Laredo Laminates is considering the purchase of new production technology equipment requiring an initial $1,200,000 investment and having an expected ten year life. At the end of its life, the equipment would have no salvage value. By installing the new equipment, the firm’s annual labor and quality costs would decline by $600,000 a. Compute the payback period for this equipment.  b. Assume instead that the annual cost savings would vary according to the following schedule: Years Annual Cost Savings 1–5 $350,000 6–10 500,000   Note: Round answer to two decimal places.  Compute the payback period under the revised circumstances.

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A manufacturer of automated optical inspection devices is deciding on a project to increase the productivity of the manufacturing processes. The estimated costs for the two feasible alternatives being compared are shown below. Use the internal rate of return (IRR) method to determine which alternative should be selected if the analysis period is 8 years and the company's MARR is 4% per year. Alternative M N Initial costs $30,000 $45,000 Net annual cash flow $4,500 $7,000 Life in years 8 8 (a) IRR of base alternative = (b) IRR of incremental cash flow = (c) Choose Alternative

Replacement Analysis Although the Chen Company's milling machine is old, it is still in relatively good working order and would last for another 10 years. It is inefficient compared to modern standards, though, and so the company is considering replacing it. The new milling machine, at a cost of $104,000 delivered and installed, would also last for 10 years and would produce after-tax cash flows (labor savings and depreciation tax savings) of $18,900 per year. It would have zero salvage value at the end of its life. The project cost of capital is 9%, and its marginal tax rate is 25%. Should Chen buy the new machine? Do not round intermediate calculations. Round your answer to the nearest cent. Negative value, if any, should be indicated by a minus sign. NPV: $ 1028.71 Chen should purchase the new machine.

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Andes, Inc. is considering the replacement of its manual material handling equipment with autonomous vehicles at a net initial cost of $12 million. The expected annual savings in operating costs are as shown below. MARR is 10% per year compounded annually. End of Year 1 2 3 4 5 6 3 4.5 4.5 Annual savings (millions) | 2.25 | 2.25 | 3 Compute the simple payback period for this replacement option. Determine the discounted payback period (DPBP). It is enough if you determine in which year the DPBP falls.

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Click to see additional instructions A company is considering an investment in a new product with a 10-year horizon (product will be sold for 10 years). The upfront investment is $5 million and it is assumed to depreciate on a straight-line basis for 10 years, with no residual value. Fixed costs are assumed to be $550,000 per year. The company estimates variable cost per unit (v) to be $120 and expects to sell each unit for $425. There are no taxes and the required rate of return is 17% per year. Assume that the investment would occur today, and all future cash-flows will occur at the end of each year beginning in one year. What is the annual financial breakeven quantity? [Keep at least 3 decimals for intermediate answers. Round your final answer UP to the next highest WHOLE unit. (ie 421.2 would be rounded to 422)]

es You are considering a new product launch. The project will cost $2,225,000, have a four- year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 280 units per year; price per unit will be $19,700, variable cost per unit will be $13,250, and fixed costs will be $670,000 per year. The required return on the project is 12 percent, and the relevant tax rate is 21 percent. a. Based on your experience, you think the unit sales, variable cost, and fixed cost projections given here are probably accurate to within ±10 percent. What are the upper and lower bounds for these projections? What is the base-case NPV? What are the best-case and worst-case scenarios? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations. Round your NPV answers to 2 decimal places, e.g., 32.16. Round your other answers to the nearest whole number, e.g. 32.) Scenario Unit Sales Variable Cost Fixed Costs NPV Base 280 $ 13,250 $ 670,000…