Apologies that the sizes of the pictures are so odd.
Homework Answers
Compute NPV if the company keeps its current machine as follows:
Thus, the NPV if company keeps its current machine is $ 314,688.
Compute NPV if the company if the company replaces the machine as follows:
Thus, the NPV if the company if the company replaces the machine is $ 282,813.
Here, the company is having higher NPV if the current machine is kept. The company will earn incremental loss of 31,875 if the machine is replaced. Thus, the decision is to keep the current machine
Working note:
Compute cash outflow in year 0 as follows:
Compute cash outflow in year 6 as follows:
Add Answer to:
Apologies that the sizes of the pictures are so odd. X Company is considering replacing one...
X Company is considering replacing one of its machines in order to save operating costs. Operating...
X Company is considering replacing one of its machines in order to save operating costs. Operating costs with the current machine are $61,000 per year; operating costs with the new machine are expected to be $46,000 per year. The new machine will cost $69,000 and will last for five years, at which time it can be sold for $1,500. The current machine will also last for five more years but will not be worth anything at that time. It cost...
X Company is considering replacing one of its machines in order to save operating costs. Operating...
X Company is considering replacing one of its machines in order to save operating costs. Operating costs with the current machine are $65,000 per year; operating costs with the new machine are expected to be $47,000 per year. The new machine will cost $70,000 and will last for five years, at which time it can be sold for $1,500. The current machine will also last for five more years but will not be worth anything at that time. It cost...
X Company must replace one of its current machines with either Machine A or Machine B....
X Company must replace one of its current machines with either Machine A or Machine B. The useful life of both machines is seven years. Machine A costs $51,000, and Machine B costs $59,000. Estimated annual cash flows with the two machines are as follows: Year Machine A Machine B 1 $-6,000 $-7,000 2 -8,000 -4,000 3 -8,000 -3,000 4 -8,000 -3,000 5 -6,000 -3,000 6 -5,000 -2,000 7 -4,000 -2,000 If X Company buys Machine B instead of Machine...
X Company must replace one of its current machines with either Machine A or Machine B....
X Company must replace one of its current machines with either
Machine A or Machine B. The useful life of both machines is seven
years. Machine A costs $52,000, and Machine B costs $55,000.
Estimated annual cash flows with the two machines are as
follows:
Year Machine A Machine B
1 $-6,000 $-7,000
2 -8,000 -4,000
3 -8,000. -3,000
4 -8,000 -3,000
5 -6,000 -3,000
6 -5,000 -2,000
7 -4,000 -2,000
If X Company buys Machine B instead of Machine...
8 pt X Company is considering replacing one of its machines in order to save operating...
8 pt X Company is considering replacing one of its machines in order to save operating costs. Operating costs with the current machine are $62,000 per year: Operating costs with the new machine are expected to be $43,000 per year. The new machine will cost $70,000 and will last for four years, at which time it can be sold for $1,000. The current machine will also last for four more years but will not be worth anything at that time....
X Company is planning to launch a new product. A market research study, costing $150,000, was...
X Company is planning to launch a new product. A market research study, costing $150,000, was conducted last year, indicating that the product will be successful for the next four years. Profits from sales of the product are expected to be $156.000 in each of the first two years and $104,000 in each of the last two years. The company plans to undertake an immediate advertising campaign that will cost $93,000. New manufacturing equipment will have to be purchased for...
X Company is planning to launch a new product. A market research study, costing $160,000, was...
X Company is planning to launch a new product. A market research study, costing $160,000, was conducted last year, indicating that the product will be successful for the next four years. Profits from sales of the product are expected to be $170,000 in each of the first two years and $117,000 in each of the last two years. The company plans to undertake an immediate advertising campaign that will cost $76,000. New manufacturing equipment will have to be purchased for...
X Company is planning to launch a new product. A market research study, costing $130,000, was conducted last year, indi...
X Company is planning to launch a new product. A market research study, costing $130,000, was conducted last year, indicating that the product will be successful for the next four years. Profits from sales of the product are expected to be $161,000 in each of the first two years and $104,000 in each of the last two years. The company plans to undertake an immediate advertising campaign that will cost $90,000. New manufacturing equipment will have to be purchased for...
question 11, table in the next pic present value of launching the 10. AO $-1,288 BO...
question 11, table in the next pic
present value of launching the 10. AO $-1,288 BO S-1,610 CO S-2,012 DO 8-2,516 D 8 pt X Company must replace one of its current machines with either Machine A or Machine B. The useful life of machines is seven years. Machine A costs $52,000, and Machine B costs $73,000. Estimated annual cash flows with the machines are as follows: Machine A Machine B S-6,000 S-7,000 -8,000 -4,000 -8,000 -3,000 -3,000 -6,000 -5,000...
