A granary has two options for a conveyor used in the manufacture of grain for transporting, filling, or emptying One conveyor can be purchased and installed for $90,000 with $2,500 salvage value after 16 years. The other can be purchased and installed for $130,000 with $5.500 salvage value after 16 years. Operation and maintenance for each is expected to be $14,000 and $15,000 per year, respectively. The granary uses MACRS-GDS depreciation, has a marginal tax rate of 40%, and has a MARR of 9% after taxes. Click here to access the TVM Factor Table Calculator Click here to access the MACRS-GDS table. Parta Determine which alternative is less costly, based upon comparison of after-tax annual worth Show the AW values used to make your decision: Conveyor 1:$ Conveyor 2:$ The tolerance is

A granary has two options for a conveyor used in the manufacture of grain for transporting, filling, or emptying One conveyor can be purchased and installed for $90,000 with $2,500 salvage value after 16 years. The other can be purchased and installed for $130,000 with $5.500 salvage value after 16 years. Operation and maintenance for each is expected to be $14,000 and $15,000 per year, respectively. The granary uses MACRS-GDS depreciation, has a marginal tax rate of 40%, and has a MARR of 9% after taxes. Click here to access the TVM Factor Table Calculator Click here to access the MACRS-GDS table. Parta Determine which alternative is less costly, based upon comparison of after-tax annual worth Show the AW values used to make your decision: Conveyor 1:$ Conveyor 2:$ The tolerance is

