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A company is considering purchasing a new machine and has to choose between two options. The...
A company needs to choose between two replacement alternatives: Machine A and B. Using the corporate...
A company needs to choose between two replacement alternatives: Machine A and B. Using the corporate MARR of 15% per year and the table below, answer the following questions. Machine A Machine B First cost, $ -62,000 -77,000 Annual operating cost, $/year -15,000 -21,000 Salvage value, $ 8,000 10,000 Life, years What is the annual worth of Machine B? Choose the closest value. a) $-80,000 b) $-100,000 c) $-40,000 d) $-25,000
Johnson Company is considering purchasing one of two new machines. The following estimates are available for...
Johnson Company is considering purchasing one of two new machines. The following estimates are available for each machine: Machine 1 Machine 2 Initial cost $152,000 $169,000 Annual cash inflows 50,000 60,000 Annual cash outflows 15,000 20,000 Estimated useful life 6 years 6 years The company's minimum required rate of return is 9%. Present Value of an Annuity of 1 Period 8% 9% 10% 11% 12% 15% 6 4.623 4.486 4.355 4.231 4.111 3.784 Requirement: Compute Payback, NPV, PI, and IRR...
A production manager wants to upgrade the manufacturing system by adding a new machine. He found...
A production manager wants to upgrade the manufacturing system by adding a new machine. He found that one of two machines can effectively be used; their cost data are given in Table Q3 below: Table Q3 Alternative Machines Cost Element M/C I M/C II First cost Anual Maintenance Operating cost/hr Useful life Salvage value £150,000 £3000 £1.6 6 years £10,000 £250,000 £3500 £1.2 8 years £25,000 Using an interest rate of 15% per year compounded annually, answer the following: What is the...
You are considering purchasing a CNC machine which costs $150,000. This machine will have an estimated service life of...
You are considering purchasing a CNC machine which costs $150,000. This machine will have an estimated service life of 12 years with a net after-tax salvage value of $15,000. Its annual after-tax operating and maintenance costs are estimated to be $54,000. To expect an 16% rate of return on investment, what would be the required minimum annual after-tax revenues? 5 Click the icon to view the interest factors for discrete compounding when i = 16% per year. The required minimum...
Westbrook Corp is considering purchasing a triple-double producing machine to help with overall company production. The...
Westbrook Corp is considering purchasing a triple-double producing machine to help with overall company production. The machine costs $175,000 and is expected to have an eight-year useful life with a salvage value of $16,000. Westbrook also expects to pay $15,000 to update the machine after 3 years of use. The machine is expected to generate $30,000 of net cash flow each year. Westbrook desires to earn a rate of return of 7%. What is the present value of the yearly...
BAK Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it...
BAK Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the company to bid on jobs that it currently isn’t equipped to do. Estimates regarding each machine are provided below. Machine A Machine B Original cost $74,600 $182,000 Estimated life 8 years 8 years Salvage value 0 0 Estimated annual cash inflows $20,000 $40,200 Estimated annual cash outflows $5,170 $10,190
A company is considering two investment alternatives. Alternative A is a new machine that costs $50,000...
A company is considering two investment alternatives. Alternative A is a new machine that costs $50,000 and will last for ten years with no salvage value. It will save the company $5479 per year and the savings will increase by $2050 each year. Alternative B is a is a machine that will cost $75,000 and last 10 years. The salvage value at the end of 10 years is $25,000. It will save $11352 per year. Find the present worth of...
Lord of the Rings Corporation is considering purchasing a new state of the art microprocessor machine...
Lord of the Rings Corporation is considering purchasing a new state of the art microprocessor machine for its manufacturing division, the X-80, to replace their old machine “MISTY”, model G-40 (model G-40 will be sold for $15,000). Both machines have the same capacity to produce and package microprocessors for customer delivery, and both have the same remaining life of 10 years from today. The company's tax rate is 40%. G-40 X-80 Cost $100,000 $180,000 Accumulated depreciation 60,000 0 Salvage...
Your company is considering expanding operations and buying a new machine to handle the increased volume....
Your company is considering expanding operations and buying a new machine to handle the increased volume. The machine's basic price is $100,000, and it will cost another $15,000 to modify it for special use by your firm. The machine falls into the MACRS three-year class, and it will be sold after three years for $15,000. Use of the machine will require an increase in net working capital (inventory) of $3,000. The machine will increase revenues by $50,000 per year, and...
Maxwell Company has an opportunity to acquire a new machine to replace one of its current...
Maxwell Company has an opportunity to acquire a new machine to replace one of its current machines. The new machine would cost $90,000, have a five-year life, and an estimated salvage value of $10,000. Variable operating costs of the new machine are $100,000 per year. The current machine was purchased for $75,000 and has an accumulated depreciation of $25,000 with a remaining useful life of five years. If the new machine is purchased, the current machine will be sold for...
A company needs to choose between two replacement alternatives: Machine A and B. Using the corporate MARR of 15% per year and the table below, answer the following questions. Machine A Machine B First cost, $ -62,000 -77,000 Annual operating cost, $/year -15,000 -21,000 Salvage value, $ 8,000 10,000 Life, years What is the annual worth of Machine B? Choose the closest value. a) $-80,000 b) $-100,000 c) $-40,000 d) $-25,000
You are considering purchasing a CNC machine which costs $150,000. This machine will have an estimated service life of 12 years with a net after-tax salvage value of $15,000. Its annual after-tax operating and maintenance costs are estimated to be $54,000. To expect an 16% rate of return on investment, what would be the required minimum annual after-tax revenues? 5 Click the icon to view the interest factors for discrete compounding when i = 16% per year. The required minimum...
Westbrook Corp is considering purchasing a triple-double producing machine to help with overall company production. The machine costs $175,000 and is expected to have an eight-year useful life with a salvage value of $16,000. Westbrook also expects to pay $15,000 to update the machine after 3 years of use. The machine is expected to generate $30,000 of net cash flow each year. Westbrook desires to earn a rate of return of 7%. What is the present value of the yearly...
Your company is considering expanding operations and buying a new machine to handle the increased volume. The machine's basic price is $100,000, and it will cost another $15,000 to modify it for special use by your firm. The machine falls into the MACRS three-year class, and it will be sold after three years for $15,000. Use of the machine will require an increase in net working capital (inventory) of $3,000. The machine will increase revenues by $50,000 per year, and...
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