Consolidated Aluminum is considering the purchase of a new machine that will cost $308,000 and provide the following cash flows over the next five years: $88,000, 92,000, $91,000, $72,000, and $71,000. What is the internal rate of return (IRR) for this piece of equipment? Use the Present Value tables in Time Value of Money Appendix of the book or use Excel to calculate the answer. Round to 2 decimal places. O Cannot be determined from the information provided. O 11.30 % O 11.28% O 11.00%

Consolidated Aluminum is considering the purchase of a new machine that will cost $308,000 and provide the following cash flows over the next five years: $88,000, 92,000, $91,000, $72,000, and $71,000. What is the internal rate of return (IRR) for this piece of equipment? Use the Present Value tables in Time Value of Money Appendix of the book or use Excel to calculate the answer. Round to 2 decimal places. O Cannot be determined from the information provided. O 11.30 % O 11.28% O 11.00%

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

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A Lathe machine at manufacturing factory undergoes a major overhaul now, its output can be increased the system performance which translates into additional cash flow of $35,000.00 at the end of each year for five years. If interest is 1⁄2 % per year, determine how much can we afford to invest to overhaul this machine? Include the cash flow diagram in your calculation.
Solve for the missing information pertaining to each investment proposal. Using the tables in Exhibit 26–3 determine the present value of the following cash flows, discounted at an annual rate of 15 percent. $40,000 to be received 20 years from today. $24,000 to be received annually for 10 years. $16,000 to be received annually for five years, with an additional $20,000 salvage value expected at the end of the fifth year. $30,000 to be received annually for the first three years, followed by $20,000 received annually for the next two years (total of five years in which cash is received)
Salalah Methanol Co. has bought some new machinery at a cost of 1250000 OMR. The impact of the new machinery will be felt in the additional annual cash flows of 375000 OMR over the next five years. What is the payback period for this project? If their acceptance period is three years, will this project be accepted? Select one: O a. None of these O b. 3.84 years, no О с. 2.82 years, yes O d. 2.53 years, yes О е. 3.33 yеars, no
Foster Company wants to buy a special automated machine to replace an existing manual system. The initial outlay (cost) is $3,500,000. The new machine will last 5 years with no expected salvage value. The expected annual cash flows are as follows: Year Cash Inflow Cash Outflow 0 $ - $ 3,500,000.00 1 $ 3,900,000.00 $ 3,000,000.00 2 $ 3,900,000.00 $ 3,000,000.00 3 $ 3,900,000.00 $ 3,000,000.00 4 $ 3,900,000.00 $ 3,000,000.00 5 $ 3,900,000.00 $ 3,000,000.00 Foster has a cost of capital equal to 10%. 1. Calculate the payback period. Payback period: years
Kanye Company is evaluating the purchase of a rebuilt spot-welding machine to be used in the manufacture of a new product. The machine will cost $166,000, has an estimated useful life of 7 years, a salvage value of zero, and will increase net annual cash flows by $32,982. Click here to view the factor table. What is its approximate internal rate of return? (Round answer to O decimal place, e.g. 13%.) Internal rate of return %
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A firm is considering an investment in new equipment that has the following information. Purchase Cost: $132,793 Salvage Value in five years time: $18,337 Useful life is 5 years and depreciation is determined using the straightline method. Expected increased annual cash flows are $52,651 What is the payback period in years? Calculate to 2 decimal places
A company is planning to invest $40,000 on a milling machine at year 0. The net cash flows generated from year 1 to year 6 is: $8000, and $10,000 equally in the following 5 years. The machine needs to be maintained at an annual cost of $2000. The machine has a 6-year service life and can be resold at the price at $6000 then. The MARR is 12%. (a) Draw the cash flow diagram. b) Determine the equivalent present and annual revenue of the machine.c) Determine the annual cost of owning the machine. d) Determine if this is a good investment using AE.
Bartlett Car Wash Company is considering the purchase of a new facility. It would allow Bartlett to increase its net income by $96,579 per year. Other information about this proposed project follows Initial investment $468,810 9 years Selvage value $ 47,000 Assume straight line depreciation method is used. Required: 1. Calculate the accounting rate of return for Bartlett Note: Round your percentage answer to 2 decimal places. 2. Calculate the payback period for Bartlett Note: Round your answer to 2 decimal places. 1. Accounting Rate of Retu 2. Payback Period years
The production department is proposing the purchase of an automatic insertion machine. It has identified 3 machines, each with an estimated life of 10 years. Which machine offers the best internal rate of return? Annual net cash flows Average investment Machine A only Machine B only Machine C only O Machines A and B Machine A $ 50,000 250,000 Machine B $ 40,000 300,000 Machine $ 75,000 500,000

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