What is the ATCF rate of return for machine that costs 300,000, lasts for 8 years,...

What is the ATCF rate of return for machine that costs 300,000, lasts for 8 years, has zero salvage value, and is classified as 5 year MACRS property? The machine will be purchased with a 20.0% down payment and a four year loan for the remaining amount at an annual interest rate of 11.50%. The machine produces net revenues after deducting direct and indirect expenses but not depreciation of 46,000 in year 1, 120,000 in years 2 to 6, 60,000 in year 7, and 40,000 in year 8. Use a tax rate of 21.00%

Expert Solution

sol:

Please Upvote......Its really usefull to us...If any querry comment below...I will resolve ASAP....Thank You....

ekkarill92 answered 10 months ago

1. What is the ATCF rate of return for a machine that cost 100,000, lasts for...

1. What is the ATCF rate of return for a machine that cost 100,000, lasts for 5 years, has zero salvage value, is classified as 3 year MACRS property, produces net revenues after deducting direct and indirect expenses but not depreciation of 26,000 in year 1, 42,000 in years 2 to 4, and 14,000 in year 5 using a tax rate of 21.00%.

Machine F costs $1,480,000, has a life of 8 years and will return a benefit of...

Machine F costs $1,480,000, has a life of 8 years and will return a benefit of $875,500 in the first year, and increasing by 6% for the life of the machine. The first year costs for Machine F is $545,000, increasing by an inflation rate of 3% per year. The salvage value at the end of life of the machine is 12% of the original investment cost. If MARR is 10%, what is the NPW for the machine? Please show...

4) Machine A costs $35,000, lasts 3 years and has a salvage value of $7,500. Machine...

4) Machine A costs $35,000, lasts 3 years and has a salvage value of $7,500. Machine B costs $25,000, lasts 2 years and has a salvage value of $3,500. The machines can be purchased at the same price with the same salvage value in the future, and are needed for a 6 year project. Which machine would you purchase and why? Provide justification using an Annualized Equivalent Cost analysis. Interest is 10% annual rate, compounded annually. Answer______________________________________

Assume a machine costs $548,000 and lasts eight years before it is replaced. The operating cost...

Assume a machine costs $548,000 and lasts eight years before it is replaced. The operating cost is $109,600 a year. Ignore taxes. What is the equivalent annual cost if the required rate of return is 14 percent? (Hint: the EAC should account for both initial investment and annual operating costs) $227,732.37 $235,885.17 $244,608.94 $251,835.43 $266,744.08

Assume a machine costs $404,000 and lasts four years before it is replaced. The operating cost...

Assume a machine costs $404,000 and lasts four years before it is replaced. The operating cost is $47,000 a year. Ignore taxes. What is the equivalent annual cost if the required rate of return is 12.5 percent? (Hint: the EAC should account for both initial investment and annual operating costs) $163,297 $174,825 $181,414 $195,637 $202,118

Ali invested $300,000 in a small project for an interest rate of 8%. Four years later,...

Ali invested $300,000 in a small project for an interest rate of 8%. Four years later, he invested another $600,000 in the same project but this time for an interest rate of 10%. What is the total amount of money he is going to receive after 12 years of his investment period? The Petrochemical manufacturing company is planning to increase the production by replacing a new continues stirred tank reactor. The costs of reactor shown in table below. Calculate the...

"You plan to operate the same type of machine for 10 years. Machine A lasts 5...

"You plan to operate the same type of machine for 10 years. Machine A lasts 5 years and Machine B lasts 10 years. Machine A costs $6,000 and Machine B costs $8,000. The salvage value of Machine A is $4,000 and the salvage value of Machine B is $2,500. Annual operation and maintenance costs are $5,000 for Machine A and $5,100 for Machine B. Both machines can be purchased in the future at the same price as today, and their...

PROBLEM A machine that costs $ 40,000 has a useful life of 8 years and it...

PROBLEM A machine that costs $ 40,000 has a useful life of 8 years and it is estimated that the residual value at the end of its useful life is $ 5,000. This machine, which will be used to make pieces of complex geometry and will have an annual operation and maintenance cost of $ 8,000. The operator of this machine receives $ 15.00 per hour and the machine consumes power at a rate of $ 1.15 per hour. It...

Assume project lasts 4 years Operating income 100 Tax rate 21% Machine cost 50

Assume project lasts 4 years Operating income 100 Tax rate 21% Machine cost 50 Straight line depreciation over 5 years Salvage value after 5 years = 20 Working capital 2 per year , 3 initially WACC = 10% What is the IRR What is the NPV What is the payback

A road resurfacing project costs $250,000, lasts 5 years and saves $150,000 annually in patching costs....

A road resurfacing project costs $250,000, lasts 5 years and saves $150,000 annually in patching costs. MARR is 12%. Determine the future worth (in $).

Question