A company must decide whether to buy Machine A or Machine B. After 5 years Machine...
A company must decide whether to buy Machine A or Machine B. After 5 years Machine A will be replaced with another A. The initial cost for Machine A is $12,500, annual maintenance is $1,000, and the salvage value at 5 years is $10,000. Machine B has an initial cost of $20,000, 0 maintenance costs, and a salvage value of $10,000 at 10 years. Which machine should be purchased? Use a MARR of 10%.
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A company must decide whether to buy Machine A or Machine B.
After 5 years Machine...
10) You buy a machine now for $10,000. The machine can be depreciated using DDB depreciation with 5 years useful life and $2,000 salvage value. Three years later you sell the machine for $1,000....
10) You buy a machine now for $10,000. The machine can be depreciated using DDB depreciation with 5 years useful life and $2,000 salvage value. Three years later you sell the machine for $1,000. The annual net benefit is $8000. The inflation rate is 5% per year. The acceptable real after-tax rate of return after taking inflation into consideration is 10%. Combined incremental tax rate is 50%. Calculate PW of this investment a) $4102 b) $3654 c) $3181 d) $2706...
Question 2 1 pts "Your company needs a machine for the next 20 years. You are considering two different machine...
Question 2 1 pts "Your company needs a machine for the next 20 years. You are considering two different machines. Machine A Installation cost: $4,300,000 Annual O&M costs: $91,000 Service life (years): 20 Salvage value: $62,000 Annual income taxes: $48,000 Machine B Installation cost: $20,000,000 Annual 0&M costs: $105,000 Service life (years): 10 Salvage value: $44,000 Annual income taxes: $36,000 If your company's MARR is 16%, determine which machine you should buy. Assume that machine B will be available in...
A company must decide which type of machine to buy, and how many units of that...
A company must decide which type of machine to buy, and how many units of that type, given the following information: Type Machine Cost $9.000 $ 11,000 Product Annual Demand Processing Time per minutes per unit Machine 1 Machin 2 1 10,000 12,000 14,000 6 8 5o 7 3 a) Evaluate the proposed machines based on the annual capacity cushion of each type to handle the given demand if the machines will operate 8 hours a day, 260 days a...
Over the next 3 years a road paving company is considering replacing their existing grading machine...
Over the next 3 years a road paving company is considering replacing their existing grading machine which was purchased 5 years ago for $950,000. Depreciation of the grading machine follows a straight line depreciation model with a predicted salvage value of $150,000 three years from now. The operation and maintenance costs of the grading machine have been increasing and are expected to be $20,000 next year, $30,000 two years from now and $50,000 three years from now. The company uses...
DelRay Foods must purchase a new gumdrop machine. Two machines are available. Machine 7745 has a...
DelRay Foods must purchase a new gumdrop machine. Two machines are available. Machine 7745 has a first cost of $1,400, an estimated life of 10 years, a salvage value of $1,000, and annual operating costs estimated at $0.01 per 1,000 gumdrops. Machine A37Y has a first cost of $8,000, a life of 10 years, and no salvage value. Its annual operating costs will be $280 regardless of the number of gumdrops produced. MARR is 6%/year, and 30 million gumdrops ware...
A manager must decide which type of machine to buy, A, B, or C. Machine costs...
A manager must decide which type of machine to buy, A, B, or C. Machine costs (per individual machine) are as follows: Machine A B C Cost $ 50,000 $ 40,000 $ 70,000 Product forecasts and processing times on the machines are as follows: PROCCESSING TIME PER UNIT (minutes) Product HM + Annual Demand 14,000 19,000 12,000 7,000 5 1 1 2 B 3 1 3 6 C 1 3 4 1 a. Assume that only purchasing costs are being...
co. is now considering which of two product labeling machine to buy. Machine A costs $5,000...
co. is now considering which of two product labeling machine to buy. Machine A costs $5,000 to buy and $300 per year to operate. It wears out and must be replaced every two years. Machine B costs $6,500 to buy and $200 per year to operate. It lasts for four years. Ignoring taxes, which one should it choose, if it use a 10% discount rate? i. Compute PV cost of each machine. ii. Compute equivalent annual cost for each machine,...
