The IE Department is considering to buy a printing machine that is expected to be obsolete in 5 years. The machine is worth P100,000. The prevailing interest rate is 15% /year. the estimated annual gross incomes from the use of this machine is as follows: Year Incom e 1 Php 25,00 0 2 Pho 26,00 0 3 Php 29,00 0 4 Php 30,00 0 5 32,00 0 Should the IE Department purchase the machine? WHY? Hint: Compute the present value

The IE Department is considering to buy a printing machine that is expected to be obsolete in 5 years. The machine is worth P100,000. The prevailing interest rate is 15% /year. the estimated annual gross incomes from the use of this machine is as follows: Year Incom e 1 Php 25,00 0 2 Pho 26,00 0 3 Php 29,00 0 4 Php 30,00 0 5 32,00 0 Should the IE Department purchase the machine? WHY? Hint: Compute the present value

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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You are planning to invest in a machine for your manufacturing facility. The machine costs P55,400, and it has an expected useful life of 5 years. You estimate that the machine will generate an annual net cash flow (revenue minus expenses) of P21,000. The interest rate is 5% per year. 1. Disregarding the revenue, what is the future value of the machine cost? 2. What is the present value of the revenue in its 5 years of useful life? Is it worth the investment compared to the machine cost? 3. What is the future value of the revenue in its 5 years of useful life? is it worth the investment compared to the future value of the machine cost? 4. Suppose that at there is a maintenance expense of P3,000 at the first year, P3,500 at the second year, P4,000 at the third year, P4,500 at the fourth year, and P5,000 at the last year. What is the present value of the maintenance expense?
A company is considering purchasing a machine for P210,000. The machine will generate an after-tax net income of P20,000 per year. Annual depreciation expense would be P15,000. What is the payback period for the new machine? Group of answer choices 10.5 years. 6 years. 42 years. 4 years. 14 years.
Salalah Methanol Co. has bought some new machinery at a cost of 1250000 OMR. The impact of the new machinery will be felt in the additional annual cash flows of 375000 OMR over the next five years. What is the payback period for this project? If their acceptance period is three years, will this project be ?ассepted اخترأحد الخیارات a. 2.82 years, yes O b. None of these O c. 2.53 years, yes d. 3.33 years, no O e. 3.84 years, no O
5. The IE Department is considering to buy a printing machine that is expected to be obsolete in 5 years. The machine is worth P100,000. The prevailing interest rate is 15%/year. the estimated annual gross incomes from the use of this machine is as follows: Income P 20, 000 P 25, 000 P 35, 000 P 30, 000 P 28, 000 Year 1 2 4 Should the IE Department purchase the machine?
Envoy Textiles Limited is considering purchasing a new machine that costs $37500. The machine is expected to generate after-tax cash flows equal to $15000, $19000, and $14000 during its three-year life. Envoy Textiles requires such Investments to earn a return equal to at least 11 percent. a. What is the machine's NPV? Should the company purchase the machine? Why? b. What is the machine's internal rate of return (IRR)? Should the company purchase the machine? Why? c. What is the machine's traditional payback period (PB)?
A company buys a printing machine for 21,000. It is expected for that machine to generate 3000 dollars in the first year, 5000 dollars in the second year, and 15000, in the third year. What is the NVP for the project if the interest rate is 10.5% compounded semi-annually? A. $ + 770.56 B. $ + 460.32 C. $ -770.56 D. $ - 460.32
Salalah Methanol Co. has bought some new machinery at a cost of 1250000 OMR. The impact of the new machinery will be felt in the additional annual cash flows of 375000 OMR over the next five years. What is the payback period for this project? If their acceptance period is three years, will this project be accepted? Select one: O a. 3.84 years, no O b. 2.82 years, yes O c. 2.53 years, yes O d. 3.33 years, no O e. None of these
Consider a machine purchased one year ago for $18,000. The machine is being depreciated $3,000 per year throughout a six-year period. Its current market value is $6,000, and the expected market value of the machine one year from now is $4,000. If the interest rate is 10%, the expected cost of holding the machine during the next year is $___.
CAGELCO is considering the purchase of a new turbo generator set that will last 5 years with a cost of P 500, 000. Maintenancewill cost P 6,000 for the first year, decreasing by P 1, 000each year to P2,000 the 5thyear. If the interest rate is 8% per year, compounded annually, how much money should the company set aside for this machine? show your solution
1. A machine costs $250,000 to purchase and will provide $60,000 a year in benefits. The company plans to use the machine for 12 years and then will sell the machine for scrap, receiving $15,000. The company interest rate is 10%. What is the net present worth?
Salalah Methanol Co. has bought some new machinery at a cost of 1250000 OMR. The impact of the new machinery will be felt in the additional annual cash flows of 375000 OMR over the next five years. What is the payback period for this project? If their acceptance period is three years, will this project be accepted?
A company is trying to decide whether to buy a machine for $ 80,000 which will saved $20000 a year for five years and which have a resale value of $10000 at the end of the years. What would be IRR of the investment project

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