Period 3% 4% 0.971 0.943 0.915 0.888 0.863 0.837 0.813 0.789 5% 0.952 0.907 0.864 0.823...
Period 3% 4% 0.971 0.943 0.915 0.888 0.863 0.837 0.813 0.789 5% 0.952 0.907 0.864 0.823 0.962 0.925 0.889 0.855 0.822 0.790 10.760 0.731 99 Present Value of $1.00 6% 7% 8% 0.943 0.890 0.840 0.792 0.917 0.842 0.772 0.784 0.935 0.873 0.816 0.763 0.713 0.666 0.623 0.582 0.582 0.747 0.705 0.665 0.746 0.926 0.857 0.794 0.735 0.681 0.630 | 0.583 0.540 11% 0.901 0.812 0.731 0.659 0.593 10.535 0.482 0.434 10.909 0.826 0.751 0.683 0.621 0.564 0.513 0.467 12%...
X Company is considering replacing one of its machines in order to save operating costs. Operating costs with the current machine are $61,000 per year; operating costs with the new machine are expected to be $46,000 per year. The new machine will cost $69,000 and will last for five years, at which time it can be sold for $1,500. The current machine will also last for five more years but will not be worth anything at that time. It cost...
X Company must replace one of its current machines with either
Machine A or Machine B. The useful life of both machines is seven
years. Machine A costs $52,000, and Machine B costs $55,000.
Estimated annual cash flows with the two machines are as
follows:
Year Machine A Machine B
1 $-6,000 $-7,000
2 -8,000 -4,000
3 -8,000. -3,000
4 -8,000 -3,000
5 -6,000 -3,000
6 -5,000 -2,000
7 -4,000 -2,000
If X Company buys Machine B instead of Machine...
8 pt X Company is considering replacing one of its machines in order to save operating costs. Operating costs with the current machine are $62,000 per year: Operating costs with the new machine are expected to be $43,000 per year. The new machine will cost $70,000 and will last for four years, at which time it can be sold for $1,000. The current machine will also last for four more years but will not be worth anything at that time....
X Company is planning to launch a new product. A market research study, costing $150,000, was conducted last year, indicating that the product will be successful for the next four years. Profits from sales of the product are expected to be $156.000 in each of the first two years and $104,000 in each of the last two years. The company plans to undertake an immediate advertising campaign that will cost $93,000. New manufacturing equipment will have to be purchased for...
X Company is planning to launch a new product. A market research study, costing $130,000, was conducted last year, indicating that the product will be successful for the next four years. Profits from sales of the product are expected to be $161,000 in each of the first two years and $104,000 in each of the last two years. The company plans to undertake an immediate advertising campaign that will cost $90,000. New manufacturing equipment will have to be purchased for...
question 11, table in the next pic
present value of launching the 10. AO $-1,288 BO S-1,610 CO S-2,012 DO 8-2,516 D 8 pt X Company must replace one of its current machines with either Machine A or Machine B. The useful life of machines is seven years. Machine A costs $52,000, and Machine B costs $73,000. Estimated annual cash flows with the machines are as follows: Machine A Machine B S-6,000 S-7,000 -8,000 -4,000 -8,000 -3,000 -3,000 -6,000 -5,000...
Period 3% 4% 0.971 0.943 0.915 0.888 0.863 0.837 0.813 0.789 5% 0.952 0.907 0.864 0.823 0.962 0.925 0.889 0.855 0.822 0.790 10.760 0.731 99 Present Value of $1.00 6% 7% 8% 0.943 0.890 0.840 0.792 0.917 0.842 0.772 0.784 0.935 0.873 0.816 0.763 0.713 0.666 0.623 0.582 0.582 0.747 0.705 0.665 0.746 0.926 0.857 0.794 0.735 0.681 0.630 | 0.583 0.540 11% 0.901 0.812 0.731 0.659 0.593 10.535 0.482 0.434 10.909 0.826 0.751 0.683 0.621 0.564 0.513 0.467 12%...
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