A firm is considering purchasing equipment that will reduce cost by P 400, 000. The equipment costs P300, 000 and has a salvage value of P50, 000 and a life of 7 years. The annual maintenance cost is P6, 000. While not in use by the firm, the equipment can be rented to others to generate an income of P10, 000 per year. If money can be invested for an 8 per cent return, is the firm justified in buying the equipment? (a) Use the Present Worth Method (b).Use the Future Worth Method (c).Use the Annual Worth Method

Q: is considering purchasing equipment that will reduce costs by P40,000. The equipment costs P300,000…

A: In the future worth method we find out the future value of cost and benefits and see whether they…

Q: Gluon Inc. is considering the purchase of a new high pressure glueball. It can purchase the glueball…

A: Calculation of equivalent annual savings: Answer: Equivalent annual savings is $14,777.60…

Q: QRW Corp, needs to replace an old machine with a new, more efficient model. The new machine being…

A: Net present value (NPV) is used to determine the present value of all future cash flows. Net present…

Q: Maya Industries is considering a new product that will sell for P100 and has a variable cost of P60.…

A: Initial cost = 1500000 Annual cash inflows = (C * Q - F)(1-t) + Dt Where C = contribution per unit…

Q: Gluon Inc. is considering the purchase of a new high pressure glueball. It can purchase the glueball…

A: Calculation of Annual Depreciation Tax Shield:

Q: Schultz company is considering purchasing a machine that would cost $478,800 and have a useful life…

A: Payback period = Investment cost / Annual cash flows

Q: Jacobs is considering the purchase of a new machine for $10,700 that has a life of 6 years and would…

A: Present Value- The value of an investment or an amount today is referred to as its present value. It…

Q: e Fine Clothing Factory wants to replace an old machine with a new one. The machine can be sold to a…

A: Fine clothing factory should purchase the machine if average rate of return in more than desired…

Q: life of 7 years. The annual maintenance cost is P6,000. While not in use by the firm, the equipment…

A: In annual worth method we try to find annual equivalent cost of of equipment and see whether it is…

Q: Bailey, Inc., is considering buying a new gang punch that would allow them to produce circuit boards…

A: MARR = 3.75% First Cost = 135,000 N = 15 Salvage Value = 0   Increase in annual labor costs = 4500…

Q: Newport Corp. is considering the purchase of a new piece of equipment. The cost savings from the…

A: Workings: Annual cash inflow = $ 205000 Initial cost ( cash out flow ) = 950000 Life period = 6…

Q: Dell is considering replacing one of its material handling systems. It has an annual O&M cost of…

A: Net present value is used to calculate the existing value of future cash flows for decision making.

Q: Venice Co. is considering a new product that will sell for P100 and has a variable cost of P60.…

A: New equipment cost (C) = P 1,500,000 Salvage value (S) = 0 Selling cost = P 100 Variable cost = P 60…

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A: Internal rate of return is a rate of return where the present value of cash inflows equates with the…

Q: A firm is considering purchasing equipment that will reduce costs by $40,000. The equipment costs…

A: Introduction: Annual Worth Method: Since the AW value only needs to be calculated once each life…

Q: Salvage Co. is considering the purchase of a new ocean-going vessel that could potentially reduce…

A:

Q: Which is a manufacturer of material handling equipment and machinery, is taking two alternatives…

A: In this we have to calculate the present value of all cost and than find breakeven point.

Q: ST Manufacturing Ltd is evaluating an investment of a machine that cost $200,000. With the new…

A: The internal rate of return is a metric used in financial analysis to estimate the profitability of…

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A: To get an assured 12% return, we should compute the no of units at which PV of outflow is equal to…

Q: What are the Equivalent annual savings?

