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) %

Solutions

Expert Solution

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

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?

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...

The project is estimated to be of 10 years duration. It involves setting up new machinery...

The project is estimated to be of 10 years duration. It involves setting up new machinery with an estimated cost of as much as Thai baht (THB) 375 million, including installation. This amount could be depreciated using the straight-line method (SLM) over a period of 10 years with a resale value of THB 13.5 million. The project would require an initial working capital of THB 15.5 million. With the planned new capacity, the company would be able to produce 200,000...

unemployment and employment over the last 10 years. report

Subjects