Question
In: Finance
TAD Inc is considering two equipment alternatives to improve the production process and serve more customers....
TAD Inc is considering two equipment alternatives to improve the production process and serve more customers. The financial estimates for each alternative are displayed in the following table:
| Equipment A | Equipment B | |
| Initial cost | $50k | $106.31k |
| Annual benefit/Year | $16k | $24k |
| Salvage Value | $ 9k | $0 |
Solutions
jeff jeffy answered 2 years agoRelated Solutions
The company makes tasty seafood dumplings and is considering two alternatives to automate its production process....
The company makes tasty seafood dumplings and is considering two
alternatives to automate its production process. The data is
included below:
A
B
Initial COst
$42.500
$70,000
Annual costs
O&M
$6,000
$4,000
Annual savings
$18,500
$20,000
Residual value
$12,000
$25,000
Useful life
3 year
6 year
Recommend the alternative that you consider the most attractive
for this company. Do the analysis using the net present value and
annual equivalent value techniques. Show the details of your
analysis.
A process control manager is considering two robots to improve materials handling capacity in the production...
A process control manager is considering two robots to improve
materials handling capacity in the production of rigid shafts.
Robot X has a first cost of $84,000, an annual M&O cost of
$31,000, a $40,000 salvage value, and will improve revenues by
$96,000 per year. Robot Y has a first cost of $146,000, an annual
M&O cost of $28,000, a $47,000 salvage value, and will increase
revenues by $119,000 per year. The company's MARR is 15% per year
and it...
Mowasalat is considering between two alternatives for purchasing sensors to improve the monitoring of transport services...
Mowasalat is considering between two alternatives for
purchasing sensors to improve the monitoring of transport services
in Qatar.
Alternative 1: Purchase sensors at a cost of 30 QAR per unit
that can be used directly in the vehicles.
Alternative 2: It can manufacture the sensors locally at 20
QAR per unit. However, it needs to buy an electronic device today
at 150,000 QAR. Labor and other operating costs are estimated to be
30,000 QAR per year over the study period...
Mariposa Inc is considering improving its production process by acquiring a new machine. There are two...
Mariposa Inc is considering improving its production process by
acquiring a new machine. There are two machines management is
analyzing to determine which one it should purchase. The company
requires a 14% rate of return and uses straight-line depreciation
to a zero book value. Machine A has a cost of $290,000, annual
operating costs of $8,000, and a 3-year life. Machine B costs
$180,000, has annual operating costs of $12,000, and has a 2-year
life. Whichever machine is purchased will...
• A MAJOR POTENTIOMETER MANUFACTURER IS CONSIDERING TWO ALTERNATIVES FOR NEW PRODUCTION MACHINES WITH CAPACITY TO...
• A MAJOR POTENTIOMETER MANUFACTURER IS CONSIDERING TWO
ALTERNATIVES FOR NEW PRODUCTION MACHINES WITH CAPACITY TO PRODUCE
20 000 UNITS PER DAY. ONE ALTERNATIVE IS FOR A HIGH-CAPACITY
AUTOMATED PRODUCTION MACHINE CAPABLE OF PRODUCING 20 000 UNITS PER
DAY WHEN OPERATED FOR THREE SHIFTS PER DAY. A QUARTER-TIME EMPLOYEE
WOULD BE ASSIGNED TO MONITOR THE MACHINE (EMPLOYEE WOULD MONITOR
OTHER MACHINES AT THE SAME TIME). WITH THE THREE-SHIFT SCHEDULE
THIS WOULD BE EQUIVALENT TO A THREE-QUARTER-TIME EMPLOYEE.
• A SECOND...
Central Food Inc., is considering replacing its current production line to improve efficiency. The new production...
Central Food Inc., is considering replacing its current
production line to improve efficiency. The new production line will
cost $650,000 plus $50,000 for shipping and installation. The
current production line has a book value of $0 and an estimated
market value of $119,666.67. CF uses straight-line depreciation
method and has a marginal tax rate of 25% for net income and
capital gain.
CF’s current annual sales is $433,000 and by estimation, the new
production line can increase CF’s annual sales...
Central Food Inc., is considering replacing its current production line to improve efficiency. The new production...
Central Food Inc., is considering replacing its current
production line to improve efficiency. The new production line will
cost $650,000 plus $50,000 for shipping and installation. The
current production line has a book value of $0 and an estimated
market value of $119,666.67. CF uses straight-line depreciation
method and has a marginal tax rate of 25% for net income and
capital gain.
CF’s current annual sales is $433,000 and by estimation, the new
production line can increase CF’s annual sales...
Central Food Inc., is considering replacing its current production line to improve efficiency. The new production...
Central Food Inc., is considering replacing its current
production line to improve efficiency. The new production line will
cost $650,000 plus $50,000 for shipping and installation. The
current production line has a book value of $74,000 and an
estimated market value of $95,000. CF uses straight-line
depreciation method and has a marginal tax rate of 25% for net
income and capital gain. CF’s current annual sales is $433,000 and
by estimation, the new production line can increase CF’s annual
sales...
Central Food Inc., is considering replacing its current production line to improve efficiency. The new production...
Central Food Inc., is considering replacing its current
production line to improve efficiency. The new production line will
cost $650,000 plus $50,000 for shipping and installation. The
current production line has a book value of $74,000 and an
estimated market value of $95,000. CF uses straight-line
depreciation method and has a marginal tax rate of 25% for net
income and capital gain.
CF’s current annual sales is $433,000 and by estimation, the new
production line can increase CF’s annual sales...
An American multinational company is now considering two mutually exclusive alternatives for the environmental protection equipment...
An American multinational company is now considering two
mutually exclusive alternatives for the environmental protection
equipment at its manufacturing plant in the United Kingdom. One of
these alternatives must be selected. The estimated cash flows for
each alternative are listed in the below table.
Alternative A
Alternative B
Capital investment
£ 20,000
£ 38,000
Annual expenses
£ 5,500
£ 4,000
Market value at end of useful life
£ 1,000
£ 4,200
Useful
5 years
10 years
Assume that the equipment...
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