Question
In: Economics
Aerotron Electronics is considering the purchase of a water filtration system to assist in circuit board...
Aerotron Electronics is considering the purchase of a water filtration system to assist in circuit board manufacturing. The system costs $80,000. It has an expected life of 7 years at which time its salvage value will be $7,500. Operating and maintenance expenses are estimated to be $2,000 per year. If the filtration system is not purchased, Aerotron Electronics will have to pay Bay City $12,000 per year for water purification. If the system is purchased, no water purification from Bay City will be needed. Aerotron Electronics must borrow 1/2 of the purchase price, but they cannot start repaying the loan for 2 years. The bank has agreed to three equal annual payments, with the 1st payment due at the end of year 2. The loan interest rate is 9.0% compounded annually. Aerotron Electronics’ MARR is 10% compounded annually.
What is the future worth of this investment?
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
Aerotron Electronics is considering purchasing a water filtration system to assist in circuit board manufacturing. The...
Aerotron Electronics is considering purchasing a water
filtration system to assist in circuit board manufacturing. The
system costs $33,000. It has an expected life of 7 years at which
time its salvage value will be $9,500. Operating and maintenance
expenses are estimated to be $2,000 per year. If the filtration
system is not purchased, Aerotron Electronics will have to pay Bay
City $10,500 per year for water purification. If the system is
purchased, no water purification from Bay City will...
Aerotron Electronics is considering the purchase of a waterfiltration system to assist in circuit board...
Aerotron Electronics is considering the purchase of a water
filtration system to assist in circuit board manufacturing. The
system costs $130,000. It has an expected life of 7 years at which
time its salvage value will be $7,500. Operating and maintenance
expenses are estimated to be $16,000 per year. If the filtration
system is not purchased, Aerotron Electronics will have to pay Bay
City $42,000 per year for water purification. If the system is
purchased, no water purification from Bay...
A. Caspian Sea Drinks is considering the purchase of a new water filtration system produced by...
A. Caspian Sea Drinks is considering the purchase of a new water
filtration system produced by Rube Goldberg Machines. This new
equipment, the RGM-7000, will allow Caspian Sea Drinks to expand
production. It will cost $15.00 million fully installed and will be
fully depreciated over a 15 year life, then removed for no cost.
The RGM-7000 will result in additional revenues of $3.08 million
per year and increased operating costs of $789,667.00 per year.
Caspian Sea Drinks' marginal tax rate...
A. Caspian Sea Drinks is considering the purchase of a new water filtration system produced by...
A. Caspian Sea Drinks is considering the purchase of a new water
filtration system produced by Rube Goldberg Machines. This new
equipment, the RGM-7000, will allow Caspian Sea Drinks to expand
production. It will cost $12.00 million fully installed and will be
fully depreciated over a 20 year life, then removed for no cost.
The RGM-7000 will result in additional revenues of $2.72 million
per year and increased operating costs of $644,288.00 per year.
Caspian Sea Drinks' marginal tax rate...
Caspian Sea Drinks is considering the purchase of a new water filtration system produced by Rube...
Caspian Sea Drinks is considering the purchase of a new water
filtration system produced by Rube Goldberg Machines. This new
equipment, the RGM-7000, will allow Caspian Sea Drinks to expand
production. It will cost $14.00 million fully installed and will be
fully depreciated over a 15 year life, then removed for no cost.
The RGM-7000 will result in additional revenues of $3.25 million
per year and increased operating costs of $620,226.00 per year.
Caspian Sea Drinks' marginal tax rate is...
Caspian Sea Drinks is considering the purchase of a new water filtration system produced by Rube...
Caspian Sea Drinks is considering the purchase of a new water
filtration system produced by Rube Goldberg Machines. This new
equipment, the RGM-7000, will allow Caspian Sea Drinks to expand
production. It will cost $12.00 million fully installed and will be
fully depreciated over a 15 year life, then removed for no cost.
The RGM-7000 will result in additional revenues of $3.19 million
per year and increased operating costs of $751,841.00 per year.
Caspian Sea Drinks' marginal tax rate is...
Caspian Sea Drinks is considering the purchase of a new water filtration system produced by Rube...
Caspian Sea Drinks is considering the purchase of a new water
filtration system produced by Rube Goldberg Machines. This new
equipment, the RGM-7000, will allow Caspian Sea Drinks to expand
production. It will cost $12.00 million fully installed and will be
fully depreciated over a 15 year life, then removed for no cost.
The RGM-7000 will result in additional revenues of $2.87 million
per year and increased operating costs of $790,526.00 per year.
Caspian Sea Drinks' marginal tax rate is...
Caspian Sea Drinks is considering the purchase of a new water filtration system produced by Rube...
Caspian Sea Drinks is considering the purchase of a new water
filtration system produced by Rube Goldberg Machines. This new
equipment, the RGM-7000, will allow Caspian Sea Drinks to expand
production. It will cost $15.00 million fully installed and will be
fully depreciated over a 15 year life, then removed for no cost.
The RGM-7000 will result in additional revenues of $2.81 million
per year and increased operating costs of $794,637.00 per year.
Caspian Sea Drinks' marginal tax rate is...
Caspian Sea Drinks is considering the purchase of a new water filtration system produced by Rube...
Caspian Sea Drinks is considering the purchase of a new water
filtration system produced by Rube Goldberg Machines. This new
equipment, the RGM-7000, will allow Caspian Sea Drinks to expand
production. It will cost $12.00 million fully installed and will be
fully depreciated over a 20 year life, then removed for no cost.
The RGM-7000 will result in additional revenues of $3.89 million
per year and increased operating costs of $518,515.00 per year.
Caspian Sea Drinks' marginal tax rate is...
Caspian Sea Drinks is considering the purchase of a new water filtration system produced by Rube...
Caspian Sea Drinks is considering the purchase of a new water
filtration system produced by Rube Goldberg Machines. This new
equipment, the RGM-7000, will allow Caspian Sea Drinks to expand
production. It will cost $13.00 million fully installed and will be
fully depreciated over a 15 year life, then removed for no cost.
The RGM-7000 will result in additional revenues of $2.99 million
per year and increased operating costs of $670,270.00 per year.
Caspian Sea Drinks' marginal tax rate is...
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