Question

In: Finance

"An automaker is considering installing a three-dimensional (3-D) computerized car-styling system at a cost of $279,000...

"An automaker is considering installing a three-dimensional (3-D) computerized car-styling system at a cost of $279,000 (including hardware and software). With the 3-D computer modeling system, designers will have the ability to view their design from many angles and to fully account for the space required for the engine and passengers. The digital information used to create the computer model can be revised in consultation with engineers, and the data can be used to run milling machines that make physical models quickly and precisely. The automaker expects to decrease the turnaround time for designing a new automobile model (from configuration to final design) by 18%. The expected savings in dollars is $249,000 per year. The training and operations and maintenance cost for the new system is expected to be $53,000 per year. The system has a five-year useful life and can be depreciated according to the five-year MACRS class. The system will have an estimated salvage value of $6,600. The automaker's marginal tax rate is 36.3%. Compute the rate of return of the project. Enter your answer as a percentage between 0 and 100."

Solutions

Expert Solution

IRR : 44.3%. Please see spreadsheet below. Assuming the cost savings are before tax. Let me know in case you have any doubts


Related Solutions

"An automaker is considering installing a three-dimensional (3-D) computerized car-styling system at a cost of $262,000...
"An automaker is considering installing a three-dimensional (3-D) computerized car-styling system at a cost of $262,000 (including hardware and software). With the 3-D computer modeling system, designers will have the ability to view their design from many angles and to fully account for the space required for the engine and passengers. The digital information used to create the computer model can be revised in consultation with engineers, and the data can be used to run milling machines that make physical...
Finance question "An automaker is considering installing a three-dimensional (3-D) computerized car-styling system at a cost...
Finance question "An automaker is considering installing a three-dimensional (3-D) computerized car-styling system at a cost of $292,000 (including hardware and software). With the 3-D computer modeling system, designers will have the ability to view their design from many angles and to fully account for the space required for the engine and passengers. The digital information used to create the computer model can be revised in consultation with engineers, and the data can be used to run milling machines that...
A family is considering installing a household solar energysystem. The system has an installed cost...
A family is considering installing a household solar energy system. The system has an installed cost of $1,100 and they reduce the homeowner’s energy bill by$350 per year. The residual value of the solar panels is $360 at the end of their 5-year life. What is the annual effective IRR of this investment? Assume the family has a MARR of 10%. Please use the interpolation method.
A firm is considering installing a sprinkler system to minimize damage in the event of a...
A firm is considering installing a sprinkler system to minimize damage in the event of a fire. The sprinkler system will last only 3 years. The initial cost of the system is $30,000. Thus, the firm will take a $10,000 depreciation expense for the equipment each year. Yearly maintenance is expected to be $2,000. If the firm installs the system, its insurance premium can be reduced by $5,000 each year and the losses are expected to decrease by $9,000 each...
A company is considering installing a sprinkler system within its factory in order to reduce losses...
A company is considering installing a sprinkler system within its factory in order to reduce losses to material. Two systems are being considered, the first (system A) will cost HK$ 250,000 and the other (system B) HK$ 350,000. Each has a working life of 5 years with no residual value at the end of that time. The projected annual savings in losses to material are: System A System B Year 1 80,000 90,000 Year 2 80,000 100,000 Year 3 70,000...
Q3. What are the essential factors for installing a cost accounting system? Explain Q4. Discuss the...
Q3. What are the essential factors for installing a cost accounting system? Explain Q4. Discuss the various reports provided by cost accounting department. Q5. Explain the treatment of over and under absorption of overheads in cost accounts.
Sun Systems Ltd. is considering installing a new heating system in its factory to provide heating...
Sun Systems Ltd. is considering installing a new heating system in its factory to provide heating and power. Details are as follows: The existing heating system will cost £8,000 to remove, and has no value. If retained, the existing heating system has an expected life of a further 5 years. The new heating system will cost £57,000 including installation expenses of £2,800. The current heating system costs £22,000 per year in energy, £8,000 per year in maintenance and £2,000 per...
You are considering installing a photovoltaic (PV) system on the roof of your one-storey home. Discuss...
You are considering installing a photovoltaic (PV) system on the roof of your one-storey home. Discuss four (4) factors that need to be taken into consideration with the installation of a PV system for providing electrical power to the home.
Acme 3-D Printing Co. custom produces products for customers by using computerized 3D printing. An employee...
Acme 3-D Printing Co. custom produces products for customers by using computerized 3D printing. An employee (clerk) at Acme takes orders from customers, each order contains the specifications for one “print job”: one custom 3D object to be manufactured. When the order is received, the employee immediately collects cash payment – no credit is extended to customers. The order takes about one week to put into production as a print job. The print job is a manufacturing process consisting of...
Which of the following properties are vectors and which are scalars considering a three-dimensional space? Give...
Which of the following properties are vectors and which are scalars considering a three-dimensional space? Give a “typical” symbol and the S.I. units used to describe these properties, i.e. if I asked for mass density you would answer: ρ is a scalar in units g cm3 = 103 kg m3 ; maybe even state ρ = m V . a) force b) mass c) angular displacement d) energy e) linear acceleration f) the period of a pendulum g) work h)...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT