Question
In: Accounting
Q5. High Precision Metal Company has to buy a laser cutting machine. They consider three alternatives...
Q5. High Precision Metal Company has to buy a laser cutting machine. They consider three alternatives as follows:
Alternative 1. Down payment $50,000, yearly nominal installment is 20,000 USD in a period of 8 years, and the yearly process and maintenance cost is $3000. The salvage value is $30,000 after 10 years.
Alternative 2. $80,000 USD investment and yearly nominal installment is $12,000 in a period of 10 years. The salvage value is $40,000. The yearly process and maintenance cost is $2000.
Alternative 3. 120,000 USD investment and yearly nominal cost 10,000 USD in a period of 9 years. The salvage value after 10 years is 50,000 USD. The yearly process and maintenance cost is $5000.
Which alternative is the best one if the company requires a 12% return on all investments? (Hint: you have to draw the time diagram first).
Solutions
ekkarill92 answered 2 years agoRelated Solutions
The Hammerlink Company has been offered an special-purpose metal-cutting machine for $110,000. The machine is expected...
The Hammerlink Company has been offered an special-purpose
metal-cutting machine for $110,000. The machine is expected to have
a useful life of eight years with a terminal disposal price of
$30,000. Savings in cash operating costs are expected to be $25,000
per year. However, additional working capital is needed to keep the
machine running efficiently and without stoppages. Working capital
includes such items as filters, lubricants, bearings, abrasives,
flexible exhaust pipes, and belts. These items must continually be
replaced so...
Heartland Paper Company is considering the purchase of a new high-speed cutting machine. Two cutting machine...
Heartland Paper Company is considering the purchase of a new
high-speed cutting machine. Two cutting machine manufacturers have
approached Heartland with proposals: (1) Toledo Tools and (2) Akron
Industries. Regardless of which vendor Heartland chooses, the
following incremental cash flows are expected to be realized.
Year
Incremental Cash Inflows
Incremental Cash Outflows
1
$
27,000
$
22,000
2
28,000
23,000
3
33,000
28,000
4
36,000
31,000
5
35,000
30,000
6
34,000
29,000
a. If the machine manufactured by Toledo Tools...
Dave Metal is examining two options – Machine A and Machine B - for a core-cutting...
Dave Metal is examining two options – Machine A and Machine B -
for a core-cutting machine. Machine A Initial Cost $ 250,000
Savings $28,000/year Maintenance Cost $10,000/year + $0.05/unit
Labor $0.25/widget Life 10 years Salvage Value $22,500. Machine B
Initial Cost $ 180,000 Savings $22,000/year Maintenance Cost
$20,000 /year Labor $0.50/widget Life 5 years Salvage Value $
17,000. MARR is 12 percent and the company’s sale projection is
30,000 widgets/year. Should either, both or neither machine be
purchased? Use...
On January 2, 2015, Roth, Inc. purchased a laser cutting machine to be used in the...
On January 2, 2015, Roth, Inc. purchased a laser cutting machine
to be used in the fabrication of a part for one of its key
products. The machine cost $80,000, and its estimated useful life
was four years or 1,000,000 cuttings, after which it could be sold
for $5,000.
Calculate the depreciation expense for each year of the
machine's useful life under each of the following methods:
a. Straight-line
b. Double-Declining balance
c. Units of Production. Assume annual production in...
On January 2, 2015, Roth, Inc. purchased a laser cutting machine to be used in the...
On January 2, 2015, Roth, Inc. purchased a laser cutting machine
to be used in the fabrication of a part for one of its key
products. The machine cost $120,000, and its estimated useful life
was four years or 1,150,000 cuttings, after which it could be sold
for $5,000.
Required
a. Calculate each year’s depreciation expense for the machine's
useful life under each of the following depreciation methods (round
all answers to the nearest dollar):
1. Straight-line.
2. Double-declining balance....
cost cutting problem: a company is considering the purchase of a new machine. the machine has...
cost cutting problem: a company is considering the purchase of a
new machine. the machine has a cost of $1,500,000. the company
believes that revenues will remain at their current levels, however
operating costs will be reduced by $380,000 per year. the machine
is expected to operate for 10 years. it will be sold for its
salvage value of $80,000 at year 5. the company’s current
investment in operating net working capital is $150,000. if the
company purchases the new...
A company offers machine rental services for material cutting. Consider the following costs of the company...
A company offers machine rental services for material cutting.
Consider the following costs of the company over the relevant range
of 4,000 to 10,000 hours of operating time for its cutting
equipment
Total costs:
4,000 hours
5,000 hours
8,000 hours
10,000 hours
Variable costs
$20,000
?
?
?
Fixed costs
82,000
?
?
?
Total costs
102,000
?
?
?
Cost per hour:
Variable costs
?
?
?
?
Fixed costs
?
?
?
?
Total cost per hour
?...
Computing Straight-Line and Double-Declining-Balance Depreciation On January 2, Haskins Company purchases a laser cutting machine for...
Computing Straight-Line and Double-Declining-Balance
Depreciation
On January 2, Haskins Company purchases a laser cutting machine
for use in fabrication of a part for one of its key products. The
machine cost $120,000, and its estimated useful life is five years,
after which the expected salvage value is $7,500. Compute
depreciation expense for each year of the machine's useful life
under each of the following depreciation methods: Round answers to
the nearest whole number, when applicable.
a. Straight-line
Year 1 $Answer...
Computing Straight-Line and Double-Declining-Balance Depreciation On January 2, Haskins Company purchases a laser cutting machine for...
Computing Straight-Line and Double-Declining-Balance
Depreciation
On January 2, Haskins Company purchases a laser cutting machine
for use in fabrication of a part for one of its key products. The
machine cost $112,000, and its estimated useful life is five years,
after which the expected salvage value is $7,000. Compute
depreciation expense for each year of the machine's useful life
under each of the following depreciation methods:
Note: Round answers to the nearest whole
number, when applicable.
a. Straight-line
Year 1...
Depreciation Methods On January 2, 2018, Skyler, Inc. purchased a laser cutting machine to be used...
Depreciation Methods
On January 2, 2018, Skyler, Inc. purchased a laser cutting
machine to be used in the fabrication of a part for one of its key
products. The machine cost $120,000, and its estimated useful life
was four years or 920,000 cuttings, after which it could be sold
for $5,000.
Required
a. Calculate each year’s depreciation expense for the machine's
useful life under each of the following depreciation methods (round
all answers to the nearest dollar):
1. Straight-line.
2....
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Describe a time when someone did not really listen to or understand a point you were...
- Enumerations Create an advanced enumeration to represent months (JANUARY – DECEMBER) called enuMonths Add internal properties...
- What is the minimum size of the automorphism group of a simple directed graph having more...
- The birthday paradox says that the probability (chance) that two people in a room will have...
- #include <iostream> #include "lib.hpp" using namespace std; int main() { // declare the bool bool...
- Why do we compare means instead of individual scores? for comparing average SAT test scores across...
- NPV Your division is considering two projects with the following cash flows (in millions): 0...
ADVERTISEMENT