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- If you buy the new machine you will be able to sell the existing machine for $6,000. The new machine will cost $10,000 for delivery and installation, on top of the purchase price. Making your product more quickly is important because you currently cannot meet the demands of your orders. You are currently selling every widget you produce. The machine will cost $100,000 today and will require annual maintenance of $5,000 each year (except for the final year), starting at the end of the first year. You expect that your machine will last for 8 years before you need to purchase the next machine. At that time, you expect you will be able to sell the machine for $7,800. You can buy the machine now and have it delivered and installed by tomorrow. You expect that you will sell 2,000 more widgets in year 1 and that this number will increase by 20% each year for the next 4 years after that before leveling off at that level of sales for the remaining years you own the machine. You can obtain more…Use the following information for the next TWO (2) questions: A farm must decide whether or not to purchase a new tractor. The tractor will reduce costs by P2, 000 in the first year, P2, 500 in the second, and P3, 000 in the third and final year of usefulness. The tractor costs P9, 000 today, wihile the above cost savings will be realized at the end of each year. If the interest rate is 7 percent. QUESTION NO. 3 What is the present value of cash inflaw from purchasing the tractor? Your answer QUESTION NO.4 What is the net present volue of purchasing the tractor, accept or reject? Your ariswerK Beryl's Iced Tea currently rents a bottling machine for $53,000 per year, including all maintenance expenses. It is considering purchasing a machine instead, and is comparing two options: a. Purchase the machine it is currently renting for $155,000. This machine will require $20,000 per year in ongoing maintenance expenses. b. Purchase a new, more advanced machine for $255,000. This machine will require $17,000 per year in ongoing maintenance expenses and will lower bottling costs by $12,000 per year. Also, $36,000 will be spent upfront training the new operators of the machine. Suppose the appropriate discount rate is 9% per year and the machine is purchased today. Maintenance and bottling costs are paid at the end of each year, as is the rental of the machine. Assume also that the machines will be depreciated via the straight-line method over seven years and that they have a 10-year life with a negligible salvage value. The corporate tax rate is 30%. Should Beryl's Iced Tea…
- RJR Logistics needs a new color printer. The cost of the printer is $2,025, plus $380 per year in maintenance costs (the first maintence cost would occur in 1 year). The color printer will last for five years. Alternatively, a local company offers to lease the printer to RJR and do the maintenance as well. If the discount rate is 5.7%, what is the most RJR would be willing to pay per year to lease the color printer (the first lease payment would be due in one year)? The most RJR would be willing to pay per year to lease the color printer is closest to: O A. $897 B. $857 C. $884 D. $777Dundar Mifflin is considering the purchase of new printer and have narrowed down the possibilities to two models which perform equally well. However, the method of paying for the two models is different. Model A requires $8,000 per year payment for the next five years. Model B requires the following payment schedule. Payment (Model 2) $10,000 9,000 Year 1 2 8,000 5,000 4 3,000 1. Which model should you buy assuming 12% rate?Suppose that you have an old car that is a real gas guzzler. It is 10 years old and could be sold to a local dealer for $400 cash. The annual maintenance costs will average $800 per year into the foreseeable future, and the car averages only 10 miles per gallon. Gasoline costs $3.50 per gallon, and you drive 15,000 miles per year. You now have an opportunity to replace the old car with a better one that costs $8,000. If you buy it, you will pay cash. Because of a two-year warranty, the maintenance costs are expected to be negligible. This car averages 30 miles per gallon. Should you keep the old car or replace it? Utilize a two-year comparison period and assume that the new car can be sold for $5,000 at the end of year two. Ignore the effect of income taxes and let your MARR be 15%. State any other assumptions you make.
- A new transmission in your truck will cost $5,000. Luckily, it should reduce maintenance expense by $3,725 each year for the next 10 years. What is the profitability index of the transmission? Use a discount rate of 11.8%.An investment Sheila is considering is a new work truck. Her old Chevy is expected to last another three years with a $2,000 repair next month. Alternatively, Sheila can sell the truck as is for $3,000 (worthless after three more years of use) and buy a used F150 for $9,000 (expected value of $3,000 at the end of three years). The new truck would be more efficient, saving Sheila an average of $100 per month on repair and fuel costs. Sheila believes she can borrow money for the new truck at an annual rate of 5%. Sheila is wondering what the pros and cons of switching trucks are, and if she should upgrade. She also wants advice on the accounting and tax treatment of a truck. Show necessary workings/calculations.You are trying to determine whether you should purchase a new or used car. The new car costs $40,000 and will last for 25 years. The used car costs $15,000 and will last for 10 years. The new car gets 30. mpg while the used car gets 20. mpg. In either case, you drive 350 miles per week and gas costs $4.38 per gallon. You get $500 for salvaging each car at the end of its lifetime. What is the net present value of each car? Assume the interest rate is 3.0%. Please show your work.
- Your company is contemplating replacing their current fleet of delivery vehicles with Nissan NV vans. You will be replacing 5 fully- depreciated vans, which you think you can sell for $3,100 a piece and which you could probably use for another 2 years if you chose not to replace them. The NV vans will cost $30,000 each in the configuration you want them, and can be depreciated using MACRS over a 5-year life, but you are unable to make use of either bonus depreciation or Section 179 expensing. Expected yearly before-tax cash savings due to acquiring the new vans amounts to about $3,800 each. If your cost of capital is 10 percent and your firm faces a 21 percent tax rate, what will the cash flows for this project be? (Round your answers to the nearest dollar amount.) FCF Year 1 6A new transmission in your truck will cost $9500. Luckily it should reduce maintenance expense by $ 3150 each year for the next 10 years. What is the NPV of the transmission? Use a discount rate of 10.6%Your company is planning to purchase a new loader for $20,937. If the company keeps the old loader, it will have $1,959 additional maintenance cost for the first year and increases $308 each year till the eighth year. Given the company's minimum attractive rate of return (MARR) is 6%, what is the present cost of keeping the old loader? 6% 1 2 3 4 5 879 6 9 Single Payment Compound Present Amount Worth Factor Factor Find F Find P Given F Given P F/P P/F 1.060 1.124 1.191 1.262 1.338 1.419 1.504 1.594 1689 .9434 .8900 .8396 .7921 .7473 .7050 .6651 .6274 5919 Sinking Fund Factor Find A Given F A/F 1.0000 .4854 3141 .2286 .1774 .1434 .1191 1010 0870 Compound Interest Factors Uniform Payment Series Capital Recovery Factor Find A Given P A/P 1.0600 .5454 .3741 .2886 2374 2034 .1791 1610 1470 Compound Amount Factor Find F Given A F/A 1.000 2.060 3.184 4.375 5.637 6.975 8.394 9.897 11 491 Present Worth Factor Find P Given A P/A 0.943 1.833 2.673 3.465 4.212 4.917 5.582 6.210 6.802 Arithmetic…
