Denny Corporation is considering replacing a technologically obsolete machine with a new state-of-the-art numerically controlled machine. The new machine would cost $180,000 and would have a twelve-year useful life. Unfortunately, the new machine would have no salvage value. The new machine would cost $26,000 per year to operate and maintain, but would save $58,000 per year in labor and other costs. The old machine can be sold now for scrap for $18.000 The simple rate of return on the new machine is closest to (Ignore income taxes.): (Round your answer to 1 decimal place.) Multiple Choice 9.44% 32.22% 20.99% O 10.49%
Q: Your company has been approached to bid on a contract to sell 21,000 voice recognition (VR) computer…
A: As per the details provided in the question, following are the required calculation where selling…
Q: Hughes Corporation is considering replacing a machine used in the manufacturing process with a new,…
A: Present value:
Q: Hughes Corporation is considering replacing a machine used in the manufacturing process with a new,…
A: Definition: Present value: This is the amount of future value reduced or discounted at a rate of…
Q: DeYoung Entertainment Enterprises is considering replacing the latex molding machine it uses to…
A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…
Q: Although the Chen Company's milling machine is old, it is still in relatively good working order and…
A: Initial cost (C) = $118000 After tax cashflows (A) = $19800 n = 10 years r = 12%
Q: The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for…
A: Depreciation expense is the reduction in the value of an asset due to normal wear and tear, passage…
Q: than Butler, process engineer, knows that the acceptance of a new process design will depend on its…
A: Requirement1 Schedule of cash flow…
Q: epreciation of $80,000. The existing machine has a current market value of $400,000. The replacement…
A: Net investment required = Purchase price of machine - Sale value of machine
Q: Holmes Manufacturing is considering a new machine that costs $250,000 and would reduce pretax…
A: Since there are multiple sub-parts in the question, I will answer only first three. Please repost…
Q: Denny Corporation is considering replacing a technologically obsolete machine with a new…
A: Simple rate of return = Annual incremental net operating income/Initial investment
Q: A manufacturer is considering the replacement of one of its boring machines with a newer and more…
A: Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: A small company that manufactures vibration isolation platforms is trying to decide whether it…
A: Amount ($) Cost of the new machine (C) Less: Sale proceeds of old components (D)…
Q: Aerotron Electronics is considering purchasing a water filtration system to assist in circuit board…
A:
Q: Crowl Corporation is investigating automating a process by purchasing a machine for $793,800 that…
A: Simple Rate of Return can be calculated with the following formula Simple Rate of Return = Annual…
Q: The Oviedo Company is considering the purchase of a new machine to replace an obsolete one. The…
A: To make the decision, calculate the net present value (NPV) of cash flows from the replacement. If…
Q: Rose Company is considering replacing a machine with a book value of P200,000, a remaining useful…
A: The questions are multiple choice questions Required Choose the Correct Option.
Q: Although the Chen Company's milling machine is old, it is still in relatively good working order and…
A: Here, Cost of Machine is $116,000 Cash Flow is $18,500 Salvage Value is 0 Time Duration is 10 years…
Q: Xinhong Company is considering replacing one of its manufacturing machines. The machine has a book…
A: Income statement: Under this Statement showing the company’s performance over a period of time by…
Q: DeYoung Entertainment Enterprises is considering replacing the latex molding machine it uses to…
A: Computation of after tax salvage value of the project is shown below: Formula sheet for the above…
Q: A company decides to automate a process that will require installing a machine that costs BD8,000…
A: solution given year initial cost 0 -8000 1 2500 2 2500 3 2500 4…
Q: A manufacturer is considering the replacement of one of its boring machines with a newer and more…
A: Capital Budgeting: Capital budgeting decisions are the most important decision in corporate…
Q: Alliance Manufacturing Company is considering the purchase of a new automated drill press to replace…
A: Cost of Machine = $25,000 Cost Saving = $6,000 Salvage Value = $1,000 Cost of capital = 14% Tax Rate…
Q: It is desired to determine the present economic value of an old machine by considering of how it…
A: The net present value (NPV) is a calculation used in capital budgeting and investment planning to…
Q: Although the Chen Company’s milling machine is old, it is still in relatively good working order and…
A: Net Present Value: It represents the sum of the present value of cash flows. These cash flows…
Q: Trask Industries, Inc. is considering replacing its old machine with a book value of P150,000 and…
A: A Incremental analysis (differential analysis) is a decision making technique which makes use of the…
Q: Dwight Donovan, the president of Benson Enterprises, is considering two investment opportunities.…
A: Net present value is the excess of the present value of cash inflows over cash outflows.
Q: What is the incremental cash outflow required to acquire the new machine?
A: Given: Amount of new machine = $ 150,000 Amount of old machine = $ 100,000 The annual operating cost…
Q: Alliance Manufacturing Company is considering the purchase of a new automated drill press to replace…
A: Since you have posted a question with multiple sub-parts, we will solve the first three subparts for…
Q: The Container Corporation of America is considering replacing an automatic painting machine…
A:
Q: DeYoung Entertainment Enterprises is considering replacing the latex molding machine it uses to…
A: Calculation of incremental cash flows and NPV is shown below:
Q: The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for…
A: 1. Depreciation expenses = Cost of the asset / Life Depreciation expenses = $55,000 / 10…
Q: A conveyor system was purchased three years ago for $60,000 with an expected useful life of 10 years…
A: in this we have to calculate present value of both defender and challenger.