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A granary has two options for a conveyor used in the manufacture of grain for transporting, filling, or emptying. One conveyor can be purchased and installed for $95,000 with $4,500 salvage value after 16 years. The other can be purchased and installed for $95,000 with $5,500 salvage value after 16 years. Operation and maintenance for each is expected to be $21,000 and $16,500 per year, respectively. The granary uses MACRS-GDS depreciation, has a marginal tax rate of 40%, and has a MARR of 9% after taxes. Determine which alternative is less costly, based upon comparison of after-tax annual worth. Show the AW values used to make your decision:Conveyor 1:Conveyor 2:
A granary has two options for a conveyor used in the manufacture of grain for transporting, filling, or emptying. One conveyor can be purchased and installed for $70,000 with $3,000 salvage value after 16 years. The other can be purchased and installed for $110,000 with $4,000 salvage value after 16 years. Operation and maintenance for each is expected to be $18,000 and $14,000 per year, respectively. The granary uses MACRS-GDS depreciation, has a income-tax rate of 25%, and a MARR of 9% after taxes. Solve, a. Determine which alternative is less costly, based upon comparison of after-tax annual worth. b. What must the cost of the second (more expensive) conveyor be for there to be no economic advantage between the two?
A granary has two options for a conveyor used in the manufacture of grain for transporting, filling, or emptying. One conveyor can be purchased and installed for $70,000 with $3,000 salvage value after 16 years. The other can be purchased and installed for $110,000 with $4,000 salvage value after 16 years. Operation and maintenance for each is expected to be $18,000 and $14,000 per year, respectively. The granary uses MACRS-GDS depreciation, has a income-tax rate of 25%, and a MARR of 9% after taxes. Comment on the differences in AWAT for each of these three analyses - Use MACRS-GDS(10) alone. Use MACRS-GDS(10) with 50% bonus depreciation. Use MACRS-GDS(10) with 100% bonus depreciation.
A granary has two options for a conveyor used in the manufacture of grain for transporting, filling, or emptying. One conveyor can be purchased and installed for $90,000 with $4,500 salvage value after 16 years. The other can be purchased and installed for $110,000 with $2,000 salvage value after 16 years. Operation and maintenance for each is expected to be $21,500 and $12,000 per year, respectively. The granary uses MACRS-GDS depreciation, has a marginal tax rate of 40%, and has a MARR of 9% after taxes. Click here to access the TVM Factor Table Calculator Click here to access the MACRS-GDS table. Part a Determine which alternative is less costly, based upon comparison of after-tax annual worth. Show the AW values used to make your decision: Conveyor 1: $ Conveyor 2: $ Alternative 1
A granary has two options for a conveyor used in the manufacture of grainfor transporting, filling, or emptying. One conveyor can be purchased and installed for $70,000 with $3,000 salvage value after 16 years. The other can be purchased and installed for $110,000 with $4,000 salvage value after 16 years. Operation and maintenance for each is expected to be $18,000 and $14,000 per year, respectively. The granary uses MACRS-GDS depreciation, has a income-tax rate of 25%, and a MARR of 9% after taxes. Use MACRS-GDS(10) alone.
Agranary has two options for a conveyor used in the manufacture of grain for transporting, filling, or emptying One conveyor can be purchased and installed for $80,000 with $2,500 salvage value after 16 years. The other can be purchased and installed for $105,000 with $2,500 salvage value after 16 years. Operation and maintenance for each is expected to be $17,500 and $11,500 per year, respectively. The granary uses MACRS-GDS depreciation, has a marginal tax rate of 25%, and has a MARR of 9% after taxes. Click here to access the TVM Factor Table Calculator Click here to access the MACRS-GDS table. Part a Determine which alternative is less costly, based upon comparison of after-tax annual worth Alternative 1 Show the AW values used to make your decision: Alternative 2 Conveyor 1:$ Conveyor 2:$ Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is t10
Alfred Home Construction is considering the purchase of five dumpsters and the transport truck to store and transfer construction debris from building sites. The entire rig is estimated to have an initial cost of $125,000, a life of 8 years, a $5000 salvage value, an operating cost of $40 per day, and an annual maintenance cost of $2000. Alternatively, Alfred can obtain the same services from the city as needed at each construction site for an initial delivery cost of $125 per dumpster per site and a daily charge of $20 per day per dumpster. An estimated 45 construction sites will need debris storage throughout the average year. If the minimum attractive rate of return is 12% per year, how many days per year must the equipment be required to justify its purchase?
Alfred Home Construction is considering the purchase of five dumpsters and the transport truck to store and transfer construction debris from building sites. The entire rig is estimated to have an initial cost of $142,500, a life of 8 years, a $8500 salvage value, an operating cost of $40 per day, and an annual maintenance cost of $8000. Alternatively, Alfred can obtain the same services from the city as needed at each construction site for an initial delivery cost of $125 per dumpster per site and a daily charge of $34 per day per dumpster. An estimated 19 construction sites will need debris storage throughout the average year. If the minimum attractive rate of return is 11% per year, how many days per year must the equipment be required to justify its purchase? The number of days per year the equipment must be required is determined to be
Two alternatives are being considered for recovering aluminum from garbage. Alternative 1 has a capital cost of $100,000 and a first-year maintenance cost of $12,000, with maintenance increasing by $500 per year for each year after the first. Alternative 2 has a capital cost of $140,000 and a first-year maintenance cost of $4000, with maintenance increasing by $1000 per year after the first. Revenues from the sale of aluminum are $20,000 in the first year, increasing $2000 per year for each year after the first. The life of both alternatives is 10 years. There is no salvage value. The before-tax MARR is 4%. Use present worth analysis to determine which alternative is preferred.
An excavator is purchased now with a cost of $200,000. The excavator will need major maintenance every year, with the first maintenance occurring at EOY 1. The cost of maintenance at EOY 1 is $20,000, and the cost increases by 2,000 each time it is performed. The life of the excavator is 20 years. At EOY 20, the excavator will be sold for $40,000. Nominal interest rate is given as 24% compounded monthly. Find the net present worth of this investment.
Two stamping machines are under consideration for purchase by a metal recycling company. The manual model will cost $25,000 to buy with an eight-year life and a $5,000 salvage value. Its annual operating costs will be $16,000. A computer-controlled model will cost $95,000 to buy and it will have a twelve-year life if upgraded at the end of year six for $15,000. Its terminal salvage value will be $23,000, with annual operating costs of $7,500 for labor and $2,500 for maintenance. The company's minimum attractive rate of return is 18%.
Two methods can be used to produce expansion anchors. Method A costs $70,000 initially and will have a $11,000 salvage value after 3 years. The operating cost with this method will be $22,000 in year 1, increasing by $2600 each year. Method B will have a first cost of $123,000, an operating cost of $8000 in year 1, increasing by $6500 each year, and a $33,000 salvage value after its 3-year life. At an interest rate of 15% per year, which method should be used on the basis of a present worth analysis? The present worth for method A is $ The present worth for method B is $[ Method (Click to select) is used to produce expansion anchors.

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