As a financial analyst for Longview Products Company, you have been asked to evaluate a proposal for new, more efficient manufacturing equipment. The existing equipment will produce benefits over the next five years of $780,000 in today's dollars. The proposed new equipment will produce benefits of $970,000 in today's dollars over the same period. The installed cost of the new equipment is $300,000; the old equipment can be sold for $130,000. Apply marginal cost-benefit analysis to determine: a. The marginal benefits of the new equipment b. The marginal costs of the new equipment c. The net benefit of the new equipment d. Based on your calculations, what do you recommend? Why? e. What factors other than the costs and benefits should be considered before the final decision is made?

Consider equipment for the expansion of a production line that will cost $600,000 up front (i.e., today, t = 0). The production line will be depreciated using a 3-year straight-line schedule. At the end of Year 3, the used equipment will have no value. The new line will generate earnings according to the schedule below. What is the Average Accounting Return (AAR) of the new production facility? Answer with a number rounded to three decimal places, e.g., 4.0877% should be entered as 4.088. Year 01 Earnings = $24,500 Year 02 Earnings = $26,000 Year 03 Earnings = $27,250

(engineering economic) a company considers purchasing a machine for $3000. The tool is planned to be used for 10 years and after that it will be sold for 25% of its purchase price. With the purchase of the tool, the company must incur operating costs of $ 400 per year. If the owner of the company wants a return of 10% annually on the investment made, what is the uniform annual income for at least 10 years that must be obtained from the heavy equipment so that the wishes of the owner of the company are fulfilled?

Assume that you are thinking about starting your own small business. You have made the following estimates regarding this opportunity: You can rent a location for your business at a cost of $36, 000 per year. The equipment costs incurred to start the business would total $250,000. The equipment would have a 5-year useful life and a salvage value of S 25,000. Your company's estimated sales per year would equal $350,000 and its variable cost of goods sold would be 30% of sales. Other operating costs would include $56, 000 per year in salaries, S4, 000 per year for insurance, $25, 000 per year for utilities, and a 3% sales commission. The payback period for this investment opportunity is closest to:   Multiple Choice 4.08 years, 2.20 years. 3.80 years. 3.08 years.