Question
In: Accounting
A mine is considering the installation of automated equipment in its processing plant to reduce labour...
A mine is considering the installation of automated equipment in
its processing plant to reduce labour costs from:
$300,000 to $220,000 in year 1, from
$330,000 to $240,000 in year 2, from
$360,000 to $260,000 in year 3, and from $400,000 to $290,000 in
year 4.
The equipment will cost $200,000 now with an expected salvage value
of $50,000 in four years. The minimum rate of return is 20%. Use
IRR and NPV analysis to determine if the equipment should be
installed
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Green House Tomato Company is considering the purchase of new processing equipment for $1,500,000, with an additional installation cost of $18,000.
Green House Tomato Company is considering the purchase of new
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A company is considering the purchase of a major piece of equipment for its manufacturing plant....
A company is considering the purchase of a major piece of
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A company is considering the purchase of a major piece of equipment for its manufacturing plant....
A company is considering the purchase of a major piece of
equipment for its manufacturing plant. The project would cost $22m
in initial investment and would result in cost savings, before tax,
of $3.25m per year for five years.
The equipment could be sold for $4.5m at the end of the five
years. The equipment would also result in an increase in NWC of
$500,000, which will be recovered at the end of the project.
The company’s CCA rate is...
On January 2, 2020, Crane Company began construction of a new citrus processing plant. The automated...
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Covid-19 Mega Waves
0.2
0
Covid-19 Contained
0.7
$200,000
Covid-19 Eliminated...
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Bernie Ltd is considering the purchase of a new equipment for its manufacturing plant and has...
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information about burnie’s current capital structure is as
follows:
Source of capital. Book value. Market value
debts. $1,500,000. $1,600,000
ordinary share capital. $1,800,000. $3,000,000
total. $3,300,000. $3,600,000
to finance the purchase, Bernie can sell 10 year-bonds paying
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An Engineering company is considering purchasing a piece of plant equipment and wishes to compare its...
An Engineering company is considering purchasing a piece of
plant equipment and wishes to compare its replacement strategies
for purchase and maintenance over a period of time. The machine’s
initial cost is $160,000 with immediate payment required. Running
Costs including maintenance are $11,000 in year 1, $16,000 in year
2, $23,000 in year 3 and $32,000 in year 4. Payments are required
at the end of each year. Interest rates are 4% p.a. The equipment
will have a salvage value...
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