Homework Answers
The
Net Present Worth of Model A is more than that of Model B and hence
Walt Wallace Construction should considering buying dump truck
model of Model A.
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Walt Wallace Construction is considering to purchase one of two alternative dump truck models (see the...
XYZ Construction Company is investigating the purchase of a new dump truck. Interest is 9%. The...
XYZ Construction Company is investigating the purchase of a new dump truck. Interest is 9%. The cash flows for two likely models are as follows: Model First cost annual operating cost annual income salvage value life A $50000 $2000 $9000 $10000 10 yr B $80000 $1000 $12000 $30000 10 yr a) Using PW analysis, decide which truck the firm should buy, and explain why. b) Before the construction company can close the deal, the dealer sells out of Model B...
4. A city is trying to decide on the purchase of a garbage truck. Two types...
4. A city is trying to decide on the purchase of a garbage truck. Two types of trucks are being considered, A and B, each with a useful life of 10 years. The capital and operating costs for each truck are given below (a) which truck should the city purchase based on these costs alone? Calculate the costs both on an annual and present worth basis assuming an interest rate of 8%
8. Andrews Manufacturing offers three models for one of its products to its customers. You have...
8. Andrews Manufacturing offers three models for one of its products to its customers. You have been asked to analyze the choices from the customer's perspective. Which model should a customer choose 19 if each model has a life of 12 years? Doing nothing is an alterative. Alternative Deluxe Regular Economy First cost $220,000 $125,000 $75.000 Annual benefit 79,000 43.000 28.000 Maintenance and operating cost 38,000 13,000 8,000 Salvage value 16,000 6,000 3.000 (a) Construct a choice table for interest...
A construction company is considering to acquire a new equipment.Table 1 is the information of two...
A construction company is considering to acquire a new
equipment.Table 1 is the information of two alternatives for this
new equipment. Complete the following questions according to the PW
analysis The after tax market minimum attractive acquire
(1) which alternative should the company acquire?
(2)if the inflation rate is 2% per year and the base year is
year 0,whic company should you choose?
PW
is Present Value
use Present Value method to analyze
Table 1 Capital investment А 9000 в...
Problem 12-4A (Video) Jane's Auto Care is considering the purchase of a new tow truck. The...
Problem 12-4A (Video) Jane's Auto Care is considering the purchase of a new tow truck. The garage doesn't currently have a tow truck, and the $59,960 price tag for a new truck would represent a major expenditure. Jane Austen, owner of the garage, has compiled the estimates shown below in trying to determine whether the tow truck should be purchased. Initial cost Estimated useful life Net annual cash flows from towing Overhaul costs (end of year 4) Salvage value $59,960...
In a large plant that has life of 12 years, the management is considering two different...
In a large plant that has life of 12 years, the management is considering two different pumps. Which of pumps should they purchase? The data on the pumps is given in the following Table. Minimum attractive interest rate is 15%. You can use net present worth (cost) criteria with common multiple life which is 6. Do before tax analysis which means do not account for tax and depreciation. Pump TCI (S) Operating Cost Life of alternatives 100,000 150,000 (S/year) 50,000...
Ridgley Custom Metal Products (RCMP) must purchase a new tube bender, RCMP'S MARR is 11 percent....
Ridgley Custom Metal Products (RCMP) must purchase a new tube bender, RCMP'S MARR is 11 percent. The company is considering two models: Model First Cost $100 000 150 000 Economic Life 5 years 5 years Yearly Net Savings $50 000 60 000 Salvage Value $20 000 30 000 a. Using the present worth method, which tube bender should it buy? b. RCMP has discovered a third alternative, which has been added to the table below. Now which tube bender should...
Ne with one of two newer more effective models. The existing crane is 3 years old, cost $32.000 a...
ne with one of two newer more effective models. The existing crane is 3 years old, cost $32.000 and is being depreciated under MACRS using a 5-year recovery period. Although the existing crane has only three years (years 4, 5, and 6) of depreciation remaining under MACRS, it has a remaining usable life of 5 years. Crane A, one of two newer models cost $40,000 to purchase, and $8,000 to install. It has a 5- and will be depreciated under...
I am confused on how to find the ATCF's A construction company is considering whether to...
