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RealTurf is considering purchasing an automatic sprinkler system for its sod farm by borrowing the entire...
RealTurf is considering purchasing an automatic sprinkler system for its sod farm by borrowing the entire $45,000 purchase price. The loan would be repaid with four equal annual payments at an interest rate of 12%/year. It is anticipated that the sprinkler system would be used for 9 years and then sold for a salvage value of $5,000. Annual operating and maintenance expenses for the system over the 9-year life are estimated to be $9,000 per year. If the new system is purchased, cost savings of $21,000 per year will be realized over the present manual watering system. RealTurf uses a MARR of 15%/year for economic decision making. Show the internal rate of return used to reach your decision. ____ %
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jeff jeffy answered 2 years agoRelated Solutions
Green Manufacturing is considering to invest a sprinkler system which costs $150,000. The sprinkler system is...
Green Manufacturing is considering to invest a sprinkler system
which costs $150,000. The sprinkler system is assumed to last 5
years. (Note: it should last longer. The reason for the assumption
is for calculation simplicity.) The net cash flows associated with
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Show the cash flows associated with the new sprinkler
system...
A company is considering installing a sprinkler system within its factory in order to reduce losses...
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its factory in order to
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first (system A) will
cost HK$ 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...
Utilising the following assumed reliabilities: Smoke detection system 95% Automatic sprinkler system 95% Smoke exhaust system...
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1. Calculate the system probability that at least three of the
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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
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A farmer is considering the purchase of a sprinkler system. He can choose to buy system...
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costs $37,000, has a before-tax net return of -$5,900, has a life
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Debbie is considering purchasing a new home for $250,000 by borrowing 80% of the purchase price....
Debbie is considering purchasing a new home for $250,000 by
borrowing 80% of the purchase price. She has two financing
options:
Option 1: Fixed rate mortgage over 30 years at 5.15% interest,
zero points
Option 2: Fixed rate mortgage over 30 years at 4.70% interest,
plus two discount points
How long (in months) would her financial planner recommend that
she live in the house to justify Option 2? Assume that the discount
points are not included in the mortgage but...
Debbie is considering purchasing a new home for $250,000 by borrowing 80% of the purchase price....
Debbie is considering purchasing a new home for $250,000 by
borrowing 80% of the purchase price. She has two financing
options:
Option 1: Fixed rate mortgage over 30 years at 5.15% interest,
zero points
Option 2: Fixed rate mortgage over 30 years at 4.70% interest,
plus two discount points
How long (in months) would her financial planner recommend that
she live in the house to justify Option 2? Assume that the discount
points are not included in the mortgage but...
Apricot Computers is considering replacing its material handling system and either purchasing or leasing a new...
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remaining life of 8 years, and an estimated salvage value of $5,800
at that time.
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maintenance costs of $19,000/year . If the new system is purchased,
the...
"A firm is considering purchasing a computer system. -Cost of system is $191,000. The firm will...
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system in year 0.
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-Depreciation method: five-years MACRS
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-Annual expenses (not including depreciation) = $77,000 (year-0
constant dollars) If the general inflation rate is 3.7% during the
project period (which will affect...
"A firm is considering purchasing a computer system. -Cost of system is $128,000. The firm will...
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system in year 0.
-Project life: 5 years
-Salvage value in year 0 (constant) dollars: $12,000
-Depreciation method: five-years MACRS
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-Annual expenses (not including depreciation) = $94,000 (year-0
constant dollars)
If the general inflation rate is 2.6% during the project period
(which will affect...
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