufacturer admits that...
tice Exercises EE9-1 p 369 PE9-1A Lease or sell Claxon Company owns a machine with a cost of $305,000 and of $65,000 that can be sold for $262,000, less a 5% sales commission. A machine can be leased by Claxon Company for end of which there is no residual value. In addition, the repair, insurance, a tax expense that would be incurred by Claxon Company on the chine $21,600 over the three years. Prepare a differential analysis on January Claxon...
8. A privately owned company manufactures metal seat frames that are used to make automobile seats. Its customer, the seat manufacturer, forecast that 50,000 frames will be needed next year. The seat frame manufacturer must determine which process to install. One process is more labor-intensive with fixed costs of $400,000 and variable costs of $90 per frame. The second process has fixed costs of $850,000 and variable costs of $75 per frame. Which process do you recommend? Why? 9. An...
Most questions answered within 3 hours.
-
In risk management, insurance is an example of:
Select one:
a. Risk avoidance
b. Risk deflection...
asked 4 minutes ago -
Write the equilibrium expression for the dissociation in
water for CH5N, C2H5O2COOH, H3AsO4, KClO2, HC2H2ClO2.
asked 2 minutes ago -
Wildhorse Company follows the practice of pricing its inventory
at the lower-of-cost-or-market, on an individual-item
basis....
asked 39 minutes ago -
3. (10 pts) You grow a corn crop that yields 150 bushels ac-1,
with the following...
asked 27 minutes ago -
7. The term Six Sigma refers to:
Select one:
a. The control limits established in a...
asked 37 minutes ago -
For the following reaction: A(g) + 2 B(g) ⇌ 2 C(g) Calculate the
equilibrium constant K...
asked 39 minutes ago -
Which of the following best describes tidal volume? options:
1.The amount of oxygen in the air...
asked 55 minutes ago -
1. Smaller cost distortions occur when the traditional systems'
single indirect-cost rate and the activity-cost-driver rates:...
asked 1 hour ago -
Using either a FMECA approach or some other appropriate RCA
tool, identify five risk treatment actions...
asked 1 hour ago -
If for a test the P-value is between 0.0025 and 0.005, what
conclusion can you draw?...
asked 1 hour ago -
Using Python. Write a function clean2(aList) that takes a list
of integers aList as argument, and...
asked 1 hour ago -
Intrapreneurship is defined as the
development of an enterprise culture with an existing (Nandan,
2009). An...
asked 1 hour ago