Question
In: Accounting
The Cupcake Company is considering purchasing a new oven which will reduce baking time. Because of...
The Cupcake Company is considering purchasing a new oven which will reduce baking time. Because of reduced baking time, the Company expects that revenues would be increased by $1,500 per year for the next 10 years. The electrical costs for the Company are expected to increase $200 in the same 10 years. The oven would cost $9,000 and would have a residual value of $1,000 at the end of the tenth year. The company would dispose of their current oven to make room and expects to earn $500 from that sale. Assuming a 12% required rate of return. Would you purchase the machine? "Yes" or "No"
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ekkarill92 answered 2 years agoRelated Solutions
The Cupcake Company is considering purchasing a new oven which will reduce baking time. Because of...
The Cupcake Company is considering purchasing a new oven which
will reduce baking time. Because of reduced baking time, the
Company expects that revenues would be increased by $1,500 per year
for the next 10 years. The electrical costs for the Company are
expected to increase $200 in the same 10 years. The oven would cost
$9,000 and would have a residual value of $1,000 at the end of the
tenth year. The company would dispose of their current oven...
The Dunder Muffin Company is considering purchasing a new commercial oven that costs $350,000. This new...
The Dunder Muffin Company is considering purchasing a new
commercial oven that costs $350,000. This new oven will produce
cash inflows of $115,000 at the end of Years 1 through 10. In
addition to the cash inflows, at the end of Year 5 there will be a
net cash outflow of $200,00. The company has a weighted average
cost of capital of 12.5 percent. What is the MIRR of the
investment? Would you make the investment? Why or Why not?...
Premium Pie Company needs to purchase a new baking oven to replace an older oven that...
Premium Pie Company needs to purchase a new baking oven to
replace an older oven that requires too much energy to run. The
industrial size oven will cost $1,200,000. The oven will be fully
depreciated on a straight-line basis over its six-year useful life.
The old oven cost the company $800,000 just four years ago. The old
oven is being depreciated on a straight-line basis over its
expected ten-year useful life. (That is, the old oven is expected
to last...
Premium Pie Company needs to purchase a new baking oven to replace an older oven that...
Premium Pie Company needs to purchase a new baking oven to
replace an older oven that requires too much energy to
run. The industrial size oven will cost
$1,200,000. The oven will be fully depreciated on a
straight-line basis over its six-year useful life. The
old oven cost the company $800,000 just four years
ago. The old oven is being depreciated on a
straight-line basis over its expected ten-year useful
life. (That is, the old oven is expected to last six
more years if it...
Premium Pie Company needs to purchase a new baking oven to replace an older oven that...
Premium Pie Company needs to purchase a new baking oven to
replace an older oven that requires too much energy to run. The
industrial size oven will cost $1,200,000. The oven will be
depreciated on a straight-line basis over its six-year useful life.
The old oven cost the company $800,000 just four years ago. The old
oven is being depreciated on a straight-line basis over its
expected ten-year useful life. (That is, the old oven is expected
to last six...
7. Premium Pie Company needs to purchase a new baking oven to replace an older oven...
7. Premium Pie Company needs to purchase a new baking oven to
replace an older oven that requires too much energy to run. The
industrial size oven will cost $1,200,000. The oven will be fully
depreciated on a straight-line basis over its six-year useful life.
The old oven cost the company $800,000 just four years ago. The old
oven is being depreciated on a straight-line basis over its
expected ten-year useful life. (That is, the old oven is expected
to...
1. Premium Pie Company needs to purchase a new baking oven to replace an older oven...
1. Premium Pie Company needs to purchase a new baking oven to
replace an older oven that requires too much energy to run. The
industrial size oven will cost $1,200,000. The oven will be
depreciated on a straight-line basis over its six-year useful life.
The old oven cost the company $800,000 just four years ago. The old
oven is being depreciated on a straight-line basis over its
expected ten-year useful life. (That is, the old oven is expected
to last...
. Grotto’s is considering purchasing a new pizza oven and the choices are: Middleby Marshall vs...
. Grotto’s is considering purchasing a new pizza oven and the
choices are: Middleby Marshall vs Blodgett. The following are the
costs and incremental cash flows from each in 3 years:
Years
Middleby
Marshall
Blodgett
0
-$15,000
-$19,000
1
$10,400
$12,700
2
$ 5,900
$ 6,100
3
$ 2,100
$ 5,300
a) If the company’s required
payback is 2 years, which of these two ovens should be
accepted?
...
Fairfax Pizza is considering buying a new oven. The new oven would be purchased today for...
Fairfax Pizza is considering buying a new oven. The new oven
would be purchased today for 17,600 dollars. It would be
depreciated straight-line to 1,200 dollars over 2 years. In 2
years, the oven would be sold for an after-tax cash flow of 1,700
dollars. Without the new oven, costs are expected to be 11,700
dollars in 1 year and 15,200 in 2 years. With the new oven, costs
are expected to be -500 dollars in 1 year and 9,300...
Fairfax Pizza is considering buying a new oven. The new oven would be purchased today for...
Fairfax Pizza is considering buying a new oven. The new oven
would be purchased today for 20,800 dollars. It would be
depreciated straight-line to 1,200 dollars over 2 years. In 2
years, the oven would be sold for an after-tax cash flow of 1,900
dollars. Without the new oven, costs are expected to be 10,400
dollars in 1 year and 17,400 in 2 years. With the new oven, costs
are expected to be -3,800 dollars in 1 year and 9,800...
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