Please don't provide solutions in an image format thanks Blossom Corp, is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the companyto bid on jobs that it currently isn't equipped to do. Estimates regarding each machine are provided here.Original costEstimated lifeSalvage valueEstimated annual cash inflowsEstimated annual cash outflowsClick here to view PV table.Net present valueProfitability indexMachine AWhich machine should be purchased?$74,0008 yearsMachine A should be purchased0$19.500Machine A$4,800Machine BCalculate the net present value and profitability index of each machine. Assume a 9% discount rate. (If the net present value is negativeuse either a negative sign preceding the number eg-45 or parentheses eg (45). Round answer for present value to Odecimal places, eg 125 andprofitability index to 2 decimal places, eg. 10.50. For calculation purposes, use 5 decimal places as displayed in the factor table provided)$179,0008 years.0$39,500$9.800Machine B

Name: Please don't provide solutions in an image format thanks Blossom Corp,
Uploaded: 2024-03-20T06:50:59.000Z
Channel: Bartleby
Description: Please don't provide solutions in an image format thanks Blossom Corp, is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the companyto bid on jobs that it currently isn't equipped to do. Estimates

The profitability index is used to determine the attractiveness of an investment. It is computed by…

Business

Finance

Blossom Corp, is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the company to bid on jobs that it currently isn't equipped to do. Estimates regarding each machine are provided here. Original cost Estimated life Salvage value Estimated annual cash inflows Estimated annual cash outflows Net present value Profitability index Machine A $74,000 8 years Which machine should be purchased? $19.500 $4,800 Machine A 0 Machine A should be purchased. Machine B $179,000 Click here to view PV table. Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. Of the net present value is negative use either a negative sign preceding the number eg 45 or parentheses eg (45). Round answer for present value to Odecimal places, eg 125 and profitability index to 2 decimal places, eg. 10.50. For calculation purposes, use 5 decimal places as displayed in the factor table provided) 8 years 10 $39,500 $9.800 Machine B

Blossom Corp, is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the company to bid on jobs that it currently isn't equipped to do. Estimates regarding each machine are provided here. Original cost Estimated life Salvage value Estimated annual cash inflows Estimated annual cash outflows Net present value Profitability index Machine A $74,000 8 years Which machine should be purchased? $19.500 $4,800 Machine A 0 Machine A should be purchased. Machine B $179,000 Click here to view PV table. Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. Of the net present value is negative use either a negative sign preceding the number eg 45 or parentheses eg (45). Round answer for present value to Odecimal places, eg 125 and profitability index to 2 decimal places, eg. 10.50. For calculation purposes, use 5 decimal places as displayed in the factor table provided) 8 years 10 $39,500 $9.800 Machine B

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 1MAD: San Lucas Corporation is considering investment in robotic machinery based upon the following...

