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In: Finance
Intel will need $2.2 million 5 years from now to replace aging equipment. Currently, the firm...
Intel will need $2.2 million 5 years from now to replace aging equipment. Currently, the firm has extra cash and would like to establish a money market account for this purpose. The account pays 3.6% interest. How much money must the company deposit today to fully fund the equipment purchase?
Solutions
jeff jeffy answered 2 years agoRelated Solutions
The company wants to have $36 million for a plant expansion 5 years from now. If...
The company wants to have $36 million for a plant expansion 5
years from now. If the company has already set aside $15 million in
an investment account for the expansion, how much more must the
company add to the account next year (i.e., 1 year from now) so
that it will have the $36 million 5 years from now? The account
earns interest at 10% per year, compounded quarterly
You expect that you will need to replace your furnace in 5 years at a cost...
You expect that you will need to replace your furnace in 5 years
at a cost of $16,447. How much must you save, each month for 14
months, starting next month (the same amount each month) if your
savings account pays 2.27% APR (compounded monthly)?
You expect that you will need to replace your furnace in 5 years at a cost...
You expect that you will need to replace your furnace in 5 years
at a cost of $15,729. How much must you save today in an account
that pays 3.42% APR (compounded monthly) to exactly pay the $15,729
in 5 years?
A firm is considering an investment of $480,000 in new equipment to replace old equipment with...
A firm is considering an investment of $480,000 in new
equipment to replace old equipment with a book value of $95,000 and
a market value of $63,000. If the firm replaces the old equipment
with new equipment, it expects to save $120,000 in operating costs
the first year. The amount of savings will grow at a rate of 8
percent per year for each of the following five years. Both pieces
of equipment belong to asset class 8, which has...
A firm is considering an investment of $480,000 in new equipment to replace old equipment with...
A firm is considering an investment of $480,000 in new equipment
to replace old equipment with a book value of $95,000 and a market
value of $63,000. If the firm replaces the old equipment with new
equipment, it expects to save $120,000 in operating costs the first
year. The amount of savings will grow at a rate of 8 percent per
year for each of the following five years. Both pieces of equipment
belong to asset class 8, which has...
A firm is considering an investment of $480,000 in new equipment to replace old equipment with...
A firm is considering an investment of $480,000 in new equipment
to replace old equipment with a book value of $95,000 and a market
value of $63,000. If the firm replaces the old equipment with new
equipment, it expects to save $120,000 in operating costs the first
year. The amount of savings will grow at a rate of 8 percent per
year for each of the following five years. Both pieces of equipment
belong to asset class 8, which has...
You need $25,000 in today's buying power, 5 years from now. You can earn 2% APR...
You need $25,000 in today's buying power, 5 years from now. You
can earn 2% APR in real terms on your investments. How much must
you invest (a different amount each year), starting next year for 4
years to just meet your needs, if you expect inflation to be 4% per
year? The amount you invest should just maintain the real cash
values.
Three years from now (now =Year 0) the equipment that Dark Star Technologies uses to coat...
Three years from now (now =Year 0) the equipment that Dark Star
Technologies uses to coat and protect the surfaces on its products
will have to be replaced. Dark Star plans to operate the new
equipment for 7 years (Years 4 to 10). The company is considering
two procurement options.
Option 1: MAKE the manufacturing equipment in-house. The yearly
acquisition costs associated with developing the equipment in-house
are as follows: Year 1 = $200,000, Year 2 = $700,000, Year 3...
a company estimates that it will need 116,000 in 11 years to replace a computer. If...
a
company estimates that it will need 116,000 in 11 years to replace
a computer. If it establishes a sinking fund by making fixed
monthly payments into an account paying 3.3% compounded monthly,
how much should each payment be?
the amount of each payment should be $___
Samir heads a team to select from two different machines to replace an aging one. Their...
Samir heads a team to select from two different machines to
replace an aging one. Their upfront costs, such as installation,
are different. Also their useful lives are 4 years and 5 years
respectively. Their salvage values, operating costs and net
benefits are different. Nonetheless, they each have pros and cons
to consider.
Tammy, a junior engineer, has suggested using the equivalent
annual annuity (EAA) method to compare each machine’s financial
attributes.
Describe how the EAA method works by creating...
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