Office Automation Inc. must choose between two copiers, XX40 and RH45. XX40 costs less than RH45, but its economic life is shorter.The costs and maintenance expenses of these two copiers are given as follows. These cash flows are expressed in real terms:CopierXX40RH45Year 0$ 9001,400Year 1$ 12095Year 2$ 12095Year 3Year 4Year 5$ 12095$ 95$ 95The inflation rate is 5 percent and the nominal discount rate is 14 percent. Assume that revenues are the same regardless of thecopier, and that whichever copier the company chooses, it will buy the model forever.a. Calculate the value of EAC for XX40 and RH45 copier? (Input all amounts as positive values. Do not round intermediatecalculations. Round the final answers to 2 decimal places. Omit $ sign in your response.)CopierXX40EAC$ -955.08 ⭑RH45$-338.82b. Which copier should the company choose? Ignore taxes and depreciation.XX40RH45

EAC is the uniform equivalent annual cost which includes the cost of ownership and cost of…

Answered: Office Automation Inc. must choose…

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

Problem 1PS

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Use the following information for the Quick Study below. (Algo) [The following information applies to the questions displayed below.] Following is information on an investment in a manufacturing machine. The machine has zero salvage value. The company requires a 6% return from its investments. Initial investment Net cash flows: Year 1 Year 2 Year 3 Year 1 Year 2 Year 3 QS 24-19 (Algo) Net present value with unequal cash flows LO P3 Compute this machine's net present value. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round all present value factors to 4 decimal places. Round present value amounts to the nearest dollar.) Totals Initial investment Net present value Net Cash Flow $ $ $ (240,000) 195,000 90,000 103,000 388,000 195,000 90,000 103,000 Present Value Factor Present Value of Net Cash Flows $ $ 0 0
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A company needs a 33 tonnage refrigeration system. Knowing that a 20 tonnage similar refrigeration system only cost $100,000 15 years ago when the approximate cost index was 150, and that the cost index now is 370. The cost-capacity factor for a refrigeration system is 0.53. 1) estimate the required cost for the 33 tonnage refrigeration system in current year. 2) If borrowing the amount of required money is from a bank in current year and the bank interested rate is 6% per year, find the equivalent value (FW) as a single payment payed back to the bank in 15 years.
(Ignore income taxes in this problem.) Your Company has a telephone system that is in poor condition. The system must be either overhauled or replaced with a new system. The following data have been gathered concerning these two alternatives: Present System Proposed New System Purchase cost when new $100,000 $110,000 Accumulated depreciation, 90,000 Overhaul cost needed now 80,000 Working capital required 50,000 Annual cash operating costs 30,000 20,000 Salvage value now of old system 10,000 Salvage value in 8 years 2,000 15,000 Your Company uses a 12% discount rate and the total cost approach to capital budgeting analysis. Both alternatives are expected to have a useful life of eight years. What is the net present value of the new system alternative? Enter your answer without dollar signs. If the NPV is negative enter with a minus sign in front.
PLEASE HELP ASAP!!! a) calculate the equivalent amount P at the present time. b) calculate the single-payment equivalent to F at n=5 c) Calculate the equivalent equal-payment swries cash flow A that runs from n=1 to n=5 Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
. Net Cash Flows and NPVs for different discount rate for projects S and L are given below Net Cash Flows ($) Discount Rate (%) NPVS NPVL Year (t) Project S Project L 0% $800 $1100 0 $(3000) $(3000) 5 554.32 1 1500 400 10 161.33 2 1200 900 15 (90.74) (259.24) 3 800 1300 20 (309.03) (565.97) 4 300 1500 h) If projects are independent (not mutually exclusive), which project(s) would you accept? i) at 5% ii) at 15%
A potential new project involves an up-front (year 0) increase in inventories of $760. In your cash flow table, the cash flow impact of that change in year 0 only should be $__________. Do not round any intermediate work, but round your final answer to 2 decimal places (ex: 12.34567 should be entered as 12.35). Do not enter the $ sign. Include a negative sign if your answer is negative.
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There are two different types of machines that produce the same job with the same quality. All the details about these machines are given below.Draw cash flow charts and make calculations using the present value method.Make your choice and write why.
Informics, Inc. is building fifth-generation software. The software quality initiatives will cost $26,800, and $37,000 is for maintenance of quality initiatives. The revenues from the initiatives: What is the cost of software quality? What is the software quality net present value? What is the return on software quality? Year Cash Flow O ($22,500) 1 51,000 2 96,250 3 96,250 4 96,250 5 96,250
The Pan American Bottling Company is considering the purchase of a new machine that would increase the speed of bottling and save money. The net cost of this machine is $57,000. The annual cash flows have the following projections. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. Year 1 2 3 4 5 Cash Flow $ 22,000 24,000 26,000 32,000 14,000 a. If the cost of capital is 11 percent, what is the net present value of selecting a new machine? Note: Do not round intermediate calculations and round your final answer to 2 decimal places. Net present value b. What is the internal rate of return? Note: Do not round intermediate calculations, Enter your answer as a percent rounded to 2 decimal places. Intemal rate of return %
Porcelain Computer Company is considered purchasing two different types of servers. Server A will generate net cash inflows of $26,000 per year and have zero residual value. Server's A's estimated useful life is three years, and it costs $42,000. Server B will generate net cash inflows of $27,000 in year 1, $14,000 in year 2, and $1,000 in year 3. Server B has a $4,000 residual value and an estimated useful life of three years. Server B also costs $42,000. Porcelain Computer Company's required rate of return is 12%. Calculate the accounting rate of return (ARR) for both server investments. Server A __________ /______= ____ % Server B __________ /______= ____ % Calculate the net present value for both server investments. Server A= $____ Server B= $____ Calculate the internet rate of return (IRR) for both server investments. Server A= ___% Server B=_____%

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