Question

In: Accounting

Assume a piece of machinery costs $420,000 and would last for 10 years. At the end...

Assume a piece of machinery costs $420,000 and would last for 10 years. At the end of 10 years, the salvage value would be $98,500. Annual cost savings for the machinery would be $91,000. Assume a minimum pretax return of 14% is required for all machinery purchases. Compute the NPV and IRR for the machinery. (Ignore income taxes.)

Provide the amounts you input in Excel and your calculated net present value. (If a variable is not used in the calculation, input a zero (0). Omit the "$" and "%" signs in your response.) Round your answer to the nearest dollar and use a minus sign for negative numbers.

Excel input:

Rate %

Nper

PMT $

PV $

FV $

Net Present Value (NPV) $

Required: Provide the amounts you input in Excel and your calculated internal rate of return. (If a variable is not used in the calculation, input a zero (0). Omit the "$" and "%" signs in your response.) Round your answer to one decimal place and use a minus sign for negative numbers. Excel input:

Rate %

Nper

PMT $

PV $

FV $

Internal Rate of Return (IRR) %

Expert Solution

ekkarill92 answered 1 year ago

Trilogy Construction, Inc. is considering purchasing a new piece of machinery that would save it $40,000...

Trilogy Construction, Inc. is considering purchasing a new piece of machinery that would save it $40,000 a year in annual labor costs. The machine would cost $130,000 and is expected to last 5 years and have a $10,000 salvage value. The company’s cost of capital is 8%. A) What is the machine’s net present value? B) Should the company buy the machine? Use the TVM tables and please show your work.

A bond is callable at the end of 10 years for $6910 or at the end...

A bond is callable at the end of 10 years for $6910 or at the end of 15 years for $8365. If the bond pays interest at j4=7%, matures at 95 in 20 years and has a face value of $8000, what price will guarantee the investor a yield of j4 =12%?

1. The new wood cutting machine will cost $420,000 and its depreciation is over 10 years...

1. The new wood cutting machine will cost $420,000 and its depreciation is over 10 years to zero using the straight-line method. At the end of 5 years, the estimated value of the wood cutting machine is $50,000. How mush is the first year to fifth year depreciation? 2. The total cost of the required 3D printers is $750,000 and its depreciation is over 15 years to zero using the straight-line method. At the end of 5 years, the estimated...

How much at end of each 6 month for 3 years at j2 = 10% would...

How much at end of each 6 month for 3 years at j2 = 10% would you have to save in order to receive $600 at the end of each 6 months for 4 years afterward? (Round your answer to 2 decimal places.

You are considering buying one of two machines. Machine A costs $5,000, should last 10 years,...

You are considering buying one of two machines. Machine A costs $5,000, should last 10 years, and will generate cash flows of $900/year. Machine B costs $8,000, should last only 6 years, and will generate cash flows of $1,900/year. The Discount Rate is 8%. What is the NPV and EAC of each project? Based on your analysis, which machine should you buy? Suppose instead that the cash flows occur at mid-year. (Assume the initial payment still occurs at the end...

You wish to have $200,000 at the end of twenty years. In the last five years,...

You wish to have $200,000 at the end of twenty years. In the last five years, you withdraw $1,000 annually at a rate of 3.8% compounded quarterly. During the middle ten years, you contribute $500 monthly at a rate of 2.8% compounded semi-annually. Given this information, determine the initial deposit that has to be made at the start of the first five years at a rate of 4% compounded monthly.

You wish to have $250,000 at the end of twenty years. In the last five years,...

You wish to have $250,000 at the end of twenty years. In the last five years, you withdraw $1,000 annually at a rate of 3.8% compounded quarterly. During the middle ten years, you contribute $500 monthly at a rate of 2.8% compounded semi-annually. Given this information, determine the initial deposit that has to be made at the start of the first five years at a rate of 4% compounded monthly?

(3 of 10) A new piece of specialty equipment costs $2,000,000 and will be depreciated to...

(3 of 10) A new piece of specialty equipment costs $2,000,000 and will be depreciated to an expected salvage value of $250,000 on a straight-line basis over its 5-year life. Assuming a tax rate of 40%, what is its after-tax salvage value if the equipment is actually sold after 3 years for $1,250,000? $180,000 $500,000 $500,000 $1,130,000 $1,250,000

Klingon Cruisers, Inc., purchased new cloaking machinery five years ago for $10 million. The machinery can...

Klingon Cruisers, Inc., purchased new cloaking machinery five years ago for $10 million. The machinery can be sold to the Romulans today for $9.1 million. Klingon's current balance sheet shows net fixed assets of $8 million, current liabilities of $780,000, and net working capital of $220,000. If all the current accounts were liquidated today, the company would receive $1.02 million cash. a. What is the book value of Klingon's assets today? (Do not round intermediate calculations and enter your answer...

Assume that you will buy and operate a piece of equipment. The machine costs $25,000. You...

Assume that you will buy and operate a piece of equipment. The machine costs $25,000. You estimate that the equipment will generate $10,000 revenue, each year for six years. You also estimate that operating costs for the machine will be $4,500 each year for six years. These estimates are in constant 2019 dollars. The inflation rate for revenues is estimated to be 3.5%. The inflation rate for operating costs is estimated to be 5.0%. You will depreciate the machine using...