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1) Your old pump has annual operating costs of $40,000, which you consider excessive. You are...
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...
b. Determine when the old pump should be replaced ? The waste water department has a...
b. Determine when the old pump should be replaced ?
The waste water department has a four year old pump that was initially purchased for $65,000. This existing pump can be kept in service for an additional four years, or it could be sold for S35,000 and replaced with a new pump. The purchase price of the new pump today is $50,000 The proiected MVs and Operating and Maintenance cost over the four vear planning period for both pumps are...
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...
Question #4 Your company has a piece of equipment that is getting old. The company that sold the ...
The depreciation method used is straight line.
Question #4 Your company has a piece of equipment that is getting old. The company that sold the equipment to you has offered to replace the equipment with something better. The salesman has provided the following information: New Equipment Cost Expected increased cash flow Salvage value of old equipment Salvage value of new equipment Life expectancy Required rate of return Required payback period $1,500,000 $200,000 per year $20,000 $100,000 10 years 10% 8...
15 iSooky has a spotter truck with a book value of $40,000 and a remaining useful...
15 iSooky has a spotter truck with a book value of $40,000 and a remaining useful life of five years. At the end of the five years the spotter truck will have a zero salvage value. The market value of the spotter truck is currently $32,000. iSooky can purchase a new spotter truck for $120,000 and receive $31,000 in return for trading in its old spotter truck. The new spotter truck will reduce variable manufacturing costs by $25,000 per year...
Example 1 JJ company wants to replace the old machine. Machine is used in molding the...
Example 1 JJ company wants to replace the old machine. Machine is used in molding the components. The old machine was acquired three year ago. Its remaining useful life is 5 years and salvage value is $10,000. Book value of old machine is $70,000. Old machine cash operating cost is $20,000 per year. A new machine is the speed accelerating machine. Its initial cost is $ 150,000. New machine cash 's operating cost is $12,000 per year. Its useful life...
Sooky has a spotter truck with a book value of $40,000 and a remaining useful life...
Sooky has a spotter truck with a book value of $40,000 and a remaining useful life of five years. At the end of the five years the spotter truck will have a zero salvage value. The market value of the spotter truck is currently $32,000. Sooky can purchase a new spotter truck for $120,000 and receive $31.000 in return for trading in its old spotter truck. The new spotter truck will reduce variable manufacturing costs by $25,000 per year over...
Suppose we are thinking about replacing an old computer with a new one. The old one...
Suppose we are thinking about replacing an old computer with a new one. The old one cost us $1,240,000; the new one will cost $1,500,000. The new machine will be depreciated straight-line to zero over its five-year life. It will probably be worth about $240,000 after five years. The old computer is being depreciated at a rate of $248,000 per year. It will be completely written off in three years. If we don’t replace it now, we will have to...
Suppose we are thinking about replacing an old computer with a new one. The old one...
Suppose we are thinking about replacing an old computer with a new one. The old one cost us $1,960,000; the new one will cost, $2,531,000. The new machine will be depreciated straight-line to zero over its five-year life. It will probably be worth about $660,000 after five years. The old computer is being depreciated at a rate of $472,000 per year. It will be completely written off in three years. If we don’t replace it now, we will have to...
Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost $597,700 and has...
Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost $597,700 and has $351,600 of accumulated depreciation to date, with a new machine that has a purchase price of $486,800. The old machine could be sold for $61,400. The annual variable production costs associated with the old machine are estimated to be $155,800 per year for eight years. The annual variable production costs for the new machine are estimated to be $99,800 per year for...
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...
b. Determine when the old pump should be replaced ?
The waste water department has a four year old pump that was initially purchased for $65,000. This existing pump can be kept in service for an additional four years, or it could be sold for S35,000 and replaced with a new pump. The purchase price of the new pump today is $50,000 The proiected MVs and Operating and Maintenance cost over the four vear planning period for both pumps are...
The depreciation method used is straight line.
Question #4 Your company has a piece of equipment that is getting old. The company that sold the equipment to you has offered to replace the equipment with something better. The salesman has provided the following information: New Equipment Cost Expected increased cash flow Salvage value of old equipment Salvage value of new equipment Life expectancy Required rate of return Required payback period $1,500,000 $200,000 per year $20,000 $100,000 10 years 10% 8...
15 iSooky has a spotter truck with a book value of $40,000 and a remaining useful life of five years. At the end of the five years the spotter truck will have a zero salvage value. The market value of the spotter truck is currently $32,000. iSooky can purchase a new spotter truck for $120,000 and receive $31,000 in return for trading in its old spotter truck. The new spotter truck will reduce variable manufacturing costs by $25,000 per year...
Example 1 JJ company wants to replace the old machine. Machine is used in molding the components. The old machine was acquired three year ago. Its remaining useful life is 5 years and salvage value is $10,000. Book value of old machine is $70,000. Old machine cash operating cost is $20,000 per year. A new machine is the speed accelerating machine. Its initial cost is $ 150,000. New machine cash 's operating cost is $12,000 per year. Its useful life...
Sooky has a spotter truck with a book value of $40,000 and a remaining useful life of five years. At the end of the five years the spotter truck will have a zero salvage value. The market value of the spotter truck is currently $32,000. Sooky can purchase a new spotter truck for $120,000 and receive $31.000 in return for trading in its old spotter truck. The new spotter truck will reduce variable manufacturing costs by $25,000 per year over...
Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost $597,700 and has $351,600 of accumulated depreciation to date, with a new machine that has a purchase price of $486,800. The old machine could be sold for $61,400. The annual variable production costs associated with the old machine are estimated to be $155,800 per year for eight years. The annual variable production costs for the new machine are estimated to be $99,800 per year for...
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