c) Based on the Minimum Accept
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Question 2 (input refer to picture attached)
a) Based on Return of Investment (
b) From Life Cycle Cost (LCC) Analysis, would you Brand X or Brand Y crane? What is your recommendation and why?
c) Based on the Minimum Acceptable
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- In a cost center, the manager has responsibility and authority for making decisions that affect a. costs b. investments in assets c. both costs and revenues d. revenues Keating Co. is considering disposing of equipment with a cost of $68,000 and accumulated depreciation of $47,600. Keating Co. can sell the equipment through a broker for $27,000 less 8% commission. Alternatively, Gunner Co. has offered to lease the equipment for five years for a total of $46,000. Keating will incur repair, insurance, and property tax expenses estimated at $10,000 over the five-year period. At lease-end, the equipment is expected to have no residual value. The net differential income from the lease alternative is a. $11,160 b. $7,812 c. $16,740 d. $13,392 If sales are $828,000, variable costs are 68% of sales, and operating income is $278,000, what is the contribution margin ratio? a. 64% b. 36% c. 68% d. 32%An automobile-manufacturing company isconsidering purchasing an industrial robot to do spotwelding, which is currently done by skilled labor.The initial cost of the robot is $210,000, and theannual labor savings are projected to be $150,000.If purchased, the robot will be depreciated underMACRS as a five-year recovery property. The robotwill be used for seven years, at the end of which time,the firm expects to sell it for $60,000. The company’s marginal tax rate is 35% over the project period.Determine the net after-tax cash flows for each periodover the project life. Assume MARR = 15%A pipeline contractor can purchase a needed truck for $44,000. Its estimated life is 6 years, and it has no salvage value. Maintenance is estimated to be $2,100 per year. Operating expense is $60 per day. The contractor can hire a similar unit for $130 per day. MARR is 7%. Click here to access the TVM Factor Table Calculator Part a K Part b If the truck is needed for 180 days/year, should the contrac buy the truck or hire the similar unit? Determine the dollar amount of annual savings generated by using the preferred alternative rather than the nonpreferred. Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is ±5. Save for Later Attempts: 0 of 3 used Submit Answer
- Your company is considering the purchase of a new 623K Wheel Tractor-Scraper. Use the following information to calculate the hourly owning costs, hourly operating costs, and total owning and operating costs. - Delivered price (with tires): $420,000 - Cost of Tires: $30,000 and their life is determined by the average operation in zone B. - Salvage value is zero - the equipment is new and it is anticipated to be used for 5 years, until end of its service life. - Anticipated operating hours per year: 2,000 hrs/yr - Simple interest rate for purchase loan: 12% - Annual cost of Insurance: $5,500 (See optional method) - Property tax rate: 2% - Fuel use will be average value in medium range - Cost of fuel: $3.10 per gallon - Hourly Maintenance Cost: $5.00 per hour - Repair cost: $11.00 per hour - Operator cost (with fringes): $75 per hour - No undercarriage or special wear items costs…Cisco Systems is purchasing a new bar code - scanning device for its service center in San Francisco. The table on the right lists the relevant initial costs for this purchase. The service life of the system is 4 years and its salvage value for depreciation purposes is expected to be about 23% of the hardware cost. a. What is the cost basis of the device? b. What are the annual depreciations of the device if (i) the SL method is used? (ii) the 150% DB method is used? (iii) the 200% DB method is used? c. Calculate the book values of the device at the end of 4 years using all the methods above. Answers: (Round to the nearest dollar) (a) The cost basis of the device is $ (b) Annual depreciaitions and book values: (Round to the nearest dollar) Year 1 2 3 4 Book values at end of year 4 SL 69 69 69 69 69 150% DB 69 $ $ 200% DB 69 69 69 12 Cost Item Hardware Training Installation Cost $160,000 $16,000 $17,000Your company decided to offer product delivery service and would need a truck for the delivery. You are evaluating the following two options. Option 1: Your company can lease a truck at a pretax cost of $27,000 per year. Option 2: Your company can buy a truck at a cost of $84,000, with annual pretax maintenance expenses of $14,000. The truck will depreciate to zero on a straight-line basis. The truck has a 4 years life and will have a salvage value of $18,000 at the end of its life. If the tax rate is 35% and the discount rate is 10%, which option would you prefer? (Hint: compute the equivalent annual cost (EAC).)
