Waterways puts much emphasis on cash flow when it plans for capital investments. The company chose its discount rate of 8% based on the rate of return it must pay its owners and creditors. Using that rate, Waterways then uses different methods to determine the best decisions for making capital outlays.

This year Waterways is considering buying five new backhoes to replace the backhoes it now has. The new backhoes are faster, cost less to run, provide for more accurate trench digging, have comfort features for the operators, and have 1-year maintenance agreements to go with them. The old backhoes are working just fine, but they do require considerable maintenance. The backhoe operators are very familiar with the old backhoes and would need to learn some new skills to use the new backhoes.

The following information is available to use in deciding whether to purchase the new backhoes.

Click here to view PV table.

(a) Evaluate in the following ways whether to purchase the new equipment or overhaul the old equipment. (Hint: For the old machine, the initial investment is the cost of the overhaul. For the new machine, subtract the salvage value of the old machine to determine the initial cost of the investment.)

(1) Using the net present value method for buying new or keeping the old. (For calculation purposes, use 5 decimal places as displayed in the factor table provided. If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round final answer to 0 decimal places, e.g. 5,275.)

(2) Using the payback method for each choice. (Hint: For the old machine, evaluate the payback of an overhaul.) (Round answers to 2 decimal places, e.g. 1.25)

(3) Comparing the profitability index for each choice. (Round answers to 2 decimal places, e.g. 1.25)

Calculate the internal rate of return factor for the new and old blackhoes. (Round answers to 5 decimal places, e.g. 5.27647.)

(4) Comparing the internal rate of return for each choice to the required 8% discount rate.

Waterways puts much emphasis on cash flow when it plans for capital investments. The company chose its discount rate of 8% based on the rate of return it must pay its owners and creditors. Using that rate, Waterways then uses different methods to determine the best decisions for making capital outlays.

This year Waterways is considering buying five new backhoes to replace the backhoes it now has. The new backhoes are faster, cost less to run, provide for more accurate trench digging, have comfort features for the operators, and have 1-year maintenance agreements to go with them. The old backhoes are working just fine, but they do require considerable maintenance. The backhoe operators are very familiar with the old backhoes and would need to learn some new skills to use the new backhoes.

The following information is available to use in deciding whether to purchase the new backhoes.

Click here to view PV table.

(a) Evaluate in the following ways whether to purchase the new equipment or overhaul the old equipment. (Hint: For the old machine, the initial investment is the cost of the overhaul. For the new machine, subtract the salvage value of the old machine to determine the initial cost of the investment.)

(1) Using the net present value method for buying new or keeping the old. (For calculation purposes, use 5 decimal places as displayed in the factor table provided. If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round final answer to 0 decimal places, e.g. 5,275.)

(2) Using the payback method for each choice. (Hint: For the old machine, evaluate the payback of an overhaul.) (Round answers to 2 decimal places, e.g. 1.25)

(3) Comparing the profitability index for each choice. (Round answers to 2 decimal places, e.g. 1.25)

Calculate the internal rate of return factor for the new and old blackhoes. (Round answers to 5 decimal places, e.g. 5.27647.)

(4) Comparing the internal rate of return for each choice to the required 8% discount rate.

Waterways puts much emphasis on cash flow when it plans for capital investments. The company chose its discount rate of 8% based on the rate of return it must pay its owners and creditors. Using that rate, Waterways then uses different methods to determine the best decisions for making capital outlays.

This year Waterways is considering buying five new backhoes to replace the backhoes it now has. The new backhoes are faster, cost less to run, provide for more accurate trench digging, have comfort features for the operators, and have 1-year maintenance agreements to go with them. The old backhoes are working just fine, but they do require considerable maintenance. The backhoe operators are very familiar with the old backhoes and would need to learn some new skills to use the new backhoes.

The following information is available to use in deciding whether to purchase the new backhoes.

Click here to view PV table.

