Question 74 You have been asked to evaluate a pollution device. The device costs $500 to set up and $100 per year to operate. It must be completely replaced every 4 years, and it has no salvage value. Assume the pollution control equipment is replaced as it wears out, and the cost of capital is 12% What is the EAC of the wet scrub device? A $257.74 B $264.62 $286.04 (D) $296.93 E) $331,21 Last saved B:52:43 PM Questions Filter (74)
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- S7.33 Tim Smunt has been asked to evaluate two machines. After some investigation, he determines that they have the costs shown in the following table. He is told to assume that: a) the life of each machine is 3 years, and b) the company thinks it knows how to make 12% on investments no more risky than this one. Machine A Machine B Original cost Labor per year Maintenance per year Salvage value $10,000 2,000 $20,000 4,000 1,000 7,000 4,000 2,000 Determine, via the present value method, which machine Tim ce should recommend.! Required information Two options are available for setting up a wireless meter scanner and controller. A simple setup is good for 2 years and has an initial cost of $11,000, no salvage value, and an AOC of $27,000 per year. A more permanent system has a higher first cost of $73,000, but it has an estimated life of 6 years and a salvage value of $15,000. It costs only $17,000 per year to operate and maintain. NOTE: This is a multi-part question. Once an answer is submitted, you will be unable to return to this part. If the two options are compared using an incremental rate of return, what is the incremental cash flow in year 6? The incremental cash flow in year 6 is $A Moving to another question will save this response. Question 14 A project to replace an old machine with a new one is under consideration. The new machine costs $1500 and requires an additional working ca $750 salvage value. Calculate the Initial Outlay of this replacement project assuming the book value of the old asset is $1500. The firm's margina O $1,912.50 O $337.50 O $1,837.50 O $1,087.50 O None of the listed choices is correct A Moving to another question will save this response. MacBook Air sc 88 FA F1 F2 F3 F5 F6 @ # $ & 3. 4 5 6 7 Q W T Y S D C V option command
- 6. 6:05 TB MC Qu. 14-55 (Algo) The management of Penfold Corporation... The management of Penfold Corporation is considering the purchase of a machine that would cost $310,000, would last for 6 years, and would have no salvage value. The machine would reduce labor and other costs by $60,000 per year. The company requires a minimum pretax return of 12% on all investment projects. © Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. The net present value of the proposed project is closest to (Ignore income taxes.): (Round your intermediate calculations and final answer to the nearest whole dollar amount.) Multiple Choice О $(63,340) $(8.349) B O $(91,225) MacBook Pro G Search or type URLReplacement project example: Suppose Mayco wants to replace an existing printer with a new high-speed copier. The existing printer was purchased 13 years ago at a cost of $16,000. The printer is being depreciated using straight line basis assuming a useful life of 18 years and no salvage value. If the existing printer is not replaced, it will have zero market value at the end of its useful life. The new high-speed copier can be purchased for $23,000 (including freight and installation). Over its 5-year life, it will reduce labor and raw materials usage sufficiently to cut annual operating costs from $18,000 to $9,000. This reduction in costs will cause before-tax profits to rise by an equal amount. It is estimated that the new copier can be sold for $2,400 at the end of five years; this is its estimated salvage value. The old printer's current market value is $4,576. If the new copier is acquired, the old printer will be sold to another company. The company's marginal…Replacement project example: Suppose Mayco wants to replace an existing printer with a new high-speed copier. The existing printer was purchased 13 years ago at a cost of $16,000. The printer is being depreciated using straight line basis assuming a useful life of 18 years and no salvage value. If the existing printer is not replaced, it will have zero market value at the end of its useful life. The new high-speed copier can be purchased for $23,000 (including freight and installation). Over its 5-year life, it will reduce labor and raw materials usage sufficiently to cut annual operating costs from $18,000 to $9,000. This reduction in costs will cause before-tax profits to rise by an equal amount. It is estimated that the new copier can be sold for $2,400 at the end of five years; this is its estimated salvage value. The old printer's current market value is $4,576. If the new copier is acquired, the old printer will be sold to another company. The company's marginal…
- NEED ASAP!!! OWN SOLUTION NOT FROM OTHER SITES. THANKS The management of KC Company is considering the purchase of a $27.000 machine that would reduce operating costs by $7,000 per year. At the end of the machine's five-year useful life, it will have zero scrap value. The company's required rate of return is 12%. Determine the net present value of the investment in the machine. look for the attachment CHOICES: a) 30,917.8 b) 30,458.65 c) 29,352.610.3 You have been asked to evaluate the proposed acquisition of a new clinical laboratory test system. The system’s price is $50,000, and it will cost another $10,000 for transportation and installation. The system is expected to be sold after three years because the laboratory is being moved at that time. The best estimate of the system’s salvage value after three years is $20,000. The system will have no impact on volume or reimbursement (and hence revenues), but it is expected to save $20,000 per year in operating costs. The not-for-profit business’s corporate cost of capital is 10 percent, and the standard risk adjustment is 4 percentage points. What is the project’s net investment outlay at time 0? What are the project’s operating cash flows in years 1, 2, and 3? What is the terminal cash flow at the end of year 3? If the project has average risk, is it expected to be profitable? What if the project is judged to have lower-than-average risk? Higher-than average risk?7. Problem 12.08 (New Project Analysis) A-Z dofice еВook You must evaluate the purchase of a proposed spectrometer for the R&D department. The base price is $80,000, and it would cost another $12,000 to modify the equipment for special use by the firm. The equipment falls into the MACRS 3-year class and would be sold after 3 years for $28,000. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The equipment would require an $9,000 increase in net operating working capital (spare parts inventory). The project would have no effect on revenues, but it should save the firm $52,000 per year in before-tax labor costs. The firm's marginal federal-plus-state tax rate is 35%. a. What is the initial investment outlay for the spectrometer, that is, what is the Year 0 project cash flow? Enter your answer as a positive value. Round your answer to the nearest cent. 2$ b. What are the project's annual cash flows in Years 1, 2, and 3? Do not round intermediate calculations. Round your…
- Solve urgent Question99)Managers of a factory want to make a replacement analysis for a machine that needs to be upgraded if they will continue using it in production. The upgrade will cost $50,000 and the machine can be kept for a maximum of 3 years after that. The salvage value will be $20,000 if sold at the end of first year, or it will be zero. Annual operating cost will be $40,000 the first year and increase by $10,000 each year. A new machine can be purchased for $150,000 with a maximum useful life of 7 years. Its salvage value is described by the relation S = 120,000 - 20,000 k, where k is the number of years since it was purchased. (Salvage value cannot be less than 0). The annual operation costs are estimated with equation AOC = 60,000 + 10,000 k. If the interest rate is 15% per year, determine if and when the machine should be replaced.1. A remotely situated fuel cell has an installed cost of BD2,000 and will reduce the existing expense by BD350 per year for eight years. The company's MARR is 10% per year. a) What is the minimum salvage value after eight years that makes the fuel cell worth purchasing? b) What is the fuel cell's IRR if the salvage value is negligible?vvk.3 You are evaluating two different milling machines to replace your current aging machine. Machine A costs $236,244, has a three-year life, and has pretax operating costs of $67,855 per year. Machine B costs $417,560, has a five-year life, and has pretax operating costs of $32,660 per year. For both milling machines, use straight-line depreciation to zero over the project’s life and assume a salvage value of $35,626. Your tax rate is 34 % and your discount rate is 10 %. What is the EAC for Machine A?
