ALUM Inc. uses high-tech equipment to produce specialized products. Each one of its machines costs $2,345,000 to purchase plus an additional $125,000 a year to operate. The machines have a four-year (4) life after which they are worthless. What is the equivalent annual cost of one these machines if the required return is 9.5 percent? Multiple Choice -$2,457.902.50 -$756,947.08 -$891,203.44 -$856,788.04
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- Dauten is offered a replacement machine which has a cost of 8,000, an estimated useful life of 6 years, and an estimated salvage value of 800. The replacement machine is eligible for 100% bonus depreciation at the time of purchase- The replacement machine would permit an output expansion, so sales would rise by 1,000 per year; even so, the new machines much greater efficiency would cause operating expenses to decline by 1,500 per year The new machine would require that inventories be increased by 2,000, but accounts payable would simultaneously increase by 500. Dautens marginal federal-plus-state tax rate is 25%, and its WACC is 11%. Should it replace the old machine?Inc. uses fine-tuned equipment to produce electronic products. Each one of its machines costs $10,000,000 to purchase plus an additional $900,000 a year to operate. The machines have a 6-year (6) life after which they are worthless. What is the equivalent annual cost of one these machines if the required return is 11.4 percent?Anderson Inc. uses packing machines to prepare their product for shipping. One machine costs $136,000 and lasts about 5 years before it needs to be replaced. The operating cost per machine is $6,500 a year. Ignoring taxes, what is the equivalent annual cost of one packing machine if the required rate of return is 11%? Multiple Choice $49,904 $51,036 $44,298 $43,298 $50,776
- Rocko Incorporated has a machine with a book value of $50,000 and a five-year remaining life. A new machine Is available at a cost of 585.000 and Rocko ca for trading in the old machine. The old machine has varlable manufacturing costs of $24,0o00 per year. The new machine will reduce variable manutacturing over its five-year life. Should the machine be replaced? Multiple Choice Rocko will be not be better or worse off by replacing the machine. Yes, because income will increase by $14,000 per year. Yes, because income will increase by $23,000 in total. No, because the income will decrease by $14,000 per year. No, because the company will be $23,000 worse off in total.Janko Wellspring Incorporated has a pump with a book value of $26,000 and a four-year remaining life. A new, more efficient pump is available at a cost of $47,000. Janko can receive $8,200 for trading in the old pump. The old machine has variable manufacturing costs of $27,000 per year. The new pump will reduce variable costs by $11,100 per year over its four-year life. Should the pump be replaced? Multiple Choice No, because the company will be $5,600 worse off in total. Yes, because income will increase by $5.500 per year No, because income wit decrease by $100 per year. Yes, because income will increase by $5.600 in total No, Janko will record a loss of $16,400 r they replace the pumpBailey, Inc., is considering buying a new gang punch that would allow it to produce circuit boards more efficiently. The punch has a first cost of $100,000 and a useful life of 15 years. At the end of its useful life, the punch has no salvage value. Labor costs would increase $2,000 per year using the gang punch but raw material costs would decrease $12,000 per year. MARR is 5%/ yr. Solve, a. What is the internal rate of return of this investment? b. What is the decision rule for judging the attractiveness of investments based on internal rate of return? c. Should Bailey buy the gang punch?
- Janko Wellspring Inc. has a pump with a book value of $35,000 and a 4-year remaining life. A new, more efficient pump, is available at a cost of $56,000. Janko can also receive $9,100 for trading in the old pump. The new pump will reduce variable costs by $13,100 per year over its four-year life. Should the pump be replaced? Multiple Choice No, because income will decrease by $13,100 per year. Yes, because income will increase by $5,500 in total. No, Janko will record a loss of $18,200 if they replace the pump. No, because the company will be $5,500 worse off in total. Yes, because income will increase by $5,500 per year.Janko Wellspring Incorporated has a pump with a book value of $28,000 and a four-year remaining life. A new, more efficient pump is available at a cost of $49,000. Janko can receive $8,400 for trading in the old pump. The old machine has variable manufacturing costs of $29,000 per year. The new pump will reduce variable costs by $11,300 per year over its four-year life. Should the pump be replaced? Multiple Choice No, because the company will be $4,600 worse off in total. Yes, because income will increase by $4,600 per year. No lankn will record a loss of $16,800 if they replace the pump.A firm is considering purchasing computers that will reduce annual costs by P40,000. The Computers costs P300,000 and has a salvage value of P50,000 and a life of 7 years. The annual maintenance cost is P6,000, while not in use by the firm, the computers can be rented to others to generate an income of P10,000 per year. money can be invested for an 8% return, using the ANNUAL COST METHOD, how much is the savings or excess cost the firm has in buying the computers?
- Lopez Company is considering replacing one of its old manufacturing machines. The old machine has a book value of $49,000 and a remaining useful life of five years. It can be sold now for $59,000. Variable manufacturing costs are $47,000 per year for this old machine. Information on two alternative replacement machines follows. The expected useful life of each replacement machine is five years. Purchase price Variable manufacturing costs per year Machine A $ 117,000 20,000 Machine B $ 130,000 12,000 (a) Compute the income increase or decrease from replacing the old machine with Machine A. (b) Compute the income increase or decrease from replacing the old machine with Machine B. (c) Should Lopez keep or replace its old machine? (d) If the machine should be replaced, which new machine should Lopez purchase? Complete this question by entering your answers in the tabs below. Req A Req B Req C and D Compute the income increase or decrease from replacing the old machine with Machine A.…K Beryl's Iced Tea currently rents a bottling machine for $53,000 per year, including all maintenance expenses. It is considering purchasing a machine instead, and is comparing two options: a. Purchase the machine it is currently renting for $155,000. This machine will require $20,000 per year in ongoing maintenance expenses. b. Purchase a new, more advanced machine for $255,000. This machine will require $17,000 per year in ongoing maintenance expenses and will lower bottling costs by $12,000 per year. Also, $36,000 will be spent upfront training the new operators of the machine. Suppose the appropriate discount rate is 9% per year and the machine is purchased today. Maintenance and bottling costs are paid at the end of each year, as is the rental of the machine. Assume also that the machines will be depreciated via the straight-line method over seven years and that they have a 10-year life with a negligible salvage value. The corporate tax rate is 30%. Should Beryl's Iced Tea…Lopez Company is considering replacing one of its old manufacturing machines. The old machine has a book value of $49,000 and a remaining useful life of four years. It can be sold now for $59,000. Variable manufacturing costs are $43,000 per year for this old machine. Information on two alternative replacement machines follows. The expected useful life of each replacement machine is four years. Purchase price Variable manufacturing costs per year Machine A $ 120,000 20,000 Machine B $ 133,000 13,000 (a) Compute the income increase or decrease from replacing the old machine with Machine A. (b) Compute the income increase or decrease from replacing the old machine with Machine B. (c) Should Lopez keep or replace its old machine? (d) If the machine should be replaced, which new machine should Lopez purchase? Complete this question by entering your answers in the tabs below. Req A Req B Req C and D Compute the income increase or decrease from replacing the old machine with Machine A. Note:…