Chiwen, Inc. is considering whether to replace an office copy machine with a new model. The manager...
Chiwen, Inc. is considering whether to replace an office copy machine with a new model. The manager is trying to decide whether to buy the machine outright or lease it from a copier company. He has generated the following information about the two options. Purchase Option Lease Option Purchase price $ 25,000 Annual lease payment (includes all supplies and maintenance) $ 7,000 Annual operating costs (paper, toner, maintenance, etc.) $ 2,000 Useful life 5 years Contract length 5 years Salvage value $...
Solve without excel: 9.17 A piece of imaging equipment was purchased two years ago for $50,000...
Solve without excel:
9.17 A piece of imaging equipment was purchased two years ago for $50,000 with an expected useful life of 5 years and a $5000 salvage value. Since its in- stallation performance was poor, it was upgraded for $20,000 one year ago. Increased demand now requires another upgrade for an additional $22,000 so that it can be used for 3 more years. Its new an- nual operating cost will be $27.000 with a $12,000 salvage after the 3...
A manager must decide which type of machine to buy, A, B, or C. Machine costs (per individual machine) are as follows:...
A manager must decide which type of machine to buy, A, B, or C. Machine costs (per individual machine) are as follows: Machine Cost A $ 60,000 B $ 50,000 C $ 60,000 Product forecasts and processing times on the machines are as follows: PROCCESSING TIME PER UNIT (minutes) Product Annual Demand A B C 1 15,000 2 4 2 2 25,000 6 2 3 3 15,000 3 5 5 4 20,000 3 4 2 a. Assume that only purchasing...
10) You buy a machine now for $10,000. The machine can be depreciated using DDB depreciation with 5 years useful life and $2,000 salvage value. Three years later you sell the machine for $1,000. The annual net benefit is $8000. The inflation rate is 5% per year. The acceptable real after-tax rate of return after taking inflation into consideration is 10%. Combined incremental tax rate is 50%. Calculate PW of this investment a) $4102 b) $3654 c) $3181 d) $2706...
Question 2 1 pts "Your company needs a machine for the next 20 years. You are considering two different machines. Machine A Installation cost: $4,300,000 Annual O&M costs: $91,000 Service life (years): 20 Salvage value: $62,000 Annual income taxes: $48,000 Machine B Installation cost: $20,000,000 Annual 0&M costs: $105,000 Service life (years): 10 Salvage value: $44,000 Annual income taxes: $36,000 If your company's MARR is 16%, determine which machine you should buy. Assume that machine B will be available in...
A company must decide which type of machine to buy, and how many units of that type, given the following information: Type Machine Cost $9.000 $ 11,000 Product Annual Demand Processing Time per minutes per unit Machine 1 Machin 2 1 10,000 12,000 14,000 6 8 5o 7 3 a) Evaluate the proposed machines based on the annual capacity cushion of each type to handle the given demand if the machines will operate 8 hours a day, 260 days a...
Over the next 3 years a road paving company is considering replacing their existing grading machine which was purchased 5 years ago for $950,000. Depreciation of the grading machine follows a straight line depreciation model with a predicted salvage value of $150,000 three years from now. The operation and maintenance costs of the grading machine have been increasing and are expected to be $20,000 next year, $30,000 two years from now and $50,000 three years from now. The company uses...
A manager must decide which type of machine to buy, A, B, or C. Machine costs (per individual machine) are as follows: Machine A B C Cost $ 50,000 $ 40,000 $ 70,000 Product forecasts and processing times on the machines are as follows: PROCCESSING TIME PER UNIT (minutes) Product HM + Annual Demand 14,000 19,000 12,000 7,000 5 1 1 2 B 3 1 3 6 C 1 3 4 1 a. Assume that only purchasing costs are being...
Solve without excel:
9.17 A piece of imaging equipment was purchased two years ago for $50,000 with an expected useful life of 5 years and a $5000 salvage value. Since its in- stallation performance was poor, it was upgraded for $20,000 one year ago. Increased demand now requires another upgrade for an additional $22,000 so that it can be used for 3 more years. Its new an- nual operating cost will be $27.000 with a $12,000 salvage after the 3...
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