Question atatched An industrial organization studying the relative desirability of two diesel enginesproposed for installation has estimated that the annual operating costs for engine Ais Tk. 40,000 and for engine B is Tk. 35000. What is the added justifiable investmentfor engine B if the cost of money use is 8 percent of the investment, taxes are 4 percentof 80 percent of the first cost, insurance is 0.3 percent of investment, and annualdepreciation charge has been set at 5 percent of the total investment?

Relative Desirability : Based on the quantity of investment in one asset in an organization, how…

Answered: An industrial organization studying the…

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 financial analyst for zzz corporation is evaluating the cost of an investment in required pollution controlled equipment.. The npv was -5746639. When this is converted to its equivalent annual cost a value of-1,000,000 was found. Given this, what is the cost of capital and number of years were assigned to cover the npv to eac.
You are evaluating two different silicon wafer milling machines. The Techron I costs $303,000, has a 3-year life, and has pretax operating costs of $84,000 per year. The Techron Il costs $525,000, has a 5-year life, and has pretax operating costs of $57,000 per year. For both milling machines, use straight-line depreciation to zero over the project's life and assume a salvage value of $61,000. If your tax rate is 25 percent and your discount rate is 13 percent, compute the EAC for both machines. (A negative answer should be Indicated by a minus sign. Do not round Intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Techron I Techron II Which machine do you prefer? Techron I Techron II
An industrial organization studying the relative desirability of two diesel engines proposed for installation has estimated that the annual operating costs for engine A is Tk. 40,000 and for engine B is Tk. 35000. What is the added justifiable investment for engine B if the cost of money use is 8 percent of the investment, taxes are 4 percent of 80 percent of the first cost, insurance is 0.3 percent of investment, and annual depreciation charge has been set at 5 percent of the total investment?
You are evaluating two different silicon wafer milling machines. The Techron I costs $252,000, has a three-year life, and has pretax operating costs of $67,000 per year. The Techron Il costs $440,000, has a five-year life, and has pretax operating costs of $40,000 per year. For both milling machines, use straight-line depreciation to zero over the project's life and assume a salvage value of $44,000. If your tax rate is 24 percent and your discount rate is 9 percent, compute the EAC for both machines. Note: Your answer should be a negative value and indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. Techron I Techron II $ -304,725.75 Which machine should you choose? O Techron I O Techron II
You are evaluating two different silicon wafer milling machines. The Techron I costs $195,000, has a three-year life, and has pretax operating costs of $32,000 per year. The Techron II costs $295,000, has a five-year life, and has pretax operating costs of $19,000 per year. For both milling machines, use straight-line depreciation to zero over the project’s life and assume a salvage value of $20,000. If your tax rate is 35 percent and your discount rate is 14 percent, compute the EAC for both machines. Which do you prefer? Why?
You are evaluating two different silicon wafer milling machines. The Techron I costs $258,000, has a three-year life, and has pretax operating costs of $69,000 per year. The Techron II costs $450,000, has a five-year life, and has pretax operating costs of $42,000 per year. For both milling machines, use straight-line depreciation to zero over the project’s life and assume a salvage value of $46,000. If your tax rate is 21 percent and your discount rate is 9 percent, compute the EAC for both machines. Note: Your answer should be a negative value and indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.
You are evaluating two different silicon wafer milling machines. The Techron I costs $258,000, has a three-year life, and has pretax operating costs of $69,000 per year. The Techron II costs $450,000, has a five-year life, and has pretax operating costs of $42,000 per year. For both milling machines, use straight-line depreciation to zero over the project’s life and assume a salvage value of $46,000. If your tax rate is 25 percent and your discount rate is 10 percent, compute the EAC for both machines. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
Midwest Fabricators Inc. is considering an investment in equipment that will replace direct labor. The equipment has a cost of $101,000 with a $9,000 residual value and a ten-year life. The equipment will replace one employee who has an average wage of $21,230 per year. In addition, the equipment will have operating and energy costs of $4,880 per year. Determine the average rate of return on the equipment, giving effect to straight-line depreciation on the investment. If required, round to the nearest whole percent
You are evaluating two different silicon wafer milling machines. The Techron I costs $279,000, has a three-year life, and has pretax operating costs of $76,000 per year. The Techron Il costs $485,000, has a five-year life, and has pretax operating costs of $43,000 per year. For both milling machines, use straight-line depreciation to zero over the project's life and assume a salvage value of $53,000. If your tax rate is 22 percent and your discount rate is 13 percent, compute the EAC for both machines. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct. Techron I $ -156,983.00 x Techron II S -150,093.00
Maui Fabricators Inc. is considering an investment in equipment that will replace direct labor. The equipment has a cost of $121,000 with a $10,000 residual value and a 10-year life. The equipment will replace one employee who has an average wage of $20,255 per year. In addition, the equipment will have operating and energy costs of $5,880 per year. Determine the average rate of return on the equipment, giving effect to straight-line depreciation on the investment. If required, round to the nearest whole percent.fill in the blank 1 of 1 %
You are evaluating two different silicon wafer milling machines. The Techron I costs $249,000, has a 3-year life, and has pretax operating costs of $66,000 per year. The Techron II costs $435,000, has a 5-year life, and has pretax operating costs of $39,000 per year. For both milling machines, use straight-line depreciation to zero over the project's life and assume a salvage value of $43,000. If your tax rate is 22 percent and your discount rate is 11 percent, compute the EAC for both machines. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Techron I Techron II Which machine do you prefer? O Techron II O Techron I
Peyton Manufacturing is trying to decide between two different conveyor belt systems. System A costs $248,000, has a four-year life, and requires $77,000 in pretax annual operating costs. System B costs $348,000, has a six-year life, and requires $71,000 in pretax annual operating costs. Both systems are to be depreciated straight-line to zero over their lives and will have zero salvage value. Suppose the company always needs a conveyor belt system; when one wears out, it must be replaced. Assume the tax rate is 22 percent and the discount rate is 9 percent. Calculate the EAC for both conveyor belt systems. (Your answers should be negative values and indicated by minus signs. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) System A System B $ -398,387.80

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