Homework Answers
a)Cash Flow Diagram:
b)Calculation of Rate
of Return:
Rate of return is the Internal Rate of return(IRR) of the project:
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Question 6 (10 points): A new machine can be purchased today for $400,000. The annual revenue...
2. A laser cutting machine is purchased today for $23,000. There are no maintenance costs for...
2. A laser cutting machine is purchased today for $23,000. There are no maintenance costs for the next two years. Maintenance at the end of year 3 is expected to be $2,000, with each subsequent year’s maintenance costs exceeding the previous year by $1,000. An increase in revenues of $14,000 per year is expected during this time period. The planning horizon is 6 years. Draw the cash flow diagram.
Please solve by hand . DO NOT SOLVE USING EXCEL QUESTION 6 GMC purchased a $180,000...
Please solve by hand . DO NOT SOLVE USING EXCEL
QUESTION 6 GMC purchased a $180,000 milling machine, which will be used for years. The machine is expected to save the company $30,000 during th first year of operation. Then, the annual savings is expected to DECREASE by 3% per year over the previous year due to additional cos of maintenance. The machine is to be operated 5,000 hours per yea (on average) and the machine is expected to have...
Raymobile Motors is considering the purchase of a new production machine for 350,000. The purchase of...
Raymobile Motors is considering the purchase of a new production machine for 350,000. The purchase of this machine will result in an increase in earnings before interest and taxes of $120,000 per year. To operate this machine properly, workers would have to go through a brief training session that would cost $27,000 after tax. In addition, it would cost $4,000 after tax to install this machine correctly. Also, because this machine is extremely efficient, its purchase would necessitate an...
Raymobile Motors is considering the purchase of a new production machine for $500,000. The purchase of...
Raymobile Motors is considering the purchase of a new production machine for $500,000. The purchase of this machine will result in an increase in earnings before interest and taxes of $150,000 per year. To operate this machine properly, workers would have to go through a brief training session that would cost $25,000 after tax. In addition, it would cost $5,000 after tax to install this machine correctly. Also, because this machine is extremely efficient, its purchase would necessitate an increase...
A new packing machine will be purchased at a cost of $57,000. The old machine that is being repla...
A new packing machine will be purchased at a cost of $57,000. The old machine that is being replaced is going to be sold today for $5000. The salvage of the new machine is $7500 after its 10 year useful life. If the new machine reduces annual expenses by $5000, what is the present worth of the new machine, assuming 25% return on investment.
CASH FLOW DIAGRAMS (10 points each) 1. A company made an investment of $16,000 in a...
CASH FLOW DIAGRAMS (10 points each) 1. A company made an investment of $16,000 in a machine to manufacture a new product. The sale of the product is expected to provide uniform annual revenue of $8,000 for 6 years. Annual operating and maintenance expenses are $2,000. The salvage value of the machine at the end of years is $7,000. Draw the Cash flow diagram, and net cash flow diagram.
New project analysis Garcia's Truckin' Inc. is considering the purchase of a new production machine...
New project analysis Garcia's Truckin' Inc. is considering the purchase of a new production machine for $300,000. The purchase of this machine will result in an increase in earnings before interest and taxes of $40,000 per year. To operate the machine properly, workers would have to go through a brief training session that would cost $7,000 after taxes. It would cost $4,000 to install the machine properly. Also, because this machine is extremely efficient, its purchase would necessitate an...
Garcia's Truckin' Inc. is considering the purchase of a new production machine for $150,000. The purchase...
Garcia's Truckin' Inc. is considering the purchase of a new production machine for $150,000. The purchase of this machine will result in an increase in earnings before interest and taxes of $60,000 per year. To operate the machine properly, workers would have to go through a brief training session that would cost $4,000 after taxes. It would cost $4,000 to install the machine properly. Also, because this machine is extremely efficient, its purchase would necessitate an increase in inventory of...
3. A company decides to produce a new product which requires buying equipment for $4000. Revenue...
3. A company decides to produce a new product which requires buying equipment for $4000. Revenue is expected to be S1500 in year 1, and increase by $500 every year. The project will last 4 years, at which time the equipment can be sold for $600. a. Draw the cash flow diagram for this project. (10 points) b. What is the present worth of this project, if interest is 8%? (10 points)
A manufacturer wants to introduce new factory equipment that requires machinery to be purchased today for...
A manufacturer wants to introduce new factory equipment that requires machinery to be purchased today for $120 million. This new machine will last for five years, and will be depreciated straight-line to a value of zero at the end of year five. The extra savings from the new machine are expected to produce project inflows of $47 million per year, beginning one year from today, for five consecutive years. The machine does carry extra costs such that project outflows will...
Please solve by hand . DO NOT SOLVE USING EXCEL
QUESTION 6 GMC purchased a $180,000 milling machine, which will be used for years. The machine is expected to save the company $30,000 during th first year of operation. Then, the annual savings is expected to DECREASE by 3% per year over the previous year due to additional cos of maintenance. The machine is to be operated 5,000 hours per yea (on average) and the machine is expected to have...
Raymobile Motors is considering the purchase of a new production machine for $500,000. The purchase of this machine will result in an increase in earnings before interest and taxes of $150,000 per year. To operate this machine properly, workers would have to go through a brief training session that would cost $25,000 after tax. In addition, it would cost $5,000 after tax to install this machine correctly. Also, because this machine is extremely efficient, its purchase would necessitate an increase...
CASH FLOW DIAGRAMS (10 points each) 1. A company made an investment of $16,000 in a machine to manufacture a new product. The sale of the product is expected to provide uniform annual revenue of $8,000 for 6 years. Annual operating and maintenance expenses are $2,000. The salvage value of the machine at the end of years is $7,000. Draw the Cash flow diagram, and net cash flow diagram.
3. A company decides to produce a new product which requires buying equipment for $4000. Revenue is expected to be S1500 in year 1, and increase by $500 every year. The project will last 4 years, at which time the equipment can be sold for $600. a. Draw the cash flow diagram for this project. (10 points) b. What is the present worth of this project, if interest is 8%? (10 points)
A manufacturer wants to introduce new factory equipment that requires machinery to be purchased today for $120 million. This new machine will last for five years, and will be depreciated straight-line to a value of zero at the end of year five. The extra savings from the new machine are expected to produce project inflows of $47 million per year, beginning one year from today, for five consecutive years. The machine does carry extra costs such that project outflows will...
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