Which brand is more economically viable on the basis of a present worth analysis over a 7 year period at an interest rate of 12% per year?
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- Delima Bhd is considering replacing old machine with a new one to meet the increasing demand for its product in the future. The old machine was bought five years ago for RM120,000. It can be used for another 5 years with zero salvage value. The machine can be sold now for RM50,000. The maintenance and defect costs of this new machine is are RM8,000 and RM6,000, respectively, per year. This machine is handled by three workers. Each worker is paid a salary and other benefits RM15,000 per year. This benefits will not continue paid if new machine is bought. In addition, only two workers will be required if the new machine is bought and the company intends to terminate one of them. A compensation of RM60,000 will be paid to him immediately on termination. The new machine costs RM200,000. Transportation cost of RM8,000 and import duties of RM16,000 will be incurred. In order to use this machine efficiently, the company has to send the two workers for training at a cost of RM20,0000. The…The management of Fujiki Bakery considering to invest in a new machine costingRM50,000. However, the company needs to make some modifications costingRM10,000 for the machine to be able to add in their special ingredients. The machinewill cost them RM2.000 to transport from Japan and RM3.000 installation cost will beincurred to fit it in the company’s premise. The new machine is expected to be usedfor 8 years and can be sold for RM5,000 at the end of the useful life.The machine will replace 2 old machines as the new machine will be able to performboth functions of baking and packaging. Both old machines were bought 5 years agoat a price of RM20,000. The baking machine has a useful life of 8 years while thepackaging machine was expected to last for 10 years. It is the company’s policy todepreciate all machines at cost over its useful life. A new bakery is willing to buy thebaking machine at RM10,000 and the packaging machine RM8,000.The new machine is expected to improve sales by…It is being decided whether the company is buying a delivery truck worth 25000 USD, which can be rented out to other warehouses in your area. For a useful life of 15 yrs, it is projected that you can earn as much as 3100 USD. At the end of its useful life, the salvage value is zero. Disregarding taxes, the ROR is projected to be approximately equal to: 7.1% 6.5% 5.3% 4.2% Other:
- A company is considering to buy a new machine for the production of its product. Currently the company is producing 1,000 products per hour with 5 workers that are paid $10 per hour each. The price of the new machine under consideration is $22,000 with useful life of 10 years and the salvage value is estimated to be $500. The annual operating & maintenance cost of the new machine is $2,000 and requires one skilled operator, that will be paid from $24 per hour, and can produce 1,500 products per hour. If the company uses MARR of 8% p.a., answer the following: (a) What is the breakeven point? (use AW). (b) What is the interpretation of this breakeven point? Explain. (c) If the company needs 180,000 products per year, should they buy the machine? Show all work. (d) What should be the total annual operating & maintenance cost of the machine in order to breakeven at the production level of 200,000 products? Note: You should first define your variable.GAP Textile Sdn Bhd. is a retail chain specialising in casual clothing. Due to increasing demand, the management of GAP Textile Sdn. Bhd. is considering to purchase a new equipment to increase the production and revenues. Its choice is between Equipment X and Equipment Y. Both equipment have a useful life of 5 years. The initial cost (cash outlay) for Equipment X is RM180,000 and for Equipment Y is RM250,000 and their respective salvage values at the end of year 5 are given as follows: Year Equipment X (RM) Equipment Y (RM) 0 (180,000) (250,000) 5 12,000 20,000 The forecasted net operating cashflows generated of the two equipment are given as follows: Year Equipment X (RM) Equipment Y (RM) 1 40,000 70,000 2 50,000 70,000 3 90,000 70,000 4 70,000 70,000 5 70,000 70,000 i)Based on the Modified Internal Rate of Return calculation, give your recommendation to the management of the company on which new…A widget manufacturing plant manager decides to purchase a new drill press with borrowed funds in order to improve efficiency at the plant. The drill press costs Php 2,000,000. The operating expense for the press in the first year is projected to be Php 350,000, increasing annually at a rate of 4% in subsequent years. The drill press has a useful life of 8 years and the yearly interest rate is 7.5% compounded annually, how much will total costs be for the drill press?
