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In: Finance
HopHeart Brewery is considering 3 different bottling machines. It is expected that each machine will be...
HopHeart Brewery is considering 3 different bottling
machines. It is expected that each machine will be replaceable at
the same cost when their useful life ends. The details of the
machines are as follows:
Machine X has a useful life of 6 years. It costs $10,000 to
purchase and $2,000 per year to maintain.
Machine Y has a useful life of 12 years. It costs $15,000 to
purchase, and $1,000 per year to maintain.
Machine Z has a useful life of 8 years. It costs $20,000 to
purchase, and $200 per year to maintain.
The appropriate planning horizon for analyzing these choices is 24
years
a) Using the planning horizon from part a, analyze the present
worth of the cost of each alternative if HopHeart has a MARR of
8.0%/year.
X $ ______
Y $ ______
Z $ ______
Solutions
X - $43832.841
jeff jeffy answered 2 years agoRelated Solutions
HopHeart Brewery is considering 3 different bottling machines. It is expected that each machine will be...
HopHeart Brewery is considering 3 different bottling machines.
It is expected that each machine will be replaceable at the same
cost when their useful life ends. The details of the machines are
as follows:
Machine X has a useful life of 6 years. It costs $10,000 to
purchase and $2,000 per year to maintain.
Machine Y has a useful life of 12 years. It costs $15,000 to
purchase, and $1,000 per year to maintain.
Machine Z has a useful life...
HopHeart Brewery is considering 3 different bottling machines. It is expected that each machine will be...
HopHeart Brewery is considering 3 different bottling machines.
It is expected that each machine will be replaceable at the same
cost when their useful life ends. The details of the machines are
as follows: Machine X has a useful life of 6 years. It costs
$10,000 to purchase and $2,000 per year to maintain. Machine Y has
a useful life of 12 years. It costs $15,000 to purchase, and $1,000
per year to maintain. Machine Z has a useful life...
The Bigbee Bottling Company is considering the replacement of one of its bottling machines with a...
The Bigbee Bottling Company is considering the replacement of
one of its bottling machines with a newer and more efficient one.
The old machine has a book value of $300,000 and will be
depreciated toward a zero salvage value using the straight line
depreciation method over its remaining life of 5 years. The firm
does not expect to realize any return from scrapping the old
machine in 5 years, but it can sell it now to another firm in the...
America Cola is considering the purchase of a special-purpose bottling machine for $72,000. It is expected...
America Cola is considering the purchase of a special-purpose
bottling machine for $72,000. It is expected to have a useful life
of 4 years with no terminal disposal value. The plant manager
estimates the following savings in cash operating costs: Year
Amount 1 $25,000 2 24,000 3 22,000 4 23,000 Total $94,000 America
Cola uses a required rate of return of 16% in its capital budgeting
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Cola is considering the purchase of a special-purpose bottling machine for$28,000.It is expected to have a...
Cola is considering the purchase of a special-purpose bottling
machine for$28,000.It is expected to have a useful life of 4 years
with no terminal disposal value. The plant manager estimates the
following savings in cash operating costs:
Year
Amount
1
$12,000
2
10,000
3
9,000
4
8,000
Total
$39,000
Calculate the following for the special purpose bottling
machine:
1.
Net present value
2.
Payback period
3.
Discounted payback period
4.
Internal rate of return (using the interpolation method)
5.
Accrual...
Caine Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost...
Caine Bottling Corporation is considering the purchase of a new
bottling machine. The machine would cost $228,168 and has an
estimated useful life of 8 years with zero salvage value.
Management estimates that the new bottling machine will provide net
annual cash flows of $33,500. Management also believes that the new
bottling machine will save the company money because it is expected
to be more reliable than other machines, and thus will reduce
downtime. Assume a discount rate of 5%....
Michener Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost...
Michener Bottling Corporation is considering the purchase of a
new bottling machine. The machine would cost $170,000 and has an
estimated useful life of eight years with zero salvage value.
Management estimates that the new bottling machine will provide net
annual cash flows of $31,000. Management also believes that the new
machine will save the company money because it is expected to be
more reliable than other machines, and thus will reduce downtime.
Assume a discount rate of 10%. Click...
Austin Jack Inc.” is considering the following machines Machine A Machine B Cost $500,000 $260,000 Expected...
Austin Jack Inc.” is considering the following machines
Machine A Machine B
Cost $500,000 $260,000
Expected Life 6 years 3 years
CF/Year $220,000 $200,000
Assume that the cost of capital is 12 percent.
15. What is the NPV for project A? *
A. $380,605
B. $404,510
C. $905,215
D. $510,000
E. None of the above
16. What is the NPV for project B? *
A. $220,366
B. $480,366
C. $740,366
D. $350,366
E. None of the above
17. What is...
The ABC Corporation is considering the purchase of a new bottling machine for its wine bottling...
The ABC Corporation is considering the purchase of a new
bottling machine for its wine bottling line. The bottling machine
will cost $30,500. The maintenance and operating costs will amount
to $1,300 for the first year. The maintenance and operating costs
can be expected to increase $3,000 for each year that the bottling
machine is used. The salvage value of the bottling machine, at any
time that it is removed from service, will be the bottling
machine's scrap value ($1,000)....
1. You are evaluating the purchase of either of two machines used in your brewery. Machine...
1. You are evaluating the purchase of either of two machines
used in your brewery. Machine A will last two years, costs $8,000
initially, and then $1,250 per year in maintenance costs. Machine B
costs $9,500 initially, has a life of three years, and requires
$1,000 in annual maintenance costs. Either machine must be replaced
at the end of its life with an equivalent machine. Your interest
rate on current debt and the initial purchases is 9 percent and the...
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