I am confused on how to find the ATCF's
A construction company is considering whether to lease or buy equipment for its new 4-year project. If they buy the equipment, it will have an initial investment cost of $640,000 with annual costs of $44,000. At the end of the 4 years the equipment can be sold for an estimated $384,000. For tax purposes, the company will use MACRS-ADS depreciation on the equipment. If they decide to lease, it will cost...
3. The Capitalpoor Company is considering purchasing a business machine for $100,000. An alternative is to...
3. The Capitalpoor Company is considering purchasing a business machine for $100,000. An alternative is to rent it for $35,000 at the beginning of each year. The rental would include all repairs and service. If the machine is purchased, a comparable repair and service contract can be obtained for $1,100 per year. The salesperson of the business machine firm has indicated that the expected useful service life of this machine is five years, with zero market value at the end...
4. A city is trying to decide on the purchase of a garbage truck. Two types of trucks are being considered, A and B, each with a useful life of 10 years. The capital and operating costs for each truck are given below (a) which truck should the city purchase based on these costs alone? Calculate the costs both on an annual and present worth basis assuming an interest rate of 8%
8. Andrews Manufacturing offers three models for one of its products to its customers. You have been asked to analyze the choices from the customer's perspective. Which model should a customer choose 19 if each model has a life of 12 years? Doing nothing is an alterative. Alternative Deluxe Regular Economy First cost $220,000 $125,000 $75.000 Annual benefit 79,000 43.000 28.000 Maintenance and operating cost 38,000 13,000 8,000 Salvage value 16,000 6,000 3.000 (a) Construct a choice table for interest...
A construction company is considering to acquire a new
equipment.Table 1 is the information of two alternatives for this
new equipment. Complete the following questions according to the PW
analysis The after tax market minimum attractive acquire
(1) which alternative should the company acquire?
(2)if the inflation rate is 2% per year and the base year is
year 0,whic company should you choose?
PW
is Present Value
use Present Value method to analyze
Table 1 Capital investment А 9000 в...
Problem 12-4A (Video) Jane's Auto Care is considering the purchase of a new tow truck. The garage doesn't currently have a tow truck, and the $59,960 price tag for a new truck would represent a major expenditure. Jane Austen, owner of the garage, has compiled the estimates shown below in trying to determine whether the tow truck should be purchased. Initial cost Estimated useful life Net annual cash flows from towing Overhaul costs (end of year 4) Salvage value $59,960...
In a large plant that has life of 12 years, the management is considering two different pumps. Which of pumps should they purchase? The data on the pumps is given in the following Table. Minimum attractive interest rate is 15%. You can use net present worth (cost) criteria with common multiple life which is 6. Do before tax analysis which means do not account for tax and depreciation. Pump TCI (S) Operating Cost Life of alternatives 100,000 150,000 (S/year) 50,000...
Ridgley Custom Metal Products (RCMP) must purchase a new tube bender, RCMP'S MARR is 11 percent. The company is considering two models: Model First Cost $100 000 150 000 Economic Life 5 years 5 years Yearly Net Savings $50 000 60 000 Salvage Value $20 000 30 000 a. Using the present worth method, which tube bender should it buy? b. RCMP has discovered a third alternative, which has been added to the table below. Now which tube bender should...
ne with one of two newer more effective models. The existing crane is 3 years old, cost $32.000 and is being depreciated under MACRS using a 5-year recovery period. Although the existing crane has only three years (years 4, 5, and 6) of depreciation remaining under MACRS, it has a remaining usable life of 5 years. Crane A, one of two newer models cost $40,000 to purchase, and $8,000 to install. It has a 5- and will be depreciated under...
I am confused on how to find the ATCF's
A construction company is considering whether to lease or buy equipment for its new 4-year project. If they buy the equipment, it will have an initial investment cost of $640,000 with annual costs of $44,000. At the end of the 4 years the equipment can be sold for an estimated $384,000. For tax purposes, the company will use MACRS-ADS depreciation on the equipment. If they decide to lease, it will cost...
3. The Capitalpoor Company is considering purchasing a business machine for $100,000. An alternative is to rent it for $35,000 at the beginning of each year. The rental would include all repairs and service. If the machine is purchased, a comparable repair and service contract can be obtained for $1,100 per year. The salesperson of the business machine firm has indicated that the expected useful service life of this machine is five years, with zero market value at the end...
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