Question
In: Mechanical Engineering
2. If produced by Method A, a product’s initial capital cost will be $100,000, its operating...
2. If produced by Method A, a product’s initial capital cost will be $100,000, its operating cost will be $20,000 per year, and its salvage value after 3 years will be $20,000. With Method B there is a first cost of $150,000, an operating cost of $10,000 per year, and a $50,0000 salvage value after its 3-year life. Based on a present worth analysis at a 15% interest rate, which method should be used?
Solutions
samet mamat answered 2 years agoRelated Solutions
2. If produced by Method A, a product’s initial capital cost will be $100,000, its operating...
2. If produced by Method A, a product’s initial capital cost
will be $100,000, its operating cost will be $20,000 per year, and
its salvage value after 3 years will be $20,000. With Method B
there is a first cost of $150,000, an operating cost of $10,000 per
year, and a $50,0000 salvage value after its 3-year life. Based on
a present worth analysis at a 15% interest rate, which method
should be used?
initial capital cost = 3,500,000 operating cash flow for each year = $1,000,000 recovery of capital...
initial capital cost = 3,500,000
operating cash flow for each year = $1,000,000
recovery of capital Assets after five years =$270,000
the hurdle rate for this project is 12%. it the
initial cost of working capital is $490,000 for each items as
teapots, teacups, saucers, and napkins, should farbucks open this
new shop if it will be in business for only five years?
what is the most it can invest in working capital and
still have a positive net present...
The following capital budgeting proposal: $100,000 initial cost, to be depreciated straight- line over 5 years...
The following capital budgeting proposal: $100,000 initial
cost, to be depreciated straight-
line over 5 years to an expected salvage value of $5,000, 35%
tax rate, $45,000 additional
annual revenues, $15,000 additional annual expense, $8,000
additional investment in
working capital, and 10% cost of capital. Calculate the
following methods.
1. NPV
2. Payback period
3. Modified IRR, a required rate of return is 12%
4. Briefly compare and contrast the NPV, Payback period and
MIRR criteria,
What are the advantages...
The following capital budgeting proposal: $100,000 initial cost, to be depreciated straight- line over 5 years...
The following capital budgeting proposal: $100,000 initial cost,
to be depreciated straight-
line over 5 years to an expected salvage value of $5,000, 35% tax
rate, $45,000 additional
annual revenues, $15,000 additional annual expense, $8,000
additional investment in
working capital, and 10% cost of capital. Calculate the following
methods.
1. NPV
2. Payback period
3. Modified IRR, a required rate of return is 12%
4. Briefly compare and contrast the NPV, Payback period and MIRR
criteria,
What are the advantages...
Calculate the NPV for the following capital budgeting proposal: $100,000 initial cost for equipment, straight-line depreciation...
Calculate the NPV for the following capital budgeting proposal:
$100,000 initial cost for equipment, straight-line depreciation
over 5 years to a zero book value, $5,000 pre-tax salvage value of
equipment, 35% tax rate, $45,000 additional annual revenues,
$15,000 additional annual cash expenses, $8,000 initial investment
in working capital to be recouped at project end, and a cost of
capital of 11%. Should the project be accepted or rejected? (Show
your work computing the NPV.)
2. Project A will cost $100,000 and requires working capital of $20,000. Annual revenue of $21,000...
2. Project A will cost $100,000 and requires working capital of
$20,000. Annual revenue of $21,000 and expenses of $5,000 for five
years. In the fifth year there will be salvage value of $8,000.
Should the project be accepted with a discounted rate of 14%.
Annuity rate 2.91371; Single factor rate .51937.
2. Project A will cost $100,000 and requires working capital of $20,000. Annual revenue of $21,000...
2. Project A will cost $100,000 and requires working capital of
$20,000. Annual revenue of $21,000 and expenses of $5,000 for five
years. In the fifth year, there will be a salvage value of $8,000.
Should the project be accepted with a discounted rate of 14%?
Annuity rate 2.91371; Single-factor rate .51937.
Two ventilation systems suppliers, Supplier A will have an initial cost of 1600000$, and its operating...
Two ventilation systems suppliers, Supplier A will have an
initial cost of 1600000$, and its operating cost is 70000 $ per
year, where its life is 4 year with salvage value of 400000 $.
Supplier B has an initial cost of 2100000 $ and operating cost of
50000 $ at the first year with an increase of $3000 per year
thereafter, and its useful life is 8 years with no salvage
value.
Use the future worth analysis to determine which...
Two ventilation systems suppliers, Supplier A will have an initial cost of 1600000$, and its operating...
Two ventilation systems suppliers, Supplier A will have an
initial cost of 1600000$, and its operating cost is 70000 $ per
year, where its life is 4 year with salvage value of 400000 $.
Supplier B has an initial cost of 2100000 $ and operating cost of
50000 $ at the first year with an increase of $3000 per year
thereafter, and its useful life is 8 years with no salvage
value.
Use the future worth analysis to determine which...
5) Scranton Shipyards has $11.0 million in total invested operating capital, and its Cost of capital...
5) Scranton Shipyards has $11.0 million in total invested
operating capital, and its Cost of capital is 10%. Scranton has the
following income statement: Sales $10.0 million (EBIT) $ 4.0
million Interest expense 2.0 million (EBT) $ 2.0 million Taxes
(25%) 0.5 million Net income $ 1.5 million What is Scranton’s EVA?
Explain what does it mean.
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