See similar textbooks

Similar questions

An engineering company is evaluating two different options for buying a triaxial testing machine. The expected cash flow for two different options and other required data are given in Table. By considering data given in Table, which option should be preferred by the engineering company. Give all calculation steps. First Cost (TL) Annual Operating COsts (TL) Annual Revenue (TL) Salvage Value (TL) Economic Life (TL) Option A 120000 14000 50000 30000 5 Option B 150000 10000 60000 350000 5 Interest Rate - 0.05 Discount Rate - 0.05
Give me right solution according to the question.... Help me urgenttttttttt Installing an automated production system costing $278,000 is initially expected to save Zia corporation $52,000 in expenses annually. If the system needs $5000 in operating and maintenance costs each year and has a salvage values of $25,000 at Year 10, what is the IRR of this system? If the company wants to earn at least 12% on all investments, should this system be purchased?
Assume that a company is considering purchasing a machine for $50,500 that will have a five-year useful life and no salvage value. The machine will lower operating costs by $17,000 per year. The company's required rate of return is 18%. The profitability index for this investment is closest to: Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. Multiple Choice C O 0.95. 1.01. 1.05. 1.11.
Assume that a company is considering purchasing a machine for $50,500 that will have a five-year useful life and no salvage value. The machine will lower operating costs by $17,000 per year. The company's required rate of return is 18%. The profitability index for this investment is closest to: Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using the tables provided. Multiple Choice O 0.95. 1.01. 1.05. 1.11.
Payback, Accounting Rate of Return, Net Present valde, Internal Rate of Retum Follow the format shown in Exhibit 12B.1 and Exhibit 12B.2 as you complete the requirements below. Woodard Company wants to buy a numerically controlled (NC) machine to be used in producing specially machined parts for manufacturers of tractors. The outlay required is $460,800. The NC equipment will last 5 years with no expected salvage value. The expected after-tax cash flows associated with the project follow: Year 1 2 3 4 5 Required: Cash Revenues $612,000 612,000 612,000 612,000 612,000 Cash Expenses $432,000 432,000 432,000 432,000 432,000 1. Compute the payback period for the NC equipment. Round your answer to two decimal places. 2.56 ✓ years Check My Work 2. Compute the NC equipment's ARR. Round the percentage to one decimal place. Assume straight-line depreciation. 19.1 ✓ % 3. Compute the investment's NPV, assuming required rate of return of 10%. Round present value calculations and your final answer…
The management of East Manufacturing needs a new high tech sorting machine and has two different proposals under consideration. They require a rate of return of 10% (discount rate) and the Accounting Department has prepared the following information: Initial Investment Useful Life of Equipment Net Annual Cash Flow Salvage Value Investment B: Click to open:↓ Ⓡ Clearly label and show calculations for full credit! No calculations = No credit. 1) Calculate the Payback Period for each option: Investment A: 2) Calculate the Net Present Value of each option: Investment A: $ 3,700,000 7 years $ 900,000 $0 Investment B: A $3,400,000 7 years $800,000 $90,000 B
Payback, Accounting Rate of Return, Net Present Value, Internal Rate of Return Follow the format shown in Exhibit 12B.1 and Exhibit 12B.2 as you complete the requirement below. Blaylock Company wants to buy a numerically controlled (NC) machine to be used in producing specially machined parts for manufacturers of trenching machines. The outlay required is $730,671. The NC equipment will last five years with no expected salvage value. The expected after-tax cash flows associated with the project follow: Year Cash Revenues Cash Expenses 1 $1,300,000 $1,000,000 1,300,000 1,000,000 1,000,000 1,000,000 1,000,000 2 3 4 5 1,300,000 1,300,000 1,300,000 Required: Compute the Investment's Internal Rate of return. Enter as a percent. If required, round your answer to the nearest whole percent. IRR = %
Payback, Accounting Rate of Return, Net Present Value, Internal Rate of Return Follow the format shown in Exhibit 12B.1 and Exhibit 12B.2 as you complete the requirements below. Blaylock Company wants to buy a numerically controlled (NC) machine to be used in producing specially machined parts for manufacturers of tractors. The outlay required is $384,000. The NC equipment will last 5 years with no expected salvage value. The expected after-tax cash flows associated with the project follow: Year Cash Revenues Cash Expenses 1 $510,000 $360,000 2 510,000 360,000 3 510,000 360,000 4 510,000 360,000 5 510,000 360,000 Required: 1. Compute the payback period for the NC equipment. Round your answer to two decimal places.fill in the blank 1 years 2. Compute the NC equipment's ARR. Round the percentage to one decimal place. Assume straight-line depreciation.fill in the blank 2 % 3. Compute the investment's NPV, assuming a required rate of return of…
A financial manager has to make a decision to replace or not an existing machine on his production line . The following information is providedsalvage value from the old machine : $ 50,000purchase value of the new machine : $ 1,000,000cost savings : $ 500,000cost of capital : 9 Should the manager replace the machine?
WCT Holdings Bhd, is considering two mutually exclusive alternatives A & B for implementing an automated passenger check-in counter at its hub airport. Each alternative meets the same service requirements, but differences in capital investment amounts, benefit, useful life, and cost expenditures. Compare which alternative which prefer using multiple attribute individual analysis present worth PW, if company use an interest rate of 0.75%? Include the cash flow diagram in your calculation: Alternative A has useful life of 6 years, a capital investment is RM45,000.00 with estimated an annual benefit of RM3,500.00 per year and estimated for an annual operating & maintenance cost of RM750.00 per year. The alternative received one-off benefit saving of RM 1,500.00 in third year. The salvage value of RM10,700.00 at the end of year life. Alternative B has useful life of 12 years, a capital investment is RM50, 000.00 with estimated an annual benefit of RM5,200.00 per year and estimated…
Engineering Economy Compute the Future Worth. Compare the results. Don't use excel Two stamping machines are under consideration for purchase by a metal recycling company. The manual model will cost P1,250,000 to buy with an eight-year life and a P250,000 salvage value. Its annual operating costs will be P800,000. A computer-controlled model will cost P4,750,000 to buy and it will have a twelve-year life if upgraded at the end of year six for 750,000. Its terminal salvage value will be P1,150,000, with annual operating costs of P375,500 for labor and P125,000 for maintenance. The company's minimum attractive rate of return is 18%.
ACME Company is interested in buying a new machine that costs $500,000. year 1 ncf = 126,800 year 2 ncf = 160,670 year 3 ncf = 155,731 year 4 ncf = 144,916 year 5 ncf = 183,065 and the discount rate is 10%. Using the valuation tools, (payback, discounted payback, NPV, IRR, PI), recommend if the company should invest in this machine.