Question
In: Accounting
Question No. 3 Atlas Engineering is planning to install new machinery in their manufacturing division. The...
Question No. 3
Atlas Engineering is planning to install new machinery in their manufacturing division. The total investment budget is $120000. Atlas Engineering is reviewing three machinery that will generate three different cash inflow with the similar investment. For comparison and optimal capital budgeting decision, company require to analyze three project options with the following cash inflows.
|
Year |
Project A |
Project B |
Project C |
|
1 |
$29,064 |
$31,970 |
$34,877 |
|
2 |
33,960 |
$37,356 |
$40,752 |
|
3 |
30,600 |
$33,660 |
$36,720 |
|
4 |
17,400 |
$19,140 |
$20,880 |
|
5 |
15,672 |
$17,239 |
$18,806 |
|
6 |
15,672 |
$17,239 |
$18,806 |
|
7 |
15,672 |
$17,239 |
$18,806 |
|
8 |
13,560 |
$14,916 |
$16,272 |
|
9 |
11,400 |
$12,540 |
$13,680 |
|
10 |
11,400 |
$12,540 |
$13,680 |
you are required to use Net Present Value (NPV) technique to compare three projects for Atlas Engineering capital budgeting and finally advise them to select or reject any one project among them. Rate of return assume to be 12% annually.
Further give clear decision on what bases project is accepted and others are rejected?
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Question 3 The Consolidated Bank of Ghana (CBG) is planning to install a new computerized accounts...
Question 3
The Consolidated Bank of Ghana (CBG) is planning to install a
new computerized accounts system. Bank management has determined
the activities required to complete the project, the precedence
relationships of the activities, and activity time estimates as
follows:
Time
Estimates
(weeks)
Activity
Description
Predecessor
a
m
b
A
Position Recruiting
-
5
8
17
B
System Development
-
3
12
15
C
System Training
A
4
7
10
D
Equipment training
A
5
8
23
E
Manual System...
The city of Stillwater is planning to install a new settling tank as an upgrade to...
The city of Stillwater is planning to install a new settling
tank as an upgrade to their existing water treat plant. You run a
batch settling test using a 2.0 m column and coagulated water from
their existing tank and collect the following data (Table 1). Using
this data, design a settling tank to remove 65% of the influent
suspended solids. Assume a design flow of 0.5 m3/s. Use
scale up factors of 0.65 for overflow rate and 1.75 for...
The engineering team at Manuel’s Manufacturing Inc. is planning to purchase an enterprise resource planning (ERP)...
The engineering team at Manuel’s Manufacturing Inc. is planning
to purchase an enterprise resource planning (ERP) system. The
software and installation from Vendor A costs $380,000 initially
and is expected to have revenue $125,000 per year every
year.Manuel’s uses a 4-year planning horizon and a 10% per year
MARR.
What is the discounted payback period of the investment (do
linear interpolation to answer)?
The engineering team at Manuel’s Manufacturing, Inc. is planning to purchase an Enterprise Resource Planning (ERP)...
The engineering team at Manuel’s Manufacturing, Inc. is planning
to purchase an Enterprise Resource Planning (ERP) system. The
software and installation from Vendor A costs $360,000 initially
and is expected to increase revenue $120,000 per year every year.
The software and installation from Vendor B costs $260,000 and is
expected to increase revenue $90,000 per year. Manuel’s uses a 4
year planning horizon and a 10% per year MARR. Based on an internal
rate of return analysis which ERP system...
The engineering team at Manuel’s Manufacturing, Inc., is planning to purchase an enterprise resource planning (ERP)...
The engineering team at Manuel’s
Manufacturing, Inc., is planning to purchase an enterprise resource
planning (ERP) system. The software and installation from Vendor A
costs $380,000 initially and is expected to increase revenue
$125,000 per year every year. The software and installation from
Vendor B costs $280,000 and is expected to increase revenue $95,000
per year. Manuel’s uses a 4-year planning horizon and a 10 percent
per year MARR.
a. What is the present worth of each
investment?
b. What...
Please provide the answers in clear way A company is planning to install a new automated...
Please provide the answers in
clear way
A company is planning to install a new automated plastic-molding
press. Four different presses are available. The initial capital
investments and annual expenses for these four different
alternatives are:
Press
P1
P2
P3
P4
Capital Investment
$24,000
$30,400
$49,600
$52,000
Annual expenses
$31,200
$29,100
$25,200
$22,900
Press life (years)
5
5
5
5
Assume each press has the same output capacity of 150,000 units
per year, has no salvage value at the end...
Sadik Industries must install $1 million of new machinery in its Texas plant. It can obtain...
Sadik Industries must install $1 million of new machinery in its
Texas plant. It can obtain a 6-year bank loan for 100% of the cost
at a 14% interest rate with equal payments at the end of each year.
Sadik’s tax rate is 40%. The equipment falls in the MACRS 3-year
class.
Year
3-year MACRS
1
33.33%
2
44.45%
3
14.81%
4
7.41%
Alternatively, a Texas investment banking firm that represents a
group of investors can arrange a guideline lease...
Sadik Industries must install $1 million of new machinery in its Texas plant. It can obtain...
Sadik Industries must install $1 million of new machinery in its
Texas plant. It can obtain a 6-year bank loan for 100% of the cost
at a 14% interest rate with equal payments at the end of each year.
Sadik’s tax rate is 34%. The equipment falls in the MACRS 3-year
class.
Alternatively, a Texas investment banking firm that represents a
group of investors can arrange a guideline lease calling for
payments of $320,000 at the end of each year...
Sadik Industries must install $1 million of new machinery in its Texas plant. It can obtain...
Sadik Industries must install $1 million of new machinery in its
Texas plant. It can obtain a bank loan for 100% of the required
amount. Alternatively, a Texas investment banking firm that
represents a group of investors believes that it can arrange for a
lease financing plan. Assume that these facts apply:
The equipment falls in the MACRS 3-year class. Estimated
maintenance expenses are $56,000 per year. The firm's tax rate is
37%. If the money is borrowed, the bank...
Big Sky Mining Company must install $1.5 million of new machinery in its Nevada mine. It...
Big Sky Mining Company must install $1.5 million of new
machinery in its Nevada mine. It can obtain a bank loan for 100% of
the purchase price, or it can lease the machinery. Assume that the
following facts apply.
(1) The machinery falls into the MACRS 3-year class.
(2) Under either the lease or the purchase, Big Sky must pay for
insurance, property taxes, and maintenance.
(3) The firm’s tax rate is 25%.
(4) The loan would have an interest...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Discuss the significance of a proposal What elements do you think are needed for the proposal...
- 1) Given the following equations: QD = 5,000 + 0.5 I + 0.2 A -...
- How has the Supreme Court's Citizens United decision changed campaigns in America? (long answer is appreciated...
- You are a Derivatives Trader at a major Broker-Dealer. At the end of the week you...
- What are the two reasons that limit the ability of correlational studies to provide information on...
- Suppose that 20 monthly payments of $100 each are followed by 30 monthly payments of $200...
- D. Explain what it means for recommendations to be specific and actionable. E. Discuss how charts...
ADVERTISEMENT