34 - Which of the following is incorrect regarding the economic life statement? A) It means economic service year. B) Operating costs do not increase with the wear and tear of machines. C) It is time to retire. D) The machine's service life is over. E) It means it's time to be taken out of service.
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34 - Which of the following is incorrect regarding the economic life statement?
A) It means economic service year.
B) Operating costs do not increase with the wear and tear of machines.
C) It is time to retire.
D) The machine's service life is over.
E) It means it's time to be taken out of service.
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- The sprayer's base price is $900,000, and it would cost another $21,000 to install it. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $510,000. The MACRS rates for the first three years are 0.3333, 0.4445, and 0.1481. The machine would require an increase in net working capital (inventory) of $15,500. The sprayer would not change revenues, but it is expected to save the firm $348,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 25%. (Ignore the half-year convention for the straight-line method.) Cash outflows, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest dollar.Current Attempt in Progress Please view the following video before answering this question. Video Example 9.6 A granary has two options for a conveyor used in the manufacture of grain for transporting, filling, or emptying. One conveyor can be purchased and installed for $100,000 with $3,500 salvage value after 16 years. The other can be purchased and installed for $115,000 with $4,000 salvage value after 16 years. Operation and maintenance for each is expected to be $16,500 and $18,000 per year, respectively. The granary uses MACRS-GDS depreciation, has a marginal tax rate of 40%, and has a MARR of 9% after taxes. Click here to access the TVM Factor Table Calculator Click here to access the MACRS-GDS table. Part a Determine which alternative is less costly, based upon comparison of after-tax annual worth. Alternative 1 Show the AW values used to make your decision: Conveyor 1: $ Conveyor 2: $ Carry all interim calculations to 5 decimal places and then round your final answer to the…1-25 Zoe Garcia is the manager of a small office-support business that supplies copying, binding, and other services for local companies. Zoe must replace a worn-out copy machine that is used for black-and-white copying. Two machines are being considered, and each of these has a monthly lease cost plus a cost for each page that is copied. Machine 1 has a monthly lease cost of $600, and there is a cost of $0.010 per page copied. Machine 2 has a monthly lease cost of $400, and there is a cost of $0.015 per page copied. Customers are charged $0.05 per page for copies. (a) What is the break-even point for each machine? (b) If Zoe expects to make 10,000 copies per month, what would be the cost for each machine?
- 1-25 Zoe Garcia is the manager of a small office-support business that supplies copying, binding, and other services for local companies. Zoe must replace a worn-out copy machine that is used for black-and-white copying. Two machines are being considered, and each of these has a monthly lease cost plus a cost for each page that is copied. Machine 1 has a monthly lease cost of $600, and there is a cost of $0.010 per page copied. Machine 2 has a monthly lease cost of $400, and there is a cost of $0.015 per page copied. Customers are charged $0.05 per page for copies. (c) If Zoe expects to make 30,000 copies per month, what would be the cost for each machine? (d) At what volume (the number of copies) would the two machines have the same monthly cost? What would the total revenue be for this number of copies?Home Furniture paid $65 for a lamp. Expenses are 14% of selling price and the required profit is 21% of selling price. Round ALL answers to the nearest cent if applicable. 1) What is the regular selling price? $ 2) What is the break-even selling price? 3) During an inventory sale, the lamp was marked down 30% on the regular selling price. What is the sale price? 4) What is the operating profit or loss during the inventory sale (use a negative sign (-) for a loss)? $The existing asset’s economic life can be found if certain estimates about it can be made. Assuming those estimates prove to be exactly correct, one can accurately predict the year when the existing asset should be replaced, even if nothing is known about potential new assets. True or false? Explain.
- Explain Equivalent Annual Operating Costs?CASE 6-1 CBN Railway Company CEO John Spychalski is concerned about a problem that has existed at CBN railroad for almost 20 years now. The continuous problem has been that the locomotives used by the company are not very reliable. Even with prior decisions to resolve the problem, there still has not been a change in the reliability of these locomotives. Between 2013 and 2014, 155 new locomotives were purchased and one of CBN's repair shops was reno- vated. The renovated shop has been very inefficient. Spychalski estimated that the shop would complete 300 overhauls on a yearly basis, but instead it has only managed to com- plete an average of 160 overhauls per year. The company has also been doing a poor job servicing customers (that is, providing equipment). CBN has averaged only 87 to 88 percent equipment availability, compared to other railroads with availability figures greater than 90 percent. Increased business in the rail industry has been a reason for trying to reduce the time…You as a businessperson have one million dollars to invest. One option is to invest your money. in a saving account that gives you 8% annual interest rate. But you decide to open a book store instead. You need to rent a place for $7900 per month and hire two workers and pay them each $6000 monthly. The other expenses such as purchases and overhead are $6500 per month. Your store generates $395,000 sales per year. How much is your economic profit? Which business do you choose? explain
- IN-N-OUT BURGER An increase in demand causes the profit on a competition sail to rise to $260. How does that change the number of sails of each to be manufactured and the maximum profit? 02017 In-N-Out BurgePlease view the following video before answering this question. Video Example 9.6 A granary has two options for a conveyor used in the manufacture of grain for transporting, filling, or emptying. One conveyor can be purchased and installed for $90,000 with $2,500 salvage value after 16 years. The other can be purchased and installed for $130,000 with $5,500 salvage value after 16 years. Operation and maintenance for each is expected to be $14,000 and $15,000 per year, respectively. The granary uses MACRS-GDS depreciation, has a marginal tax rate of 40%, and has a MARR of 9% after taxes. Click here to access the TVM Factor Table Calculator Click here to access the MACRS-GDS table. Part a Your answer is partially correct. Determine which alternative is less costly, based upon comparison of after-tax annual worth. Alternative 1 Show the AW values used to make your decision: Conveyor 1: $ 21950 Conveyor 2: $ 26426 Carry all interim calculations to 5 decimal places and then round your final…Crane Inc. manufactures snowsuits. Crane is considering purchasing a new sewing machine at a cost of $2.45 million. Its existing machine was purchased 5 years ago at a price of $1.8 million; six months ago, Crane spent $55,000 to keep it operational. The existing sewing machine can be sold today for $241,835. The new sewing machine would require a one-time, $85,000 training cost. Operating costs would decrease by the following amounts for years 1 to 7: Year 1 $389,500 2 399,400 3 411,000 4 425,400 5 433,700 6 435,300 7 437,300 The new sewing machine would be depreciated according to the declining-balance method at a rate of 20%. The salvage value is expected to be $379,500. This new equipment would require maintenance costs of $94,500 at the end of the fifth year. The cost of capital is 9%. Click here to view the factor table. Use the net present value method to determine the following: (If net present value is negative then enter with negative sign preceding the number e.g. -45 or…