A: Time value of money (TVM) refers to the method used to measure the amount of money at different…

Q: Holmes Manufacturing is considering a new machine that costs $275,000 and would reduce pretax…

A: Net present value is the difference between present value of cash inflows and present value of cash…

Q: Crowl Corporation is investigating automating a process by purchasing a machine for $808,200 that…

A: Net Cost of machine = Purchase price - sale of old machine = $808200−22800 = $785,400

Q: Thomson Media is considering some replacing its equipment. The new equipment will reduce the…

A: Net present value refers to the capital budgeting method that is used by investor for evaluation…

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A: The initial outlay is the initial cost associated with a new project. It is the cash outflow that…

Q: A firm is considering purchasing equipment that will reduce costs by P40,000. The equipment costs…

A: GIVEN   . A firm is considering purchasing equipment that will reduce costs by P40,000. The…

Q: NUBD Co. has an opportunity to acquire a new machine to replace one of its present machines. The new…

A: As per decision old one retain and new one purchase then differntiate between cost and cost of…

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A: Depreciation = Cost of the printer / Useful life Depreciation = $900 / 6 Depreciation = $150 Tax…

Q: How many units per year the firm must sell for the investment to earn 12% internal rate of return?

A: Internal Rate of Return is the rate at which present value of cash inflow is equal to present value…

Q: Bailey, Inc., is considering buying a new gang punch that would allow them to produce circuit boards…

A: It is a discount rate at which the net present value equal to zero.

Q: NUBD Co. has an opportunity to acquire a new machine to replace one of its present machines. The new…

A: Calculations are as follows

Q: A manufacturer is considering replacing a production machine tool. The new machine, costing $40,000,…

A: Annual cash flow means the cash flow which are going to be received from the investment or project…

Q: Beaver Corporation is investigating the purchase of a new threading machine that costs $18,000. The…

A: Here, To Find: Net present value =?

Q: lvage Co. is considering the purchase of a new ocean-going vessel that could potentially reduce…

A:

Q: Bailey, Inc., is considering buying a new gang punch that would allow it to produce circuit boards…

A: Discounted Pay-Back Period(DPBP) shows period in which initial outlay of an proposal is fully…

Q: NUBD Co. has an opportunity to acquire a new machine to replace one of its present machines. The new…

A: Incremental cost of new machine = Cost of New machine - Disposable value of old machine…

Q: Win Corporation is considering the purchase of a P100,000 machine that i expected to result in a…

A: Accounting rate of return: The accounting rate of return is the percentage of return of a particular…

Q: firm is considering purchasing equipment that will reduce costs by P40,000. The equipment costs…

A: Purchased Equipment refers to each and every gear or other physical items purchased by Customer…

Q: Bau Long-Haul, Inc., is considering the purchase of a tractor-trailer that would cost $376,960,…

A: The calculation of cumulative present value factor has been made as follows: Cumulative present…

Q: NUBD Co. has an opportunity to acquire a new machine to replace one of its present machines. The new…

A: Incremental Cost of New Machine = Cost of New Machine - Disposable value of old Machine…

Q: Madison Manufacturing is considering a new machine that costs $350,000 and would reduce pre-tax…

A: Net Present Value(NPV) is the difference between the Present value of Cash Outflow and Present Value…

Q: lue of P50,000 and a life of 7 years. The annual maintenance cost is P6,000. While not in use by the…

A: Given information : Proposal 1   Cost reduction 400000 Cost of equipment 300000 Salvage…

Q: Happiny Corporation is considering the purchase of new equipment costing P300,000. The projected…

A: The annual operating cash inflow each year = after tax net income + depreciation = 12,000 + 100,000…

Q: NUBD Co. is considering a new product that will sell for P100 and has a variable cost of P60.…

A: Here, we should compute the PV of outflows. This PV of inflows should be such that both PV are…

Q: The Cap Company is considering the replacement of Machine A with Machine B that will cost P160,000…

A:

Q: NUBD Co. has an opportunity to acquire a new machine to replace one of its present machines. The new…

A: The question is related to Capital Budgeting.

Q: firm is considering purchasing computers that will reduce annual costs by P40,000. The Computers…

A: The overall cost incurred as a result of producing an extra unit of product is known as incremental…

Q: JKL Company is considering replacing a machine with a book value of P100,000, a remaining useful…

A: Answer-  Calculation of Increase in annual income taxes if the company replaces the machine :…

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A: Particulars                                Amount Purchase cost of the…

Q: ABC Corporation is considering starting to manufacture a new product where an equipment costing…

A: When the company will sell the Break even units, the company will sell the number of units to cover…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.