Q: A new high-efficiency digital-controlled flange-lipper can be purchased for $130,000, including…
A: In capital budgeting, the net present value technique helps to analyze a project's profitability…
Q: International Soup Company is considering replacing a canning machine. The old machine is being…
A: Net present value is the difference between the present value of cash inflows and present value of…
Q: national Soup Company is considering replacing a canning machine. The old machine is being…
A: Hello. Since your question has multiple sub-parts, we will solve first three sub-parts for you. If…
Q: It is desired to determine the present economic value of an old machine by considering of how it…
A: The present value of an equipment can be determined by discounting the future cash flow of the…
Q: Although the Chen Company's milling machine is old, it is still in relatively good working order and…
A: Given: Initial Investment = -$100000 After tax cash flow = $18400 Number of years = 10 Cost of…
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: pany is considering the purchase of a new machine to replace an obsolete one. The machine being used…
A: NPV= Present value of cashinflows - Prsent value of cashoutflows.
Q: The Bigbee Bottling Company is contemplating the replacement of one of its bottling machines with a…
A: The cash flows refer to the payments or receipts of the amount. The cash flows from projects include…
Q: Denny Corporation is considering replacing a technologically obsolete machine with a new…
A: Simple rate of return: Is the incremental amount of net income from an investment divided by the…
Q: Benson Enterprises is deciding when to replace its old machine. The machine’s current salvage value…
A: Given: Benson Enterprises is deciding when to replace its old machine. In five years a replacement…
Q: It is desired to determine the present economic value of an old machine by considering of how it…
A: Net Present Value is a technique in Capital budgeting which is used for evaluation of project on the…
Q: Compute the net present value of each project. Which project should be adopted based on the net…
A: Net present value (NPV) of an alternative/project refers to the difference between the initial…
Q: The Bigbee Bottling Company is contemplating the replacementof one of its bottling machines with a…
A: Hey, since there are multiple subparts posted, we will answer the first three subparts. If you want…
Q: Win Corporation is considering replacing a machine with a book value of P400,000, a remaining useful…
A: The net investment required to replace the existing machine will be difference of value of new…
Q: Should Chen buy the new machine? Do not round intermediate calculations. Round your answer to the…
A: Net Present Value: It is a measure of absolute profitability in dollar terms for a project or…
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- Friedman Company is considering installing a new IT system. The cost of the new system is estimated to be 2,250,000, but it would produce after-tax savings of 450,000 per year in labor costs. The estimated life of the new system is 10 years, with no salvage value expected. Intrigued by the possibility of saving 450,000 per year and having a more reliable information system, the president of Friedman has asked for an analysis of the projects economic viability. All capital projects are required to earn at least the firms cost of capital, which is 12 percent. Required: 1. Calculate the projects internal rate of return. Should the company acquire the new IT system? 2. Suppose that savings are less than claimed. Calculate the minimum annual cash savings that must be realized for the project to earn a rate equal to the firms cost of capital. Comment on the safety margin that exists, if any. 3. Suppose that the life of the IT system is overestimated by two years. Repeat Requirements 1 and 2 under this assumption. Comment on the usefulness of this information.Denny Corporation is considering replacing a technologically obsolete machine with a new state-of-the-art numerically controlled machine. The new machine would cost $180,000 and would have a twelve-year useful life. Unfortunately, the new machine would have no salvage value. The new machine would cost $26, 000 per year to operate and maintain, but would save $58,000 per year in labor and other costs. The old machine can be sold now for scrap for $18,000. The simple rate of return on the new machine is closest to (Ignore income taxes.):Denny Corporation is considering replacing a technologically obsolete machine with a new state-of-the-art numerically controlled machine. The new machine would cost $340,000 and would have a ten-year useful life. Unfortunately, the new machine would have no salvage value. The new machine would cost $50,000 per year to operate and maintain, but would save $95,000 per year in labor and other costs. The old machine can be sold now for scrap for $30,000. The simple rate of return on the new machine is closest to (Ignore income taxes.): (Round your answer to 1 decimal place.)