(a) Evaluate in the following ways whether to purchase the new equipment or overhaul the old equipment. (Hint: For the old machine, the initial investment is the cost of the overhaul. For the new machine, subtract the salvage value of the old machine to determine the initial cost of the investment.)

(1) Using the net present value method for buying new or keeping the old. (For calculation purposes, use 5 decimal places as displayed in the factor table provided. If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round final answer to 0 decimal places, e.g. 5,275.)

(2) Using the payback method for each choice. (Hint: For the old machine, evaluate the payback of an overhaul.) (Round answers to 2 decimal places, e.g. 1.25)

(3) Comparing the profitability index for each choice. (Round answers to 2 decimal places, e.g. 1.25)

Calculate the internal rate of return factor for the new and old blackhoes. (Round answers to 5 decimal places, e.g. 5.27647.)

(4) Comparing the internal rate of return for each choice to the required 8% discount rate.

The CFL: Coming Soon to a Light Socket Near You

In a nation with 4 billion light sockets, one light bulb per household can make a real difference. If every U.S. household

replaced one ordinary incandescent light bulb with a compact fluorescent lamp (CFL), the energy saved would be enough

to light 3 million homes. This single change would be the environmental equivalent of taking 800,000 cars off the road

and preventing 450 pounds of greenhouse gases from reaching the atmosphere. Change a light bulb, help the planet, slash

energy costs

—sounds like a win

-win situation.

Yet since the CFL’s invention more than 30 years ago, it has been slow to catch on. Meanwhile, the incandescent light

bulb, which was commercialized more than a century ago, still accounts for more than 90 percent of all light bulbs sold in

the U.S. Why have CFLs not been more popular?

•

Higher price.

One big reason that CFLs have not been big sellers is because each costs five to seven times more than

an incandescent light bulb does. A

CFL can last up to twelve times as long as an incandescent bulb does, and

installing even a few will make a noticeable difference in a household’s monthly electric bill. However, the initial

outlay has discouraged many people from making the switch.

•

Not t

he same old light bulb.

A second reason is that CFLs do not work as well as incandescent bulbs do in certain

circumstances, such as in fixtures outfitted with dimmers or in spotlights. Because the two types of bulbs are not

completely interchangeable, cons

umers have to do at least a little research and possibly some experimentation to

determine when they can and cannot install a CFL in place of an incandescent bulb. Instead, most consumers stay

with what they know and keep buying the same type of bulbs they

have always used.

•

Still too new.

Until very recently, few CFLs could be found on store shelves; those that were available had to compete

with rows and rows of incandescent light bulbs. And CFLs were rarely featured in advertising. Despite some

publicity, not everyone was getting the message about the CFL’s energy efficiency and the long

-term cost benefits of

switching from incandescents.

•

Disposal concerns.

Because CFLs contain a minute amount of mercury, they must be handled like hazardous waste

instead of

being thrown away like ordinary light bulbs. Sylvania provides customers with special packaging to return

burnt

-out CFLs for recycling by dropping them off at FedEx Kinko’s or at local post offices. However, even when

consumers know about the benefits of CFLs, they may not know how to dispose of them safely.

Now the CFL is coming into its own amid a growing chorus of campaigns by retailers, manufacturers, utilities, and

government agencies. Wal

-Mart is putting a major marketing push behind CFLs, featuring them in ads and on the Web to

encourage its 100 million customers to buy at least one new bulb. The retailer has even added CFLs to its back-

to-school

shopping list for eco-

friendly products that it has posted on Facebook to reach “green teens.” Utilities such as Pacific Gas

& Electric in California have given away free CFLs or have offered CFLs at reduced prices to encourage customers to at

least try the bulbs.

