ne that affixes labels to bottles. The machine has a book value c years and no salvage value. A new, more efficient machine is a ve a 3-year useful life with no salvage value. The new machine ts from $520,000 to $410,000. me over the 3 years if Elmdale Company chooses to replace the
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- Provide answer in table format Xinhong Company is considering replacing one of its manufacturing machines. The machine has a book value of $43,000 and a remaining useful life of five years, at which time its salvage value will be zero. It has a current market value of $53,000. Variable manufacturing costs are $33,900 per year for this machine. Information on two alternative replacement machines follows. Alternative A Alternative B Cost $ 120,000 $ 119,000 Variable manufacturing costs per year 22,500 10,300 Calculate the total change in net income if Alternative A, B is adopted. Should Xinhong keep or replace its manufacturing machine? If the machine should be replaced, which alternative new machine should Xinhong purchase?Bonita company has a factory machine with a book value of $152,000 and a remaining useful life of 4years. A new machine is available at a cost of 252000 this Mach will have 4year useful life with no salvage value. The new machine will lower annual variable manufacturing cost from $600,000 to $503,000 Prepare an analysis that shows whether bonita should retain or replace the old machine. Keep equipment replace equipment net income increase (decrease) Variable cost New machine costQUESTION 3 Kobe Company has a factory machine with a book value of $90,000 and a remaining useful life of 5 years. It can be sold for $30,000. A new machine is available at a cost of $300,000. This machine will have a 5-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $600,000 to $500,000. In the table below, prepare an analysis showing whether the old machine should be retained or replaced. NET 4-YEAR RETAIN REPLACE INCOME EQUIPMENT EQUIPMENT INCREASE / (DECREASE) Variable manufacturing costs for 4 years: New machine cost Sale proceeds from old machine. Total What should be the decision of the company? Why? Justify your answer.
- Saved ework i Howell Petroleum is considering a new project that complements its existing business. The machine required for the project costs $3.93 million. The marketing department predicts that sales related to the project will be $2.63 million per year for the next four years, after which the market will cease to exist. The machine will be depreciated down to zero over its four-year economic life using the straight-line method. Cost of goods sold and operating expenses related to the project are predicted to be 30 percent of sales. The company also needs to add net working capital of $280,000 immediately. The additional net working capital will be recovered in full at the end of the project's life. The corporate tax rate is 23 percent. The required rate of return is 13 percent. What is the NPV for this project? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.) NPVEngineering Economy Compute the Future Worth. Compare the results. Don't use excel Two stamping machines are under consideration for purchase by a metal recycling company. The manual model will cost P1,250,000 to buy with an eight-year life and a P250,000 salvage value. Its annual operating costs will be P800,000. A computer-controlled model will cost P4,750,000 to buy and it will have a twelve-year life if upgraded at the end of year six for 750,000. Its terminal salvage value will be P1,150,000, with annual operating costs of P375,500 for labor and P125,000 for maintenance. The company's minimum attractive rate of return is 18%.PART 2 (RATE OF RETURN) ABC Company is trying to decide whether or not to automate their product packing process. The machine costs $200,000, has a useful life of 10 years and a salvage value $10,000. The machine costs $9000 per year to operate and maintain but will save the company $50,000 per year in labor costs. ABC Company has asked you to evaluate the economics of this purchase. (Assume their MARR is 14% per year).
- 2. Super Apparel wants to replace an old machine with a new one. The new machine would increase annual revenue by $200,000 and annual operating expenses by $80,000. The new machine would cost $400,000. The estimated useful life of the machine is 10 years with zero salvage value. i. Compute Accounting Rate of Return (ARR) of the machine using above information. ii. Should Super Apparel purchase the machine if management wants an Accounting Rate of Return of 19% on all capital investments? Hint: Use Average Income or Profit after deducting tax, depreciation, and operating expenses.Replacement project example: Suppose Mayco wants to replace an existing printer with a new high-speed copier. The existing printer was purchased 13 years ago at a cost of $16,000. The printer is being depreciated using straight line basis assuming a useful life of 18 years and no salvage value. If the existing printer is not replaced, it will have zero market value at the end of its useful life. The new high-speed copier can be purchased for $23,000 (including freight and installation). Over its 5-year life, it will reduce labor and raw materials usage sufficiently to cut annual operating costs from $18,000 to $9,000. This reduction in costs will cause before-tax profits to rise by an equal amount. It is estimated that the new copier can be sold for $2,400 at the end of five years; this is its estimated salvage value. The old printer's current market value is $4,576. If the new copier is acquired, the old printer will be sold to another company. The company's marginal…Replacement project example: Suppose Mayco wants to replace an existing printer with a new high-speed copier. The existing printer was purchased 13 years ago at a cost of $16,000. The printer is being depreciated using straight line basis assuming a useful life of 18 years and no salvage value. If the existing printer is not replaced, it will have zero market value at the end of its useful life. The new high-speed copier can be purchased for $23,000 (including freight and installation). Over its 5-year life, it will reduce labor and raw materials usage sufficiently to cut annual operating costs from $18,000 to $9,000. This reduction in costs will cause before-tax profits to rise by an equal amount. It is estimated that the new copier can be sold for $2,400 at the end of five years; this is its estimated salvage value. The old printer's current market value is $4,576. If the new copier is acquired, the old printer will be sold to another company. The company's marginal…
- i 4 ances Lopez Company is considering replacing one of its old manufacturing machines. The old machine has a book value of $47,000 and a remaining useful life of five years. It can be sold now for $57,000. Variable manufacturing costs are $50,000 per year for this old machine. Information on two alternative replacement machines follows. The expected useful life of each replacement machine is five years. Purchase price Variable manufacturing costs per year (a) Compute the income increase or decrease from replacing the old machine with Machine A (b) Compute the income increase or decrease from replacing the old machine with Machine B. (c) Should Lopez keep or replace its old machine? (d) if the machine should be replaced, which new machine should Lopez purchase? Req A Complete this question by entering your answers in the tabs below. Revenues Machine A: Keep or Replace Analysis Req B Compute the income increase or decrease from replacing the old machine with Machine A. (Amounts to be…Question 1 LTC Inc. is considering whether to sell an existing diecasting mould and then lease it back for 3 years. In this way, cash can be freed up to meet more intermediate needs. The mould brings in revenue of $20,000 yearly with variable cost staking 20% of revenue. The mould was bought 7 years ago for $500,000 with an estimated life of 10 years. It has been depreciated based on the straight-line method. The mould can be sold now for $100,000. Mitti Heavy Equipment Inc. has agreed to buy and then lease back the mould to LTC Inc. at $20,000 yearly for 3 years. The yearly lease payments are to be made in advance, that is, beginning of the lease period. LTC Inc. still enjoys tax holidays granted by the country's economic bureau. Its cost of funds is at 5% (a) Analyse if LTC Inc. should go ahead with the sale-and-lease back plan.(b) LTC Inc. now learns that it can junk the mould as scrap metal for $88,000 payable immediately. Hence, production shall stop as LTC Inc. will relocate to…A machine can be purchased at t=0 for $20,000. The estimated life is 15 years, with an estimated salvage value of zero at that time. The average annual operating and maintenance expenses are expected to be $5,500. If MARR =2.54%, what must the average annual revenues be in order to be indifferent between purchasing the machine and doing nothing? $7,120 $3,880 $6,969 @$7,213 $7,175