Geo-Star Manufacturing Company is considering a new investment in a punch-press machine that will cost $96,000 and has an annual maintenance cost of $10,800. There is also an additional overhauling cost of $23,000for the equipment once every four years. Assuming that this equipment will last infinitely under these conditions, what is the capitalized equivalent cost of this investment at an interest rate of 15%?Click the icon to view the interest factors for discrete compounding when i=15% per year.The capitalized equivalent cost of this investment is $ thousand. (Round to the nearest whole number.)More InfoSingle PaymentCompoundAmountFactorEqual Payment SeriesSinking PresentFundCompoundAmountFactor(F/A, i, N)CapitalRecoveryWorthFactorFactorFactorN(F/P, i, N)(A/F, i, N)(P/A, i, N)(A/P, i, N)11.15001.00001.00000.86961.150021.32252.15000.46511.62570.615131.52093.47250.28802.28320.438041.74904.99340.20032.85500.350352.01146.74240.14833.35220.298362.31318.75370.11423.78450.264272.680011.06680.09044.16040.240483.059013.72680.07294.48730.222993.517916.78580.05964.77160.2098104.045620.30370.04935.01880.1993PresentWorthFactor(P/F, i, N)0.86980.75610.65750.57180.49720.43230.37590.32690.28430.2472

Geo-Star Manufacturing Company is considering a new investment in a punch-press machine that will cost $98,000 and has an annual maintenance cost of $10,800. There is also an additional overhauling cost of $23,000 for the equipment once every four years. Assuming that this equipment will last infinitely under these conditions, what is the capitalized equivalent cost of this investment at an interest rate of 15%? Click the icon to view the interest factors for discrete compounding when /=15% per year.

Geo-Star Manufacturing Company is considering a new investment in a punch-press machine that will cost $98,000 and has an annual maintenance cost of $10,800. There is also an additional overhauling cost of $23,000 for the equipment once every four years. Assuming that this equipment will last infinitely under these conditions, what is the capitalized equivalent cost of this investment at an interest rate of 15%? Click the icon to view the interest factors for discrete compounding when /=15% per year.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 5PA: Falkland, Inc., is considering the purchase of a patent that has a cost of $50,000 and an estimated...

See similar textbooks

Similar questions

It is estimated that a certain piece of equipment can save$19,000per year in labor and materials costs. The equipment has an expected life ofsixyears and no market value. If the company must earn a20%annual return on such investments, how much could be justified now for the purchase of this piece ofequipment?...Click the icon to view the interest and annuity table for discrete compounding when i=20% per year. The company can justify spending up to $ for this piece of equipment. (Round to the nearest cent.
CircleCo is considering the purchase of new construction crane, which would cost approximately $400,000 initially. produce cash flows of $4,500 per month for the next 8 years and has a resale value of $50,000 in assets at the end of 8 years. i With an interest rate of 4.5% what is this project's net present value? li) What is this project's Internal Rate of Return? ili) How do you use the IRR to determine if a project should be accepted?
Golden Country Homes are to install a street lighting that costs $120,000. Annualmaintenance costs are expected to be $65,000 for the first 20 years and $85,000 foreach year thereafter. The lighting will be needed for an indefinitely long period oftime. With an interest rate of 10% per year, what is the capitalized cost of thisproject?
The required investment cost of a new, large shopping center is $52 million. The salvage value of the project is estimated to be $18 rmillon (the value of the land) The projects life is 18 years and the annual operating expenses ar estimated to be $13 million. The MARR for such projects is 22% per year. What must the minimum annual revenue be to make the shopping center a worthwhile venture? Click the icon to view the interest and annuity table for discrete compounding when the MARR is 22% per year To make the shopping center a worthwhile venture, the minimum annual revenue must be S milion per year (Round to three decimal places)
CAGELCO is considering the purchase of a new turbo generator set that will last 5 years with a cost of P 500, 000. Maintenancewill cost P 6,000 for the first year, decreasing by P 1, 000each year to P2,000 the 5thyear. If the interest rate is 8% per year, compounded annually, how much money should the company set aside for this machine? show your solution
Consider palletizer at a bottling plant that has a first cost of $134,338, has operating and maintenance costs of $17.980 per year, and an estimated net salvage value of $37,509 at the end of 30 years. Assume an interest rate of 8%. What is the future worth of this project? Enter your answer as follow: 123456.78
The Geo-Star Manufacturing Company is considering a new investment in a punch-press machinethat will cost $100,000 and has an annual maintenance cost of $10,000. There is also an additionaloverhauling cost of $20,000 for the equipment onceevery four years. Assuming that this equipment willlast infinitely under these conditions, what is thecapitalized equivalent cost of this investment at aninterest rate of 10%?
Tovar Toasters is considering an equipment investment that will cost $930,000. Projected net cash inflows over the equipment's three-year life are as follows: Year 1: $488,000; Year 2: $386,000; and Year 3: $304,000. Tovar wants to know the equipment's IRR. (Click the icon to view the present value annuity table.) (Click the icon to view the present value factor table.) (Click the icon to view the future value annuity table.) Requirement (Click the icon to view the future value factor table.) Use trial and error to find the IRR within a 2% range. (Hint: Use Tovar's hurdle rate of 12% to begin the trial-and-error process.) Use a business calculator or spreadsheet to compute the exact IRR. Begin by calculating the NPV at three rates: 12%, 14%, and 16%. (Round your answers to the nearest whole dollar. Use parentheses or a minus sign for negative net present values.) The NPV at 12% is $ 29,874 The NPV at 14% is $ 10 The NPV at 16% is $(27,682) The IRR is somewhere between 14% and 16%, but…
(Net present value calculation) Big Steve's, makers of swizzle sticks, is considering the purchase of a new plastic stamping machine. This investment requires an initial outlay of $105,000 and will K cash inflows of per year 8 years a. What is the project's NPV using a discount rate of 8 percent? Should the project be accepted? Why or why not? b. What is the projects NPV using a discount rate of 14 percent? Should the project be accepted? Why of why not? c. What is this project's internal rate of retum? Should the project be accepted? Why or why not? com
Cute Camel Lumber Company is considering a three-year project that has a weighted average cost of capital of 10% and a net present value (NPV) of $85,647. Cute Camel Lumber Company can replicate this project indefinitely. What is the equivalent annual annuity (EAA) for this project? Do the projects need to be independent or mutually exlusive for an analyst to use the EAA approach to evaluate projects with unequal lives?
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. 3.84 years, no O b. 2.82 years, yes O c. 2.53 years, yes O d. 3.33 years, no O e. None of these
In an investment project, the initial cost of investment is $400,000. The annual revenues are expected to be S 195,000 over the 6-years life of the machine, and the annual expenses will be $100,000. The market value of the machine after 6 years is $50,000. (Note that, the project is already accepted with a MARR =10%) a) What is the simple payback period of the investment? b) What is the internal rate of return of the investment?