The company's interest rate (MARR) is 6%. Which extruder should the Styrofoam company choose? Use Annual Cash Flow Analysis and provide the right reason.
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- Reference: Case Study S Dunn Manufacturing is considering the following two alternatives. The cost information for the two proposals for replacing an equipment are provided are in table below. Initial cost Benefits/year Machine X $120,000 $20,000 for the first 10 years and $9,000 for the next 10 years Life Salvage value $40,000 MARR 5.2. The NPW of machine X is A) $35,158 B) $48,192 C) $50,752 Machine Y $96,000 $12,000 per year for 20 years. 20 years 8% $20,0005. Dawg Engineering is considering a new machine for its assembly line, Each choice has a 10 year life. Calculate the IRR for each alternative Initial Cost $132,000.00 $186,000.00 $144,000.00 Annual Benefit $52,000.00 $42,00.00 $56,000.00 Yearly O & M $33,000.00 $12,000.00 $32,000.00 cost Salvage value $15,000.00 $9,000.00 $16,000.00 IRR-A IRR-B IRR-CDunder Mifflin Paper Company is considering the following two alternatives. The cost information for the two proposals for replacing an equipment are provided are in table below. Machine A Machine B Initial cost $120,000 $96,000 $20,000 for the first 10 years $12,000 per year for 20 Benefits/year and $9,000 for the next 10 years. years Life 20 years for both Salvage value $40,000 $20,000 interest 8% per year for both The NPW of machine A is Choose the closest answer.
- The table given below lists the relevant cost items for a specific system purchase. The operating expenses for the new system are $10,000 per year, and the useful life of the system is expected to be five years. The salvage value for depreciation purposes is equal to 25% of the hardware cost. Cost Item Cost Hardware $160,000 Training $15,000 Installation $15,000 a) What is the Book Value (BV) of the device at the end of year three if the Straight Line (SL) depreciation method is used? b) Suppose that after depreciating the device for two years with the SL method, the firm decides to switch to the double declining balance depreciation method for the remainder of the device's life (the remaining three years). What is the device's BV at the end of four years?The owners of a new planned unit development have installed a package sewage treatment plant that will be paid for by rates charged to the users. package sewage treatment plant cost new = $1,000,000 life of the plant = 240 months %3D salvage value at EOM 240 = 50 O & M cost = gradient in O & M = $400/month/month $40,000/month %3D periodic overhaul every 10 months (first at EOM 4, last at EOM 234) = $100,000/cach gradient in periodic overhaul = $5,000each/10 months number of customers = 6,000 charge per customer = $16.00/month %3D The owners borrowed money at 1 percent per month interest in order to construct the plant, so while they do not expect to make a big profit, they do want the plant to earm a rate of return of at least 1 percent. Is the rate shown above sufficient to carn 1 percent rate of return? (Ans. At a trial i= 1%, the NAW=+$930/month, so the plant earns more than 1% rate of return.)Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $491,000 cost with an expected four-year life and a $20,000 salvage value Additional annual information for this new product line follows PV of $. EX of St. PVA of Stand EVA of $ (Use appropriate factors) from the tables provided) Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery 1. Determine income and net cash flow for each year of this machine's life. 2. Compute this machine's payback period, assuming that cash flows occur evenly throughout each year 3. Compute net present value for this machine using a discount rate of 7% Complete this question by entering your answers in the tabs below. Required 1 Required 2 year 4 Required 3 Compute net present value for this machine using a discount rate of 7%. (Do not round intermediate calculations. Negative amounts should be entered with a minus sign.…
- Should WMM lease or construct their own production facility Option 1: Construct Costs to incur: Actual expenditure towards buying land, construct building and getting ready for use $ 500,000Taxes, insurance, and repairs (per year) $ 20,000Intended years of use 18Projected market value in 18 years $ 1,000,000 Budgeted maximum expenditure towards buying land, construction of building and getting ready for use. $ 500,000Remainder in four payments of; $ 175,000Option 2: LeaseIntended years of use 18First lease payment due now $ 100,000Rest of the lease payments…RLC Manufacturing is planning to purchase a cutting equipment. Information are as follows: Equipment 1 Equipment 2 First Cost P 12,000 P 18,000 Salvage Value P 600 P 2,000 Annual Operation P 3,200 P 2,500 Annual Maintenance P 1,200 P 1,000 Taxes & Insurance 3% 3% Life, years 10 15 Money is worth at least 16%. Which equipment should be selected? Use: Annual Cost MethodAn oven at a bakery is being considered for replacement. Its salvage value and maintenance costs for several years are given in the table below. The first cost of a new oven is $80,000, including installation, with a MARR of 10%. What is the economic service life for this oven? Year Salvage value at end of year Maintenance costs 0 $20,000 $ 1 75,000 500 2 70,000 500 3 66,000 1000 4 62,000 3000
- An office building is needing to replace its refrigeration and cooling units. Two mutually exclusive alternatives for the office's building refrigeration and air conditioning needs are being investigated is 15% per year and the study period is 18 years, which chilling system should be recommended? Their relevant costs and lives are summarized as follows: Absorption Chilling (AC) Compression Chilling (CC) Capital investment $60,000 $80,000 Annual operating expenses 40,000 32,000 Salvage (market) value 10,000 0 Useful life 6 years 9 years If the hurdle rate (MARR) is 15% per year and the study period is 18 years, which chilling system should be recommended?Assignment 1 a) LIFE CYCLE COSTS FOR PROPOSED BRIDGE REPLACEMENT STEEL PANEL TRUSS DESIGN Year Activity Cost 0 Bridge replacement 595,000 15 Replace asphalt paving 15,000 30 Replace asphalt paving 15,000 40 Replace deck, regalvanize trusses, 306,000 55 Replace asphalt paving 15,000 70 Replace asphalt paving 15,000 Calculate the present value of the costs for the above project cash flow with a discounting rate of 5% b)THREE-SPAN PRE-STRESSED GIRDER DESIGN Year Activity Cost 0 Bridge replacement…Six sites have been identified for a parking lot in downtown Blacksburg. Because the sites are plots of land, their salvage value and investment cost are identical. A 10-year study period has been specified, and the MARR is 17% per year. Which site should be chosen based on the IRR criterion? Click the icon to view the alternatives description More Info Investment cost (thousands) Annual revenue minus expense (thousands) IRR on total investment A $120 $17 14.2% B $170 $39.5 23.2% C $280 $52 18.6% Print Done D $420 $84.5 20.1% E $520 $104,5 20.1% $650 $138.5 21.3% - X
