Question

In: Finance

A machine has a 10-year life. It costs $5,000 to install today, and annual maintenance costs...

  1. A machine has a 10-year life. It costs $5,000 to install today, and annual maintenance costs in years 1-10 are $500 per year. If the discount rate is 7%, what is the machine's equivalent annual annuity (EAA)?

  1. A project requires an initial investment of $20,000 today (i.e. year 0). Expected future cash flows in years 1-4 are $8000; $2000; $3000 and $6000 respectively.

  1. If the discount rate is 8%, what is the NPV?
  1. What is the IRR?

Solutions

Expert Solution

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

A new equipment will cost 200,000 to install, 5,000 annually maintenance, and have a life of...
A new equipment will cost 200,000 to install, 5,000 annually maintenance, and have a life of 5 years. The revenue generated by this equipment is estimated to be 60,000 per year. The MARR is 10% per year compounded monthly. Examine the sensitivity of present worth to variation in individual parameters estimates, while others remain constant 1.Sensitivity to installation cost variation: 150,000 to 250,000 2.Sensitivity to revenue variation: 45,000 to 75,000 3.Sensitivity to life variation: 4 year to 7 year 4.Plot...
Machine X costs $248,751 and has annual operating and maintenance costs of $9,980. Machine Y costs...
Machine X costs $248,751 and has annual operating and maintenance costs of $9,980. Machine Y costs $264,500 and has annual operating and maintenance cost of $5,120. Both machines are Class 39, which specifies a CCA rate of 25%. The company needs the machines for 11 years, and at the end of year 11 machine X can be sold for $12,257 and machine Y can be sold for 13,033. The Company's MARR is 10%, and its marginal tax rate is 35%....
Your firm needs a machine which costs $125,000, and requires $5,000 in maintenance for each year...
Your firm needs a machine which costs $125,000, and requires $5,000 in maintenance for each year of its three-year life. After three years, this machine will be replaced. The machine falls into the MACRS three-year class life category. Assume a tax rate of 35 percent and a discount rate of 10 percent. If this machine can be sold for $15,000 at the end of year 3, what is the after-tax salvage value? $11,692.69 $9,750.00 $12,991.88 $9,262.50
A machine costs $900,000 and requires $50,000 maintenance for each year of its three-year life. the...
A machine costs $900,000 and requires $50,000 maintenance for each year of its three-year life. the maintenance costs are paid at the end of each year. after 3 years, the machine will be replaced. assume a tax rate of 34% and a discount rate of 14%. if the machine is depreciated over three years using the straight-line method, with no salvage value, what is the equivalent annual annuity?
Investment: $75,000 Annual costs: $5,000 Annual revenues: $50,000 Project life: 10 years MARR: 10% Salvage: $10,000...
Investment: $75,000 Annual costs: $5,000 Annual revenues: $50,000 Project life: 10 years MARR: 10% Salvage: $10,000 What is the NPV of this project? If the NPV of an alternative project was $200,000, which project would you pursue? If the NPV of this project was $100,000, what would be the AW of this project? If the NPV of this project was $100,000, what would be the FW of this project? what is the IRR of this project? ​​​​​​​ Based on the...
What is the present value of costs for a 30-year project that has annual maintenance costs...
What is the present value of costs for a 30-year project that has annual maintenance costs of $1.1 million per year, but also requires additional major maintenance costing $9 million every ten years? You may assume major maintenance is needed after 10 years and 20 years but not after 30 years (at the end of the project). Assume a discount rate of 8% and that all costs are incurred at the end each year. Enter your answer in the box...
A project has annual cash flows of $5,000 for the next 10 years and then $5,000...
A project has annual cash flows of $5,000 for the next 10 years and then $5,000 each year for the following 10 years. The IRR of this 20-year project is 13.58%. If the firm's WACC is 10%, what is the project's NPV? Do not round intermediate calculations. Round your answer to the nearest cent. $   = Project A requires an initial outlay at t = 0 of $1,000, and its cash flows are the same in Years 1 through 10....
A project has annual cash flows of $5,000 for the next 10 years and then $5,000...
A project has annual cash flows of $5,000 for the next 10 years and then $5,000 each year for the following 10 years. The IRR of this 20-year project is 13.63%. If the firm's WACC is 12%, what is the project's NPV? Do not round intermediate calculations. Round your answer to the nearest cent. $_________
A machine costs $35,000 to buy and $5,000 per year to operate and maintain. It will...
A machine costs $35,000 to buy and $5,000 per year to operate and maintain. It will have a salvage value of $8,000 in 9 years. It will generate $10,000 per year in net revenue for the first four years, and then the revenue will fall by $1,000 each year after. If the company purchasing the machine uses a MARR of 7% to make project , find the NPW, NFW, and AW. Is this project worth undertaking if no loss is...
A machine costs $35,000 to buy and $5,000 per year to operate and maintain. It will...
A machine costs $35,000 to buy and $5,000 per year to operate and maintain. It will have a salvage value of $8,000 in 9 years. It will generate $10,000 per year in net revenue for the first four years, and then the revenue will fall by $1,000 each year after. If the company purchasing the machine uses a MARR of 7% to make project , find the NPW, NFW, and AW. Is this project worth undertaking if no loss is...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT