Which is a manufacturer of material handling equipment and machinery, is taking two alternatives into their consideration with regards to an equipment which it needs. Equipment A can be purchased with the cost of P850,000 and have a salvage value of P150,000 at the end of 10 years. It has a daily operating cost of P550. For the other option, the company can just r
Q: The M&N company is considering a new manufacturing facility plan for its new venture. The plan…
A: Answer:- Break-even analysis:- A break-even analysis is a kind of financial computation that…
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: A small manufacturing company is evaluating trucks for delivering their products. Truck A has a…
A: A method of capital budgeting that helps to evaluate the present worth of cash flow and a series of…
Q: NCC is a company. The company needs a new machine that can either leased or purchased. If it is…
A: In order to compare two different alternatives in regard to the machine, the Net present value of…
Q: Bernard Productions, a motion picture producer, is considering the purchase of a new movie camera.…
A: Calculation of cash outflows on new camera = Purchase price = - P 30000
Q: A bulldozer can be purchased for $380,000 and used for 6 years, when its salvage value is 15% of the…
A: Given: Cost of bulldozer = $380,000 No of years used = 6 years Salvage value = 15% of 380,000 =…
Q: Martinez Industries is considering the purchase of new equipment costing $1,500,000 to replace exisg…
A: Computation of cash flows:- CASH FLOWS: Year Acquiring Cost Sale of existing…
Q: It is possible to replace a used machine with book value of $380,000 and remaining useful life five…
A:
Q: Rory Company has a machine with a book value of $75,000 and a remaining five-year useful life. A new…
A: Incremental cash flow refers to the extra working cash flow that an association gets from taking on…
Q: Erebor Sdn Bhd is considering a replacement of an existing machine. The new machine would cost…
A: ai) Working note salvage value of old machine: Depreciation = Cost of asset / Life Depreciation =…
Q: ABC Enterprise is considering an investment in a new packaging, which could reduce labor costs by…
A: Old Machine Cost = $850,000 Annual Depreciation = (Cost - Salvage) / useful life = 850,000/6 =…
Q: A company is considering buying a new piece of machinery. the initial cost of the machine is 80,000…
A: The equivalent uniform annual cost (EAC) will represent the total costs of the machine in a form of…
Q: Raguna Co. is considering adding a new machine to its production line. The machine costs…
A: Initial cash outlay will include the total cost of machine i.e. purchase cost and installation cost,…
Q: Norton Auto Parts, Inc., is considering two different forklift trucks for use in its assembly…
A: Computation:
Q: The company "Delicia S.A." is considering the possibility of acquiring a new chocolate processing…
A: Present value of investment is the summation of discounted expected future values. It shows the…
Q: Mowbot Company is evaluating the production of a new part. It would require the acquisition of a…
A: The company is having Two options: 1. Acquisition: $3,75,000 Residual value: $ 1,35,000 2.Annual…
Q: Ramsis is a heavy equipment rental company. It is considering the purchase of Tower crane at a price…
A: Before investing in new assets or projects, profitability of the project is evaluated by using…
Q: Wrangler Western has some of its jeans stone-washed under a contract with an independent contractor,…
A: The present worth of the machine is operating cost is the present value of all future cash outflow
Q: Ramsis is a heavy equipment rental company. It is considering the purchase of Tower crane at a price…
A: Discounted payback period Discounted payback period calculates the period to achieve the earnings…
Q: A construction company excavator will take. A new excavator costs $150,000, lifespan 10 years, scrap…
A:
Q: he Campbell Company is considering adding a robotic paint sprayer to its production line. The…
A: Net cash flow is referred to as the gain or loss of the company's funds over the specified period of…
Q: A production machine costs $40,000 and has a 7-year useful life. At the end of 7 years, it can be…
A: Hello. Since your question has multiple parts, we will solve first question for you. If you want…
Q: You are considering a four-year project to improve production efficiency of your press. Buying a new…
A: Frist you need to calculate deperciation on machine and tax saving on sale of sale. Depreciation…
Q: Lockwood Company would like to purchase a production machine for $900,000. The machine is expected…
A: Here, Purchase Cost of Machine is $900,000 Life of Machine is 5 Years Salvage Value of Machine is…
