DT is evaluating an alternative for a new piece of equipment. They estimate the new equipment...

DT is evaluating an alternative for a new piece of equipment. They estimate the new equipment will cost $164,000, last 4 years, and have a maintenance and operation cost of $55,000 per year with no salvage value. Using a MARR of 22% per year, what is the present worth?

Solutions

Expert Solution

Present worth = -164000 – 55000(P/A, 22%, 4)

= -164000 – 55000*2.49364

= -301,150

Hence the present worth is -301,150

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

The expected annual maintenance expense for a new piece of equipment is $10,000. This is Alternative...

The expected annual maintenance expense for a new piece of equipment is $10,000. This is Alternative A. Alternatively, it is possible to perform the maintenance every fifth year at a cost of $50,000 (Alternative B). In either case, maintenance will be performed in the fifth year so that the equipment can be sold for $100,000 at that time. If the MARR is 15% per year (before income taxes), which alternative should be recommended in each of these situations? a) Before...

a) Boulder Milling is evaluating a proposal to invest in a new piece of equipment costing...

a) Boulder Milling is evaluating a proposal to invest in a new piece of equipment costing $160,000 (salvage value = $10,000) with the following annual cash flows over the equipment's 4-year useful life. There is an initial working capital payment of $50,000 required for this equipment. Cash revenues Cash expenses Depreciation expenses (straight-line) Income provided from equipment Cost of capital Note: Depreciation is a non-cash expense $120,000 (64,000) (20,000) $36,000 12 percent Periods Present value of $1 8% 10% 12%...

Harriman Manufacturing Company is evaluating the purchase of a new piece of equipment. The quoted price...

Harriman Manufacturing Company is evaluating the purchase of a new piece of equipment. The quoted price is $50,000, and it would cost Harriman another $ 10,000 for related capital costs such as transportation and equipment modification for special use. The total investment would fall into MACRS three year class with depreciation rates being applied to the full capitalized costs not excluding salvage at 33%, 45%, 15% and 7% in years 1-4, respectively. Harriman expects that the equipment would be sold...

Harriman Manufacturing Company is evaluating the purchase of a new piece of equipment. The quoted price...

Litchfield Design is evaluating a 3-year project that would involve buying a new piece of equipment...

Litchfield Design is evaluating a 3-year project that would involve buying a new piece of equipment for 340,000 dollars today. The equipment would be depreciated straight-line to 20,000 dollars over 2 years. In 3 years, the equipment would be sold for an after-tax cash flow of 34,000 dollars. In each of the 3 years of the project, relevant revenues are expected to be 212,000 dollars and relevant costs are expected to be 111,000 dollars. The tax rate is 50 percent...

Litchfield Design is evaluating a 3-year project that would involve buying a new piece of equipment...

Litchfield Design is evaluating a 3-year project that would involve buying a new piece of equipment for 450,000 dollars today. The equipment would be depreciated straight-line to 50,000 dollars over 2 years. In 3 years, the equipment would be sold for an after-tax cash flow of 63,000 dollars. In each of the 3 years of the project, relevant revenues are expected to be 369,000 dollars and relevant costs are expected to be 142,000 dollars. The tax rate is 50 percent...

Litchfield Design is evaluating a 3-year project that would involve buying a new piece of equipment...

Litchfield Design is evaluating a 3-year project that would involve buying a new piece of equipment for 400,000 dollars today. The equipment would be depreciated straight-line to 30,000 dollars over 2 years. In 3 years, the equipment would be sold for an after-tax cash flow of 42,000 dollars. In each of the 3 years of the project, relevant revenues are expected to be 246,000 dollars and relevant costs are expected to be 127,000 dollars. The tax rate is 50 percent...

Litchfield Design is evaluating a 3-year project that would involve buying a new piece of equipment...

Litchfield Design is evaluating a 3-year project that would involve buying a new piece of equipment for 430,000 dollars today. The equipment would be depreciated straight-line to 40,000 dollars over 2 years. In 3 years, the equipment would be sold for an after-tax cash flow of 52,000 dollars. In each of the 3 years of the project, relevant revenues are expected to be 259,000 dollars and relevant costs are expected to be 95,000 dollars. The tax rate is 50 percent...

TA, Inc. is considering replacing a piece of old equipment with a piece of new equipment....

TA, Inc. is considering replacing a piece of old equipment with a piece of new equipment. Details for both are given below: Old Equipment New Equipment Current book value $1,500,000 Current market value $2,500,000 Acquisition cost $6,200,000 Remaining life 10 years Life 10 years Annual sales $350,000 Annual sales $850,000 Cash operating expenses $140,000 Cash operating expenses $500,000 Annual depreciation $150,000 Annual depreciation $620,000 Accounting salvage value $0 Accounting salvage value $0 Expected salvage value after 10 years $240,000 Expected...

TA, Inc. is considering replacing a piece of old equipment with a piece of new equipment....

TA, Inc. is considering replacing a piece of old equipment with a piece of new equipment. Details for both are given below: Old Equipment New Equipment Current book value $1,800,000 Current market value $2,500,000 Acquisition cost $6,200,000 Remaining life 10 years Life 10 years Annual sales $350,000 Annual sales $850,000 Cash operating expenses $140,000 Cash operating expenses $500,000 Annual depreciation $180,000 Annual depreciation $620,000 Accounting salvage value $0 Accounting salvage value $0 Expected salvage value $240,000 Expected salvage value $750,000...

Subjects