Question
In: Finance
QUESTION 97 A company is considering the purchase of a new production line that it has...
QUESTION 97
-
A company is considering the purchase of a new production line that it has estimated will generate the following annual cash flows: $5,710,498 per year for 8 years, followed by $7,672,287 per year for 2 years, followed by $3,519,326 per year for 15 years. All cash flows will be received at the end of the year. If the company's required rate of return is 12.4%, what is the maximum price at which the company will purchase this new line? State your answer to the nearest whole dollar.
QUESTION 98
-
Assume that you will receive $8,766 per year for 4 years, followed by $4,590 per year for 8 years, followed by $7,686 per year for 3 years. All cash flows are to be received at the end of the year. If the required rate of return is 14.9%, what is the present value of these cash flows? State your answer to the nearest whole dollar.
Solutions
jeff jeffy answered 1 year agoRelated Solutions
A company is considering the purchase of new equipment for its production area. The equipment has...
A company is considering the purchase of new equipment for its
production area. The equipment has an initial cost of $ 3,000 with
operation and maintenance costs, as well as the market liquidation
value as shown in the following table:
Year
Costs of operation
Rescue value
1
$1,000
$1,500
2
$1,700
$1,000
3
$2,400
$500
4
$3,100
$0
Determine the Optimal Economic Life of this investment, if the
MARR of the company is 12%
Bronson manufacturing is considering replacing an existing production line with a new line that has a...
Bronson manufacturing is considering replacing an existing
production line with a new line that has a greater output capacity
and operates with less labor than the existing line. The new line
would cost $1 million, have a five-year life, and be depreciated
using straight line method. At the end of five years, the new line
would be sold as scrap for $200,000 (in year 5 dollars). Because
the new line is more automated, it would require fewer operators,
resulting in...
ACME manufacturing is considering replacing an existing production line with a new line that has a...
ACME manufacturing is considering replacing an existing
production line with a new line that has a greater output capacity
and operates with less labour than the existing line. The new line
would cost $1 million, have a 5-year life, and would be depreciated
using the straight-line depreciation method over 5 years. At the
end of 5 years, the new line could be sold as scrap for $200 000
(in year 5 dollars). Because the new line is more automated, it...
ACME manufacturing is considering replacing an existing production line with a new line that has a...
ACME manufacturing is considering replacing an existing
production line with a new
line that has a greater output capacity and operates with less
labour than the existing
line. The new line would cost $1 million, have a 5-year life,
and would be depreciated
using the straight-line depreciation method over 5 years. At the
end of 5 years, the new
line could be sold as scrap for $200 000 (in year 5 dollars).
Because the new line is more
automated, it...
Premiere Company is considering the purchase of a machine to further automate its production line. The...
Premiere Company is considering the purchase of a machine to
further automate its production line. The machine will cost
P600,000 and has a useful life of 5 years. The straight line method
of depreciation is used. Premiere expects annual income before
depreciation and taxes of P220,000. Premiere’s income tax rate is
25% and its cost of capital is 16%.
Required:
Determine whether the
new machine investment should be accepted using the following:
(30 pts)
Accounting Rate of Return
Payback...
Company A is considering an investment in a new production line which will entail an immediate...
Company A is considering an investment in a new production line
which will entail an immediate capital
expenditure of €1,200,000, an increase in accounts receivables by
€100,000 and a decrease in accounts
payable by €100,000. The production line is going to be depreciated
on a straight-line basis over 5 years
with no expected salvage value. The sales and operating expenses of
the company are expected to
increase by €600,000 and €100,000 per year respectively, over the
5-year life of the...
Your company is considering the purchase of a new production system with an installed cost of...
Your company is considering the purchase of a new production
system with an installed cost of $1,250,000. The cost will be
depreciated on a straight-line basis to zero over the five-year
life of the project, and the system can be sold at the end of the
project for $225,000. It will provide additional revenue of
$685,000 in the first year, and the additional revenue is expected
to grow 5% per year thereafter. The associated cost of goods sold
is estimated...
A company is considering a 5-year project to expand production with the purchase of a new...
A company is considering a 5-year project to expand production
with the purchase of a new automated machine using the latest
technology. The new machine would cost $200,000 FOB St. Louis, with
a shipping cost of $8,000 to the plant location. Installation
expenses of $15,000 would also be required. This new machine would
be classified as 7-year property for MACRS depreciation purposes.
The project engineers anticipate that this equipment could be sold
for salvage for $44,000 at the end of...
Healthy Options is a Pharmaceutical Company which is considering investing in a new production line of...
Healthy Options is a Pharmaceutical Company which is considering
investing in a new production line
of portable electrocardiogram (ECG) machines for its clients who
suffer from cardiovascular diseases.
The company has to invest in equipment which costs $2,500,000 and
falls within a MARCS
depreciation of 5 years, and is expected to have a scrap value of
$200,000 at the end of the project.
Other than the equipment, the company needs to increase its cash
and cash equivalents by $100,000,
increase...
Question 1. A company is planning to purchase a new machine to expand its production. There...
Question 1. A company is planning to purchase a
new machine to expand its production. There are two brand available
A and B in the market. Both the
machines are costing OMR 10000. The following cash
inflows are expected to come for both the machines.
Years
Machine A
Machine B
1
2400
1200
2
3600
3000
3
5800
4800
4
6000
7600
5
6500
9200
Calculate Pay back period and
Discounted Payback period for Machine A and
Machine B and...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- A)Given a generic array with ‘n’ items (not only integers). Give a solution for checking whether...
- Explain virtualization as a key technology in cloud computing environments, as well as the purpose of...
- A system is set up to take raw grading information from the console and calculate a...
- I have an 8 by 8 array that has values ranging from 1-64. I am wanting...
- The background information and instruction of the question is provided below, and i only asked for...
- Which business or industry sectors have the most startups companies that consider a small and medium...
- 16. Cost of trade credit Firms usually offer their customers some form of trade credit. This...
ADVERTISEMENT