Q: A company is considering buying a new bottle-capping machine. The initial cost of the machine is…
A: The future value of a cash flow is the future worth of a cash flow at a certain rate of interest and…
Q: The Campbell Company is considering adding a robotic paint sprayer to its production line. The…
A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…
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: A firm is considering whether to buy specialized equipment that would cost $200,000 and have annual…
A: Net Present Value method (NPV) is one of the Discounted Cash Flow techniques. Under this method,…
Q: alculate the following after-tax cash flows attributable to the new printing machine:…
A: Initial Outlay Costs: These are costs associated with the purchase of the equipment and making the…
Q: Martin Enterprises needs someone to supply it with 110,000 cartons of machine screws per year to…
A: The initial cost is $940,000 The no. of units to supply per year is 110,000 The variable cost per…
Q: Carr Corporation is considering new equipment. The equipment can be purchased from an overseas…
A: Differential Analysis: Differential analysis refers to the analysis of differential revenue that…
Q: Delima Bhd is considering replacing old machine with a new one to meet the increasing demand for its…
A: INTRODUCTION Cash Flow: The net amount of cash flows flowing into and moving out of a business is…
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: Erebor Sdn Bhd is considering a replacement of an existing machine. The new machine would cost…
A: a1. Calculate the initial outlay as follows: Therefore, the initial outlay is RM354,400.…
Q: Raguna Co. is considering adding a new machine to its production line. The machine costs RM3,000,000…
A: Annual operating cash flows = NOPAT + depreciation NOPAT is net operating profit after tax.…
Q: Mowbot Company is evaluating the production of a new part. It would require the acquisition of a…
A: Introduction Lease or buy decision Given that Acquisition cost of CNC is $375,000, machine resale…
Q: Some equipment is needed for a 4-year project. It can be leased for $15,000 annually, or it can be…
A: In order to find the rate of return one has to know the purchased amount and the amount for it was…
Q: Turner plc is considering whether to buy a machine costing K100,000 through a three-year loan with…
A: Decision-making between buying with a loan and leasing out can be done by making a comparison of NPV…
Q: A construction company can purchase a used backhoe for $90,000 and spend $450 per day in operating…
A: Initial cost of alternative 1 = $90,000 Operating cost of alternative 1 = $450 per day Operating…
Q: Ramsis is a heavy equipment rental company. It is considering the purchase of Tower crane at a price…
A: Capital budgeting is the process by which a corporation examines potential large projects or…
Q: Based on pretax analysis, should Mowbot choose leasing or buying?
A: Capital budgeting is a process of determining whether the investment projects like purchase of new…
Q: A company is considering two methods for obtaining a certain part on annual basis. Method A will…
A: Required: The number of units to make the two methods, producing in-house and purchase, break-even.
Q: make and buy. The make altermative has an initial equipment cost of $175,000, a life of 5 years, a S…
A: Number of Cameras needed must satisfy the all cost that are necessary to make including processing…
Q: XYZ Enterprise is considering an investment in a new packaging, which could reduce labour costs by…
A: Particulars Amount Purchase cost of the…
Q: ABC Ltd. expects the cost of a machine to produce a specific part to be Rs. 40,00,000. After 5-year…
A: Break-even sales=Total Fixed CostsSelling Price-Variable Cost per unit×Selling Price
Q: A factory has the following alternative: buy a used machine at a price of $10,000.00 or a new…
A: The equivalent annual cost method involves the following steps: Step 1 – Calculate the net present…
Q: Some equipment is needed for a construction project. It can be leased for $150,000 annually, or it…
A: IRR is discount rate at which total of discounted inflows gets equal to discounted value of outflows…
Which is a manufacturer of material handling equipment and machinery, is taking two alternatives into their consideration with regards to an equipment which it needs. Equipment A can be purchased with the cost of P850,000 and have a salvage value of P150,000 at the end of 10 years. It has a daily operating cost of P550. For the other option, the company can just rent the equipment for P1550 per day. At 18% interest, how many days should the equipment be is use if the Equipment A would be chosen to break even?