- Denny Corporation is considering replacing a technologically obsolete machine with a new state-of-the-art numerically controlled machine. The new machine would cost $290,000 and have a tenericals controll nortunately, the new machine would have no salvage value. The new machine would cost $48,000 per year to operate and maintain but would save $89,000 per year in labor and other costs. The old machine can be sold now for scrap for $29,000. The simple rate of return on the new machine is closest to (Ignore income taxes.):Ballard MicroBrew is considering the purchase of an automated bottling machine for $120,000. The machine would replace an old piece of equipment that costs $30,000 per year to operate. The new machine would cost $12,000 per year to operate. The old machine currently in use is fully depreciated and could be sold now for a salvage value of $40,000. The new machine would have a useful life of 10 years with no salvage value. Required: 1. What is the annual depreciation expense associated with the new bottling machine? 2. What is the annual incremental net operating income provided by the new bottling machine? 3. What is the initial investment used for calculating the machine's simple rate of return? 4. What is the simple rate of return on the new bottling machine? Note: Round your answer to 1 decimal place i.e. 0.123 should be considered as 12.3% 1. Depreciation expense 2. Incremental net operating income 3. Initial investment 4. Simple rate of return $ $ 12,000 80,000The Container Corporation of America is considering replacing an automatic painting machine purchased 9 years ago for $700,000. It has a market value today of $40,000. The unit costs $350,000 annually to operate and maintain. A new unit can be purchased for $800,000 and will have annual O&M costs of $120,000. If the old unit is retained, it will have no salvage value at the end of its remaining life of 10 years. The new unit, if purchased, will have a salvage value of $100,000 in 10 years. Using an EUAC measure and a MARR of 20% should the automatic painting machine be replaced if the old automatic painting machine is taken as a trade-in for its market value of $40,000? Solve, a. Use the cash flow approach (insider’s viewpoint approach). b. Use the opportunity cost approach (outsider’s view point approach).
- The Sumitomo Chemical Corporation is considering replacing a 5-year-old machine that originally cost $50,000 and can be sold for $60,000. This machine is totally depreciated. The replacement machine would cost $125,000 and have a 5-year expected life over which it would be depreciated down using the straight-line method and have no salvage value at the end of five years. The new machine would produce savings before depreciation and taxes of $45,000 per year. Assuming a 34 percent marginal tax rate and a required return of 10%, calculate The internal rate of return and the net present value. Please show work in Excel.The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $61,000. The machine would replace an old piece of equipment that costs $15,000 per year to operate. The new machine would cost $6,000 per year to operate. The old machine currently in use is fully depreciated and could be sold now for a salvage value of $20,000. The new machine would have a useful life of 10 years with no salvage value. Required: 1. What is the annual depreciation expense associated with the new bottling machine? 2. What is the annual incremental net operating income provided by the new bottling machine? 3. What is the amount of the initial investment associated with this project that should be used for calculating the simple rate of return? 4. What is the simple rate of return on the new bottling machine? (Round your answer to 1 decimal place i.e. 0.123 should be considered as 12.3%.) 1. Depreciation expense 2. Incremental net operating income 3. Initial investment 4.…The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $59,000. The machine would replace an old piece of equipment that costs $15,000 per year to operate. The new machine would cost $7,000 per year to operate. The old machine currently in use is fully depreciated and could be sold now for a salvage value of $25,000. The new machine would have a useful life of 10 years with no salvage value. Required: 1. What is the annual depreciation expense associated with the new bottling machine? 2. What is the annual incremental net operating income provided by the new bottling machine? 3. What is the amount of the initial investment associated with this project that should be used for calculating the simple rate of return? 4. What is the simple rate of return on the new bottling machine? (Round your answer to 1 decimal place i.e. 0.123 should be considered as 12.3%.)
- Dell is considering replacing one of its material handling systems. It has an annual O&M cost of $48,000, a remaining operational life of 8 years, and an estimated salvage value of $6,000 at that time. A new system can be purchased for $175,000. It will be worth $50,000 in 8 years, and it will have annual O&M costs of only $17,000 per year due to new technology. If the new system is purchased, the old system will be traded in for $55,000, even though the old system can be sold for only $45,000 on the open market. Leasing a new system will cost $31,000 per year, payable at the beginning of the year, plus operating costs of $15,000 per year payable at the end of the year. If the new system is leased, the existing material handling system will be sold for its market value of $45,000. Use a planning horizon of 8 years, an annual worth analysis, and MARR of 15% to decide which material handling system to recommend: (i) keep existing, (ii) trade in existing and purchase new, or (iii)…The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $50,000. The machine would replace an old piece of equipment that costs $13,000 per year to operate. The new machine would cost $6,000 per year to operate. The old machine currently in use is fully depreciated and could be sold now for a salvage value of $21,000. The new machine would have a useful life of 10 years with no salvage value? What is the simple rate of return on the new bottling machine? (Round your answer to 1 decimal place i.e. 0.123 should be considered as 12.3%.)The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $55,000. The machine would replace an old piece of equipment that costs $14,000 per year to operate. The new machine would cost $6,000 per year to operate. The old machine currently in use is fully depreciated and could be sold now for a salvage value of $21,000. The new machine would have a useful life of 10 years with no salvage value. Required: 1. What is the annual depreciation expense associated with the new bottling machine? 2. What is the annual incremental net operating income provided by the new bottling machine? 3. What is the amount of the initial investment associated with this project that should be used for calculating the simple rate of return? 4. What is the simple rate of return on the new bottling machine? (Round your answer to 1 decimal place i.e. 0.123 should be considered as 12.3%.) ces 1. Depreciation expense 2. Incremental net operating income 3 Initial investment…