! Required information The two machines shown are being considered for a chip manufacturing operation. Assume the MARR is a real return of 12% per year and that the inflation rate is 4.3% per year. Machine A B First Cost, $ -152,000 -900,000 M&O, $ per year -70,000 -5,000 Salvage Value, $ 40,000 200,000 Life, years 5 00 Which machine should be selected on the basis of an annual worth analysis if the estimates are in future dollars? What is the annual worth of the selected alternative? Select machine A The annual worth of the alternative is $
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- Gardner Denver Company is considering the purchase of a new piece of factory equipment that will cost $420,000 and will generate $95,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further Instructions on internal rate of return in Excel, see Appendix C.The two machines shown are being considered for a chip manufacturing operation. Assume the MARR is a real return of 12% per year and that the inflation rate is 7% per year. Which machine should be selected on the basis of an annual worth analysis if the estimates are in (a) constant-value dollars, and (b) future dollars? Solve by hand and using a spreadsheet. Machine A B First cost, $ −150,000 −1,025,000 M&O, $ per year −70,000 −5,000 Salvage value, $ 40,000 200,000 Life, years 5 ∞REQUIRED Study the information given below and calculate the following: Payback period (in years, months and days) Net Present Value Internal Rate of Return (expressed to two decimal places). (Note: Your answer must include the interpolation.) information Eva Limited is considering the purchase of a machine. The company desires a minimum required rate of return of 12%. The machine will cost R2 200 000 plus installation costs of R200 000 and is expected to have a useful life of six years. It is anticipated that the machine will have a salvage value of R100 000. The machine is expected to increase revenues by R800 000 per year but will require the employment of two new machine operators at R100 000 per year for each operator, and it will also require maintenance and repairs averaging R50 000 per year. Depreciation is estimated to be R400 000 per year.
- An operation manager expects that the new machine will generate the following streams of income: Year 1- Ᵽ 13, 240.25; Year 2 - Ᵽ 15, 780; Year 3 - Ᵽ18, 990.95; Year 4 - Ᵽ21, 500.50; Year 5 - Ᵽ25,000.00. What is the present value of these future payments if the assumed interest rate is 3.7% ? If a new technology can reduce the future cost of production in 6 years at the following rate: Ᵽ8,550, Ᵽ10,200, Ᵽ13,600, Ᵽ 15,000, Ᵽ12,500, Ᵽ9000 what is present value of the future cost of production assuming that the interest is 6.33%? If the cost of the new technology in Item No. 2 is Ᵽ 52,435.60, what is the net present value? Should you buy or not the new technology?Oasis Entertainment Systems is setting up to manufacture a new line of video game consoles. The cost of the manufacturing equipment is OMR 1750000. Expected cash flows over the next four years are OMR 725000, OMR 850000, OMR 1200000, and OMR 1500000. Given the company's required rate of return of 15 percent, what is the NPV of this project? Select one: a. 3122607.27 OMR b. 4669806.27 OMR c. None of these d. 2919806.27 OMR e. 1169806.27 OMRYou have been asked to evaluate two alternatives, X and Y, that may increase plant capacity for manufacturing high-pressure hydraulic hoses. The parameters associated with each alternative have been estimated. Which one should be selected on the basis of a present worth comparison at an interest rate of 14% per year? Why is yours the correct choice? X $-40,000 $-12000 $1,500 5 years The present worth of alternative X is $ Alternative (Click to select) is selected by the company. Alternative First Cost Maintenance cost, per Year Salvage Value Life Y $-60,000 $-2000 $2,500 5 years and that of alternative Y is $
- One oil company is considering 5 pipe sizes for a new pipeline. The costs for each of them are given below. Assuming that all the pipelines will last 15 years and that the company's minimum acceptable rate of return (MAAR) is 18% per year, determine which pipe size can be used based on A) present value method and B) incremental rate of return method. Tube size in mm 140 160 200 240 300 Initial inversion $9180 $10510 $13180 $15850 $30530 Installation Cost $600 $800 $1400 $1500 $2000 Annual Cost Opperation $6000 $5800 $5200 $4900 $4800Required information [The following information applies to the questions displayed below.] A company is considering investing in a new machine that requires a cash payment of $50,939 today. The machine will generate annual cash flows of $21,208 for the next three years. What is the internal rate of return if the company buys this machine? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)Your company is considering undertaking a project to expand an existing product line. The required rate of return on the project is 8% and the maximum allowable payback period is 3 years. Time 0 1 2 3 4 5 6 Cash Flow $(10,000) $2,400 $4,800 $3,200 $3,200 $2,800 $2,400 Questions Evaluate the project using the following method. should the project be accepted or rejected? Payback period
- 0.5.10 A company that manufactures magnetic flow meters expects to undertake a project that will have the cash flows estimated. At an interest rate of 10% per year, what is the equivalent annual cost of the project? Find the AW value using (a) tabulated factors, and (b) a spreadsheet. Table Summary: A table divided into two columns shows the items to consider for obtaining the annual cost of the project in the first column, and the numeric value of the items in the second column. First cost, $ -800,000 Equipment replacement cost in year 2, $-300,000 Annual operating cost, $/year Salvage value, $ Life, years -950,000 250,000 4Required information [The following information applies to the questions displayed below.] A company is considering investing in a new machine that requires a cash payment of $47,947 today. The machine will generate annual cash flows of $21,000 for the next three years. What is the internal rate of return if the company buys this machine? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Amount Invested Internal Rate of Return Annual Net Cash Flow % < Prev Present Value Factor 5 of 5 HH Next G OGiven the initial investment in a factory processing equipment as Ghc500,037. Let the opportunity cost of capital for the industry be 10% p.a. Assuming that the equipment is capable of generating an after-tax returns of Ghc115,000 for the first 5 years and Ghc65000 for the 6th year and Ghc53400 for the 7th year. a. Find the Net Present Value (NPV) b. Determine the Internal Rate of Return c. Identify three ways in which the Net Present value is superior to the Internal Rate of