Step by step
Solved in 2 steps
- A company is considering two methods for obtaining a certain part on annual basis. Method A will involve purchasing a machine for $60K with a life of 5 years, a $3K salvage value and a fixed annual operating cost of $10K. Additionally, each part produced by the method will cost $10. Method B will involve purchasing the part from a subcontractor for $27 per part. At an interest rate of 10% per year, What is the number of parts (in x thousands) per year required for the two methods to break even ? A. 1480 B.1490 C. 1500 which is it and whyThe Fine Clothing Factory wants to replace an old machine with a new one. The old machine can be sold to a small factory for R10 000. The new machine would increase annual revenue by R150 000 and annual operating expenses by R60 000. The new machine would cost R360 000. The estimated useful life of the machine is 12 years with zero salvage value. Using Average rate of return (ARR), Should Fine Clothing Factory purchase the machine if management desired rate of return of 15% on all capital investments? Show all the calculations and motivate your answer.A construction company can purchase a used backhoe for $90,000 and spend $450 per day in operating costs. The equipment will have a 5-year life with no salvage value. Alternatively, the company can lease the equipment for $800 per day. How many days per year must the company use the equipment in order to justify its purchase at an interest rate of 8% per year
- A construction company can purchase a used backhoe for $90,000 and spend $450 per day in operating costs. The equipment will have a 5 -year life then sell it at salvage for $3,000. Alternatively, the company can lease the equipment for $800 per day. How many days per year must the company use the equipment in order to justify its purchase at an interest rate of 6% per year.The X Company is considering purchasing a business machine for $100,000. An alternative is to rent it for $35,000 at the beginning of each year. The rental would include all repairs and services. If the machine is purchased, a comparable repair and service contract can be obtainedfor $1,000 per year. The salesperson of the business machine firm has indicated that the expected useful service life of this machine is five years, with zero market value, but the company is not sure how long the machine will be needed. If the machine is rented, the company can cancel the lease at the end of any year. Assuming an income tax rate of 25%, a straight-line depreciation charge of $20,000 for each year the machine is kept, and an after-tax MARR of 10%, prepare an appropriate analysis to help the firm decide whether it is more desirable to purchase or rent.A firm is considering whether to buy specialized equipment that would cost $200,000 and have annual costs of $15,000. After 5 years of operation, the equipment would have no salvage value. The same equipment can be leased for $50,000 per year (annual costs included in the lease), payable at the beginning of each year. If the firm uses an interest rate of 5% per year, the annual cost advantage of leasing over purchasing is nearest what value? (a) $2494 (b) $8694 (c) $11,200 (d) $12,758
- Cal Construction Company must choose between two types of cranes. Crane X costs $600,000, will last for 5 years, and will require $60,000 in maintenance each year. Crane Y costs $800,000 and will last for 7 years and will require $30,000 in maintenance each year. Maintenance costs for cranes X and Y are incurred at the end of each year. The appropriate discount rate is 10% per year. Which machine should the company purchase? Crane X as EAC is $218,278.49 Crane X as EAC is $827,447.21 Crane Y as EAC is $946,052.56 Crane Y as EAC is $194,324.40The Capitalpoor Company is considering purchasing a business machine for $100,000. An alternative is to rent it for $35,000 at the beginning of each year. The rental would include all repairs and service. If the machine is purchased, a comparable repair and service contract can be obtained for $1,000 per year. The salesperson of the business machine firm has indicated that the expected useful service life of this machine is five years, with zero market value, but the company is not sure how long themachine will actually be needed. If the machine is rented, the company can cancel the lease at the end of any year. Assuming an income tax rate of 25%, a straight-line depreciation charge of $20,000 for each year the machine is kept, and an after-tax MARR of 10%, prepare an appropriate analysis to help the firm decide whether it is more desirable to purchase or rent.A company is considering buying a piece of machinery that costs $20,000 and has a salvage value of $6,000 at the end of its 5-year useful life. The machinery nets $5,000 per year in annual revenues. The internal rate of return (IRR) on this investment is between__________. if the company considering purchasing the machine uses a MARR of 12%, would you recommend that it be bought?
- Epica PLC is considering marketing a new product with a four-year life. Epica will needto install new equipment to manufacture the product. Epica has to choose between twomachines both of which would be suitable.Machine 1 costs K460,000 to purchase and install, and will have a residual value ofK20,000 at the end of four years. Machine 2 costs K630,000 to purchase and install, andhas a residual value of K30,000 at the end of four years. Machine 2 takes slightly longerto install and commission, but once in operation it has slightly lower operating costs perunit, and will eventually produce more output.The following projections have been prepared of the cash flows from product sales andoperating costs for the two machines:Machine 1 Machine 2Sales K’000 Costs K’000 Sales K’000 Costs K’000Year 1 1,340 1,160 700 610Year 2 1,460 1,260 1,400 1,100Year 3 1,300 1,140 1,600 1,240Year 4 820 760 900 750The company’s cost of capital is 12% p.a. All capital investments have to achieve apayback period…A firm is considering purchasing equipment that will reduce costs by P40,000. 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% return, is the firm justified in buying the equipment? Use annual worth methodA firm is considering purchasing equipment that will reduce costs by P40,000. 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% return, is the firm justified in buying the equipment? Use future worth method