ny is considering the acquisition of an automatic 3D printer machine for it assemble operation of production line. The project investment of RM35,000 will produce a uniform annual revenue of RM5,310 for seven years and then have a market (salvage) value of RM6,000. Expenses will be RM3,100 in second years and RM2,000 in third years. One-off revenue of RM4, 000 in fifth years will give additional profit to the company. The company is willing to accept any project that will earn 10% per year or more before incomes taxes, on all invested capital. Evaluate whether this project is desirable investment by using the
ny is considering the acquisition of an automatic 3D printer machine for it assemble operation of production line. The project investment of RM35,000 will produce a uniform annual revenue of RM5,310 for seven years and then have a market (salvage) value of RM6,000. Expenses will be RM3,100 in second years and RM2,000 in third years. One-off revenue of RM4, 000 in fifth years will give additional profit to the company. The company is willing to accept any project that will earn 10% per year or more before incomes taxes, on all invested capital. Evaluate whether this project is desirable investment by using the
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 4P
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The JessT Company is considering the acquisition of an automatic 3D printer machine for it assemble operation of production line. The project investment of RM35,000 will produce a uniform annual revenue of RM5,310 for seven years and then have a market (salvage) value of RM6,000. Expenses will be RM3,100 in second years and RM2,000 in third years. One-off revenue of RM4, 000 in fifth years will give additional profit to the company. The company is willing to accept any project that will earn 10% per year or more before incomes taxes, on all invested capital. Evaluate whether this project is desirable investment by using the Annual Worth method.
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