Question
In: Finance
Heron Corporation is planning to add manufacturing capacity by installing new high-tech machines. The machines would...
Heron Corporation is planning to add manufacturing
capacity by installing new high-tech machines. The machines would
increase revenues by $180,000 per year and increase costs by
$50,000 per year. The new machines cost $560,000 and would be
depreciated over 5 years using simplified straight line. Investment
in net working capital of $30,000 would be required at the time of
installation. The firm is planning to keep the machines for 7 years
and then sell them for $80,000. The firm has a required rate of
return on investment projects of 13% and a tax rate of 21%. What is
the net present value of this project?
a) ($146,055)
d)
($26,209)
b) ($13,457)
e)
($18,015)
c) ($53,073)
Solutions
jeff jeffy answered 10 months agoRelated Solutions
Heron Corporation is planning to add manufacturing capacity by installing new high-tech machines. The machines would...
Heron Corporation is planning to add manufacturing capacity by
installing new high-tech machines. The machines would increase
revenues by $180,000 per year and increase costs by $50,000 per
year. The new machines cost $560,000 and would be depreciated over
5 years using simplified straight line. Investment in net working
capital of $30,000 would be required at the time of installation.
The firm is planning to keep the machines for 7 years and then sell
them for $80,000. The firm has...
Heron Corporation is planning to add manufacturing capacity by installing new high-tech machines. The machines would...
Heron Corporation is planning to add manufacturing capacity by
installing new high-tech machines. The machines would increase
revenues by $180,000 per year and increase costs by $50,000 per
year. The new machines cost $560,000 and would be depreciated over
5 years using simplified straight line. Investment in net working
capital of $30,000 would be required at the time of installation.
The firm is planning to keep the machines for 7 years and then sell
them for $80,000. The firm has...
a) Hank Co. recently opened a new state of the art, high tech manufacturing plant, and...
a) Hank Co. recently opened a new state of the art, high tech
manufacturing plant, and management made the decision to install a
just in time production system. How would labor costs, overhead
costs and work in process inventory levels at this plant
respectively compare with those at other Fulton facilities?
a. lower, higher, higher b. lower, lower, lower c.
lower, higher, lower d. higher, higher, higher
e. higher, lower, higher
b) Crystal Industries began June with a finished good...
Campbell Corporation is planning to add a new machine to its current plant. There are two...
Campbell Corporation is planning to add a new machine to its
current plant. There are two machines it is considering, with cash
flows as follows:
Machine
A
0
1
2 3
4
-10,000
4000 4000
4,000 4000
Machine
B
0
1
2
3
-5,000
3,000
3,000
3,000
Which machine should Campbell choose?
Assume the cost of capital is 9%.
Barbour Corporation, located in Buffalo, New York, is a retailer of high-tech products and is known...
Barbour Corporation, located in Buffalo, New York, is a retailer of high-tech products and is known for its excellent quality and innovation. Recently, the firm conducted a relevant cost analysis of one of its product lines that has only two products, T-1 and T-2. The sales for T-2 are decreasing and the purchase costs are increasing. The firm might drop T-2 and sell only T-1. Barbour allocates fixed costs to products on the basis of sales revenue. When the president of...
Barbour Corporation, located in Buffalo, New York, is a retailer of high-tech products and is known...
Barbour Corporation, located in Buffalo, New York, is a retailer
of high-tech products and is known for its excellent quality and
innovation. Recently, the firm conducted a relevant cost analysis
of one of its product lines that has only two products, T-1 and
T-2. The sales for T-2 are decreasing and the purchase costs are
increasing. The firm might drop T-2 and sell only T-1.
Barbour allocates fixed costs to products on the basis of sales
revenue. When the president...
Barbour Corporation, located in Buffalo, New York, is a retailer of high-tech products and is known...
Barbour Corporation, located in Buffalo, New York, is a retailer
of high-tech products and is known for its excellent quality and
innovation. Recently, the firm conducted a relevant cost analysis
of one of its product lines that has only two products, T-1 and
T-2. The sales for T-2 are decreasing and the purchase costs are
increasing. The firm might drop T-2 and sell only T-1.
Barbour allocates fixed costs to products on the basis of sales
revenue. When the president...
Barbour Corporation, located in Buffalo, New York, is a retailer of high-tech products and is known...
Barbour Corporation, located in Buffalo, New York, is a retailer
of high-tech products and is known for its excellent quality and
innovation. Recently, the firm conducted a relevant cost analysis
of one of its product lines that has only two products, T-1 and
T-2. The sales for T-2 are decreasing and the purchase costs are
increasing. The firm might drop T-2 and sell only T-1. Barbour
allocates fixed costs to products on the basis of sales revenue.
When the president...
Barbour Corporation, located in Buffalo, New York, is a retailer of high-tech products and is known...
Barbour Corporation, located in Buffalo, New York, is a retailer
of high-tech products and is known for its excellent quality and
innovation. Recently, the firm conducted a relevant cost analysis
of one of its product lines that has only two products, T-1 and
T-2. The sales for T-2 are decreasing and the purchase costs are
increasing. The firm might drop T-2 and sell only T-1.
Barbour allocates fixed costs to products on the basis of sales
revenue. When the president...
Barbour Corporation, located in Buffalo, New York, is a retailer of high-tech products and is known...
Barbour Corporation, located in Buffalo, New York, is a retailer
of high-tech products and is known for its excellent quality and
innovation. Recently, the firm conducted a relevant cost analysis
of one of its product lines that has only two products, T-1 and
T-2. The sales for T-2 are decreasing and the purchase costs are
increasing. The firm might drop T-2 and sell only T-1.
Barbour allocates fixed costs to products on the basis of sales
revenue. When the president...
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