- Mwasalat Company wants to renovate one of its existing buses at cost of OMR 200,000 and the Company will incur a repair cost of OMR 20,000 at the end of 3rd year from now. If these costs are incurred, the bus will be useful for 6 years. After a 6-year period, it will be sold at a salvage value of OMR 30,000. The total annual revenues of the bus will be OMR 260,000 and the total cost to operate the bus will be OMR 170,000 per year. Alternatively, Mwasalat Company can purchase a new bus for OMR 190,000. The new bus will require some repairs at the end of the 6-year period at a cost of OMR15,000. Its salvage value will be OMR 40,000 after its useful life of 6 years. The total annual revenues of the new bus will be OMR 220,000 and its operating cost will be OMR 130,000 per year. The company’s required rate of return is 15% before taxes. A)Should Mwasalat Company renovate the old bus or purchase a new bus? Justify your answer. B)Would the above decision of Mwasalat Company will change if…Cisco Systems is purchasing a new bar code scanning device for its service center in San Francisco. The table on the right lists the relevant initial costs for this purchase. The service life of the system is 4 years and its salvage value for depreciation purposes is expected to be about 22% of the hardware cost. a. What is the cost basis of the device? b. What are the annual depreciations of the device if (i) the SL method is used? (ii) the 150% DB method is used? (iii) the 200% DB method is used? c. Calculate the book values of the device at the end of 4 years using all the methods above. Answers: (a) The cost basis of the device is $ (Round to the nearest dollar) (b) Annual depreciaitions and book values: (Round to the nearest dollar) 200% DB Year 1 2 3 4 Book values at end of year 4 SL 150% DB (...) 0 Cost Item Hardware Training Installation Cost $165,000 $15,000 $15,000Cisco Systems is purchasing a new bar code scanning device for its service center in San Francisco. The table on the right lists the relevant initial costs for this purchase. The service life of the system is 4 years and its salvage value for depreciation purposes is expected to be about 25% of the hardware cost. a. What is the cost basis of the device? b. What are the annual depreciations of the device if (i) the SL method is used? (ii) the 150% DB method is used? (iii) the 200% DB method is used? c. Calculate the book values of the device at the end of 4 years using all the methods above. Answers: (a) The cost basis of the device is (Round to the nearest dollar) (b) Annual depreciaitions and book values: (Round to the nearest dollar) Year 1 2 3 4 Book values at end of year 4 SL $ 150% DB $ 200% DB $ $ C Cost Item Hardware Training Installation Cost $165,000 $16,000 $14,000
- Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $491,000 cost with an expected four-year life and a $20,000 salvage value Additional annual information for this new product line follows PV of $. EX of St. PVA of Stand EVA of $ (Use appropriate factors) from the tables provided) Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery 1. Determine income and net cash flow for each year of this machine's life. 2. Compute this machine's payback period, assuming that cash flows occur evenly throughout each year 3. Compute net present value for this machine using a discount rate of 7% Complete this question by entering your answers in the tabs below. Required 1 Required 2 year 4 Required 3 Compute net present value for this machine using a discount rate of 7%. (Do not round intermediate calculations. Negative amounts should be entered with a minus sign.…The truck's base price is $600,000. Due to the technical complexity of the vehicle, the company will have to pay $1,000 to train a "driver" before the truck can be put into operation. Assume the truck falls into the MACRS 5-year class. If purchased for this pilot project, the company expects to use the truck for two years and then sell it at the end of the second year. The expected market value of the truck at the end of the second year is $310,000. Use of the truck will require an increase in inventory of $4,000 and accounts payable are expected to increase by $3,000. The truck is expected to increase the firm's revenue by $145,000 per year and it is expected to increase operating expenses by $75,000 per year. Last month a consultant was paid $2,000 to do a similar analysis and recommended that the truck be purchased, the firm has hired you for a second opinion. The firm's marginal tax rate is 25 percent and the cost of capital is 10 percent. 5-Year MACRS RATES Year 1 Year 2 Year 3…You are hired as an analyst for Engro Corporation. During your first assignment, you are asked to perform a buy versus lease analysis on a newly developed machine. The machine cost Rs. 1,200,000 and if Engro decide to purchase it, a term loan can be obtained at a cost of 10%. The amount of the loan will be amortized in 4-year machine life (with the payments made at the end of each year). This is the special purpose machine and falls into MACRS 3-year class for depreciation purpose. The depreciation rates for this machine are 33%,45%,15%, and 7% for the next four years, respectively. The purchase of the machine will result in a maintenance cost of Rs. 25,000 payable at the beginning of each year. The residual salvage value of the machine is estimated to be Rs. 125,000 after its useful life of 4-years. Because of rapid changes in technology and uncertainty around residual value, a useful alternate is to arrange this machine through leasing. Orix leasing company has shown interest to give…