Major bulb manufacturers like General Electric, Philips, and Sylvania are helping to educate con

sumers about CFLs

through on-

package information and in marketing communications such as ads and media interviews. With new

government standards calling for the phase

-out of regular incandescent light bulbs over the next 10 years, manufacturers

are also testing energy

-efficient lighting alternatives such as low

-heat incandescent bulbs, new halogen bulbs, and light

-

emitting diode (LED) bulbs. Soon light sockets all over America will be lit with CFLs and other new bulbs.

i

Case Questions

1. Would you characterize the CFL as discontinuous, dynamically continuous, or continuous? How does this level of innovation help to explain why CFLs have diffused relatively slowly through the market?

Harriet Moore is an accountant for New World Pharmaceuticals. Her duties include tracking research and development spending in the new product development division. Over the course of the past six months, Harriet has noticed that a great deal of funds have been spent on a particular project for a new drug. She hears “through the grapevine” that the company is about to patent the drug and expects it to be a major advance in antibiotics. Harriet believes that this new drug will greatly improve company performance and will cause the company’s stock to increase in value. Harriet decides to purchase shares of New World in order to benefit from this expected increase.

Required:

Identify ethical dilemmas Harriet faces, if any, with respect to the information she has learned through her duties as an accountant for New World Pharmaceuticals. What are the implications of her planned purchase of New World shares?

Harriet Moore is an accountant for New World Pharmaceuticals. Her duties include tracking research and development spending in the new product development division. Over the course of the past six months, Harriet has noticed that a great deal of funds have been spent on a particular project for a new drug. She hears “through the grapevine” that the company is about to patent the drug and expects it to be a major advance in antibiotics. Harriet believes that this new drug will greatly improve company performance and will cause the company’s stock to increase in value. Harriet decides to purchase shares of New World in order to benefit from this expected increase.

Required:

Identify ethical dilemmas Harriet faces, if any, with respect to the information she has learned through her duties as an accountant for New World Pharmaceuticals. What are the implications of her planned purchase of New World shares?

A small solid sphere of mass M₀, of radius R₀, and of uniform density ρ₀ is placed in a large bowl containing water. It floats and the level of the water in the dish is L. Given the information below, determine the possible effects on the water level L, (R-Rises, F-Falls, U-Unchanged), when that sphere is replaced by a new solid sphere of uniform density.

The new sphere has mass M = M₀ and radius R > R₀
The new sphere has radius R = R₀ and density ρ > ρ₀
The new sphere has radius R < R₀ and mass M = M₀
The new sphere has mass M < M₀ and density ρ = ρ₀
The new sphere has density ρ < ρ₀ and radius R > R₀
The new sphere has density ρ = ρ₀ and mass M > M₀

5) Anderson Equipment Manufacturing produces equipment for the natural gas industry. The company management is considering purchasing new controllers for the fabricating machines. The new controllers are expected to increase efficiency and product quality. The engineering staff estimate that annual net cash savings from increased efficiency will be $35,000 per year for four years. The existing controllers can be sold for $8,000. The new controllers have a purchase price of $75,000 and will require installation costs in the amount of $4,500. The annual software contract for the new controllers is $1,700; the controllers will be depreciated using the straight-line method. The salvage value of the new controllers at the end of four years is estimated to be $10,000. The company has a required rate of return of 15%.

Required:

1. Determine the net present value of the investment in the new controllers.
2. Estimate the internal rate of return (within a 5% range) of the investment in the new controllers.

An existing 36-inch diameter concrete gravity sewer installed on a slope of 0.25% currently conveys a peak flow rate of 12 cfs. A builder proposes to connect a new residential development to this existing sewer. Projected peak flow from this new development is 4 cfs.

a) Depth of flow in sewer before new development is connected

b) Depth of flow in sewer after new development is connected

c) Flow velocity in sewer after new development is connected

d) Flow type (critical, subcritical or supercritical) after new development is connected

e) Diameter of a sewer to convey combined peak flow of 16 cfs if maximum allowable D/d is 0.85 (i.e. assume you are designing new sewer on the same 0.25% slope)

Please show all work. Thank you so much in advance!