- Shonda & Shonda is a company that does land surveys and engineering consulting. They have an opportunity to purchase new computer equipment that will allow them to render their drawings and surveys much more quickly. The new equipment will cost them an additional $1.200 per month, but they will be able to increase their sales by 10% per year. Their current annual cost and break-even figures are as follows: A. What will be the impact on the break-even point if Shonda & Shonda purchases the new computer? B. What will be the impact on net operating income if Shonda & Shonda purchases the new computer? C. What would be your recommendation to Shonda & Shonda regarding this purchase?Noor Taxis Co. owns and runs 350 taxis and had sales of OMR 10 million in the last year. Noor Taxis Co. is considering introducing a new computerized taxi tracking system. The expected costs and benefits of the new computerized tracking system are as follows: a. The system would cost OMR 2,100,000 to implement. b. Depreciation would be provided at OMR 420,000 per annum. c. OMR 75,000 has already been spent on staff training in order to evaluate the potential of the new system. Further training costs of OMR 425,000 would be required in the first year if the new system is implemented. d. Revenue are expected to rise to OMR 11 million in Year 1 if the new system is implemented, thereafter increasing by 5% per annum. If the new system is not implemented, revenue would be expected to increase by OMR 200,000 per annum. e. Despite increased revenue, savings in vehicle running costs are expected as a result of the new system. These are estimated at 1% of total revenue. f. Six new members of…A chip manufacturer makes video gaming chip that can be sold for $50. The chip material cost is $15 for each chip. The operations costs of the chip manufacturer (administration etc.) is $100000. The chip manufacturing machinery costs $500000 that is depreciated over 10 years to a salvage value of zero. a) What is the accounting breakeven level of sales in terms of number of chips sold? b) b. What is the NPV breakeven level of sales assuming a tax rate of 35%, 10-year project life and a discount rate of 12%.
- A casting company is considering the replacement analysis of a furnace. If it is bought from A factory, annual operating and maintenance costs will be 50.000 TL/year. It can be kept for 10 years. The purchase cost is 300.000 TL. The scrap value is 15.000 TL. If the furnace is bought from the B factory, the annual operating and maintenance cost will be 30.000 TL/year. Economical life of this machine is 5 years. The purchase cost is 250.000 TL and the Scrap Value is 25.000 TL. Capital cost is 25% for two factories. Based on these data, what will be the present value (TV) of the annual operating expense of alternative A? A) 188525 B) 198525 C) 178525 D) 158525 E) 168525Valentina Allegra de Fontaine Inc. is considering the purchase of a new machine for use in its production process. The invoice cost of the machine is Php2,000,000 and needs an additional Php700,000 to install. This machine is expected to substantially reduce costs in the following items: Labor costs Php700,000 120,000 Materials costs However, maintenance costs are expected to jump by Php6,000 per month if the machine is acquired. The machine would also be overhauled at the end of the third year that would cost Php150,000. Its useful life is 5 years, after which it would be sold for its residual value of Php180,000. The old machine can be sold for Php70,000. Valentina Allegra de Fontaine Inc. requires a return of at least 14% on investment. Required: a. Compute the net annual cash inflow from the new machine. b. Compute the net present value of the proposed investment. c.. Assume an income tax rate of 40%, determine the net present value of the proposed investment.A company sells Gizmos to consumers at a price of $90 per unit. The costs to produce Gizmos is $38 per unit. The company will sell 14,000 Gizmos to consumers each year. The fixed costs incurred each year will be $180,000. There is an initial investment to produce the goods of $3,800,000 which will be depreciated straight line over 11 year life of the investment to a salvage value of $0. The opportunity cost of capital is 9% and the tax rate is 31%. A. What is operating cash flow each year? B. Using an operating cash flow of 485, 210.91 each year, what is the NPV of this project? C. Given a net present value of $-498, 047.3, should the company accept or reject this project? D. Find the net present value break-even level of units sold. Round your answer to the nearest whole unit