Machine A costs $1,520,000 to buy and install and costs $48,000 per year to operate. The machine has a five-year useful life and zero salvage value. The required return is 15.5%. What is the equivalent annual cost of Machine A? (Answer: $506,819)
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Machine A costs $1,520,000 to buy and install and costs $48,000 per year to operate. The machine has a five-year useful life and zero salvage value. The required return is 15.5%. What is the equivalent annual cost of Machine A? (Answer: $506,819)
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- A new production system for a factory is to be purchased and installed for $135331. This system will save approximately 300,000 kWh of electric power each year for a 6-year period. Assume the cost of electricity is $0.10 per kWh, and factory MARR is 15% per year, and the salvage value of the system will be $8662 at year 6. Using the PW method to analyzes if this investment is economically justified A- calculate the PW of the above investment and insert the result below.A new production system for a factory is to be purchased and installed for $135331 . This system will save approximately 300,000kWh of electric power each year for a 6-year period. Assume the cost of electricity is $0.10 per kWh , and factory MARR is 15% per year, and the salvage value of the system will be $8662 at year 6 . Using the PW method to analyzes if this investment is economically justified A- calculate the PW of the above investment and insert the result below. _______________________Xinhong Company is considering replacing one of its manufacturing machines. The machine has a book value of $41,000 and a remaining useful life of five years, at which time its salvage value will be zero. It has a current market value of $51,000. Variable manufacturing costs are $33,300 per year for this machine. Information on two alternative replacement machines follows. Alternative A Alternative B Cost $ 118,000 $ 118,000 Variable manufacturing costs per year 22,200 10,700 Calculate the total change in net income if Alternative A, B is adopted. Should Xinhong keep or replace its manufacturing machine? If the machine should be replaced, which alternative new machine should Xinhong purchase?
- Beaver Corporation is investigating the purchase of a new threading machine that costs $18,000. The machine would save about $4,000 per year over the present method of threading component parts and would have a salvage value of about $3,000 in 6 years when the machine would be replaced. The company's required rate of return is 12%. The machine's net present value is closest to: A. B. $1,556 C. $11,000 D. $8,000It is possible to replace a used machine with book value of $380,000 and remaining useful life five years, after which its book value will be zero, although today may sold on the market for $250,000. The alternative machine costs $900,000, life five-year useful life and $150,000 salvage value at the end of that period. will produce savings $250,000 per year. Taxes are paid at 50%, the company's MARR is 11%, and the Equipment is depreciated on a straight line basis. Determine the economic desirability of the replacement. Reply Accept replacement; $102,753 incremental NPVA machine costs $100,000 and generates $25,000 of pre-tax operating income per year. The tax rate is 40%. The machine is in a CCA class with a 20% rate. The cost of capital is 12%. The machine is expected to last 10 years and will have no salvage value. Other assets will remain in the asset class. What is the NPV of the machine?
- An assembly operation at a software company currently requires $100,000 per year in labor costs. A robot can be purchased and installed to automate this operation, and the robot will cost $200,000 with no MV at the end of its 10-year life. The robot, if acquired, will be depreciated using SL depreciation to a terminal BV of zero after 10 years. Maintenance and operation expenses of the robot are estimated to be $64,000 per year. Thecompany has an effective income tax rate of 40%. Invested capital must earn at least 8% after income taxes are taken into account. Solve, a. Use the IRR method to determine if the robot is a justifiable investment. b.If MACRS (seven-year recovery period) had been used in Part (a), would the after-tax IRR be lower or higher than your answer to Part (a)?A hydraulic lift is purchased for a warehouse for $60,000. This lift is expected to generate $7000 in annual income for its useful life of 12 years. No Salvage value is expected. O&M costs are estimated to be $1000 annually. What is the approximate rate of return for this investment? [Enter your response as a percentage to one decimal point]An existing machine in a factory has an annual maintenance cost of P40,000. A new and more efficient machine will require an investment of P90,000 and is estimated to have salvage value of P30,000 at the end of 8 years. Its annual expenses for maintenance and upkeep etc. is total of P 22,000. if the company expects to earn 12% on its investment, will it be worthwhile to purchase the new machine using the present worth. Use PW Method
- A dozer costs $145,000 to purchase and has a useful life of 6 years with a salvage value of $15,000. Assume that MARR is 11%. How much should the company charge per hour to recover the cost of the investment if the dozer will operate 1,200 hours/year.An existing machine in a factory has an annual maintenance cost of P40,000. A new and more efficient machine will require an investment of P90,000 and is estimated to have salvage value of P30,000 at the end of 8 years. Its annual expenses for maintenance and upkeep etc. is total of P 22,000. if the company expects to earn 12% on its investment, will it be worthwhile to purchase the new machine using the present worth. Use PW Method Write it on paper with clear solution. ThanksThe cost of a new machine is $250,000) The machine has a 3-year life and no salvage value) If the cash flow each year is equal to 40% of the cost of the machine, calculate the payback period for the project: