A firm is considering leasing or buying a mower. The mower costs $1000 and can be depreciated and falls into the MACRS 3 year class (33%; 45% ; 15% and 7%). A maintenance contract will be purchased for $200 per year payable at the start of each year for 4 years. The firms tax rate is 30%. The firm expects to sell the mower for $96 at the end of the 3rd year. What is the net sale price when the mower is sold?

Your company is planning to purchase a new loader for $20,937. If the company keeps the old loader, it will have $1,959 additional maintenance cost for the first year and increases $308 each year till the eighth year. Given the company's minimum attractive rate of return (MARR) is 6%, what is the present cost of keeping the old loader? 6% 1 2 3 4 5 879 6 9 Single Payment Compound Present Amount Worth Factor Factor Find F Find P Given F Given P F/P P/F 1.060 1.124 1.191 1.262 1.338 1.419 1.504 1.594 1689 .9434 .8900 .8396 .7921 .7473 .7050 .6651 .6274 5919 Sinking Fund Factor Find A Given F A/F 1.0000 .4854 3141 .2286 .1774 .1434 .1191 1010 0870 Compound Interest Factors Uniform Payment Series Capital Recovery Factor Find A Given P A/P 1.0600 .5454 .3741 .2886 2374 2034 .1791 1610 1470 Compound Amount Factor Find F Given A F/A 1.000 2.060 3.184 4.375 5.637 6.975 8.394 9.897 11 491 Present Worth Factor Find P Given A P/A 0.943 1.833 2.673 3.465 4.212 4.917 5.582 6.210 6.802 Arithmetic…

Builtrite is considering purchasing a new machine that would cost $60,000 and the machine would be depreciated (straight line) down to $0 over its five year life. At the end of five years it is believed that the machine could be sold for $15,000. The machine would increase EBDT by $42,000 annually.  Builtrite’s marginal tax rate is 34%. What is the TCF associated with the purchase of this machine?     $5,100     $7,500     $0     $9,900

A startup is considering buying a $295,000 piece of equipment. If it purchases the equipment, it will take a loan for the entire amount; the interest on the loan is 3%, and the loan will be repaid in 5 equal end of year payments. The startup estimates that the equipment would generate an additional $170,000 of revenue each year. At the end of 5 years, the equipment would have a salvage value of $21,000. The tax rate is 23%. Assuming a planning horizon of 5 years, that the equipment is depreciated using MACRS (3-year property class), and that the medical practice uses an after-tax MARR of 6%, compute the PW and determine whether the startup should invest in the equipment. Click here to access the TVM Factor Table calculator. Click here to access the MACRS-GDS Property Classes. Click here to access the MACRS-GDS percentages page. Click here to access the MACRS-GDS percentages for 27.5-year residential rental property. 2$ Carry all interim calculations to 5 decimal places and then round…

A laboratory might buy a new piece of equipment for $26,785. The equipment's useful life is 4 years, and its salvage value is $5000. The company will save $9000 per year for 4 years if it buys the equipment. Maintenance costs in year 1 will be zero, but will increase each year starting in year 2 by $500 per year (the first year is covered by a warranty). Determine the Equivalent Annual Worth if the company's cost of money is 10%.

Vijay

MAG Industrial needs 1000 square meters of storage space. Purchasing land for $80,000 and then erecting a temporary metal building at $70 persquare meter is one option. The president hopes to sell the land for $100,000 and the building for $20,000 after 3 years. Another option is to lease space for $30 per square meter per year payable at the beginning of each year. The MARR is 20%. Perform a present worth analysis of the building and leasing alternatives to determine the sensitivity of the decision if the construction cost decreases by 10% to $63 per square meter and the lease cost remainsat $30 per square meter per year.

A construction company can purchase a used backhoe for $90,000 and spend $450 per day in operating costs. The equipment will have a 5 -year life then sell it at salvage for $3,000. Alternatively, the company can lease the equipment for $800 per day. How many days per year must the company use the equipment in order to justify its purchase at an interest rate of 6% per year.

After spending $9,600 on client-development, you have just been offered a big production contract by a new client. The contract will add $196,000 to your revenues for each of the next five years and it will cost you $96,000 per year to make the additional product. You will have to use some existing equipment and buy new equipment as well. The existing equipment is fully depreciated, but could be sold for $45,000 now. If you use it in the project, it will be worthless at the end of the project. You will buy new equipment valued at $29,000 and use the 5-year MACRS schedule to depreciate it. It will be worthless at the end of the project. Your current production manager earns $79,000 per year. Since she is busy with ongoing projects, you are planning to hire an assistant at$38,000 per year to help with the expansion. You will have to immediately increase your inventory from $20,000 to $30,000. It will return to $20,000 at the end of the project is 21% and your discount rate is 14.7%. What…

The ABC Corporation is considering introducing a new product, which will require buying new equipment for a monthly payment of $5,000.  Each unit produced can be sold for $20.00.  ABC incurs a variable cost of $10.00 per unit. Suppose that ABC would like to realize a monthly profit of $50,000.  How many units must they sell each month to realize this profit?