Blossom Manufacturing, Inc., needs to purchase a new central air-conditioning system for a plant. There are two choices. The first system costs $76,000 and is expected to last 10 years, and the second system costs $87,000 and is expected to last 15 years. Assume that the opportunity cost of capital is 10 percent. (Round answers to 2 decimal places, e.g. 5,275.25.) System 1 System 2 Equivalent annual cost $ $ Which air-conditioning system should Blossom purchase? Blossom should purchase the

A new machine can be purchased for $1,500,000. It will cost $45,000 to ship and $55,000 to install the machine. The new machine will replace an older machine that is fully depreciated and will be sold for $125,000. The firm’s income tax rate is 40%. What is the initial outlay (IO) for the new machine? $1,525,000 $1,600,000 $1,675,000 $1,725,000

2. A new electric power generation plant is expected to cost $42,000,000 to complete. The revenues generated by the new plant are expected to be $3,875,000 per year, while operational expenses are estimated to be $2,000,000 per year. The plant will last 40 years, and the electric authority uses a 3% interest rate. Determine if the plant will be able to recover its investment using the following methods: a. IRR (show your solution for interpolation; use 5 decimal places for the interpolation procedure) b. Payback period

A tunnel to transport water initially cost $1,000,000 and has expected maintenance costs that will occur in a 6-year cycle as shown below, assume MARR is 5% per year. End of Year Maintenance $35,00 535,000 535,000 $45,000 S48,000 so0.00) Compute the Equivalent Annual Cost of the maintenance. Hint: Don't insert the negative sign Compute the Capitalized Cost? Hint: Don't insert the negative sign

H3. Show proper step by step calculation

1. CB Electronix needs to expand its plant. It is considering an alternative plan that will last indefinitely. The MARR is 15%. Please determine the capitalized cost of the alternative. Alternative: Expand by 20 000 square feet First cost = $2 000 000 Annual Maintenance costs = $10 000 per year starting in year 3 Periodic maintenance costs = $15 000 every 15 years, starting in 20 years

PROBLEM 1. New Project You must evaluate a proposal to buy a new milling machine. The base price is $108,000, and shipping and installation costs would add another $12,500. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $65,000. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The machine would require a $5,500 increase in working capital (increased inventory less increased accounts payable). There would be no effect on revenues, but pretax labor costs would decline by $44,000 per year. The marginal tax rate is 35%, and the WACC is 12%. Also, the firm spent $5,000 last year investigating the feasibility of using the machine. What are the project's annual net cash flows during Years 0 through 3?

A company must purchase a new machine to increase production. The machine will cost $50,000 to purchase. The following are the remaining cash flows of the machine and its probabilities. The machine is supposed to be used for 6 years and the MARR is 10%. Annual Cost Annual Revenue Calculate the Present Worth. Probability .2 .6 .2 .6 .4 Outcome $3,000 $4,500 $5,500 $35,000 $40,000

T1).

Management of Wildhorse, Inc., is considering switching to a new production technology. The cost of the required equipment will be $4,000,000. The discount rate is 11 percent. The cash flows that management expects the new technology to generate are as follows. Years 1-2 3-5 6-9 CF 0 $750,000 $1,450,000 a. Compute the payback and discounted payback periods for the project. (Round answers to 2 decimal places, e.g. 15.25.) The payback for the project is The NPV of the project is $ years, and the discounted payback period is b. What is the NPV for the project? Should the firm go ahead with the project? (Enter negative amounts using negative sign e.g. -45.25. Do not round discount factors. Round intermediate calculations to O decimal places, e.g. 1,525 and final answer to O decimal places, e.g. 5,125.) The IRR of the project is , and using the NPV rule the project should be c. What is the IRR, and what would be the decision based on the IRR? (Round answer to 3 decimal places, e.g.…