Sams pays a delivery firm to distribute products. Delivery revenues are 30000 per year. he can buy a truck for 12500 that will be adequate for the next 3 years. operating and maintenance costs are 20000 per year. at the end of 3 years the salvage of the truck is 2500. the Marr is 20% per year. what is the annual worth of the investment

Sams pays a delivery firm to distribute products. Delivery revenues are 30000 per year. he can buy a truck for 12500 that will be adequate for the next 3 years. operating and maintenance costs are 20000 per year. at the end of 3 years the salvage of the truck is 2500. the Marr is 20% per year. what is the annual worth of the investment

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 22P

See similar textbooks

Similar questions

If a copy center is considering the purchase of a new copy machine with an initial investment cost of $150,000 and the center expects an annual net cash flow of $20,000 per year, what is the payback period?
Bouvier Restaurant is considering an investment in a grill that costs $140,000, and will produce annual net cash flows of $21,950 for 8 years. The required rate of return is 6%. Compute the net present value of this investment to determine whether Bouvier should invest in the grill.
Conestoga Plumbing plans to invest in a new pump that is anticipated to provide annual savings for 10 years of $50,000. The pump can be sold at the end of the period for $100,000. What is the present value of the investment in the pump at a 9% interest rate given that savings are realized at year end?
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.
Falkland, Inc., is considering the purchase of a patent that has a cost of $50,000 and an estimated revenue producing life of 4 years. Falkland has a cost of capital of 8%. The patent is expected to generate the following amounts of annual income and cash flows: A. What is the NPV of the investment? B. What happens if the required rate of return increases?
A grocery store is considering the purchase of a new refrigeration unit with an Initial Investment of $412,000, and the store expects a return of $100,000 in year one, $72000 in years two and three, $65,000 in years four and five, and $38,000 in year six and beyond, what is the payback period?
A construction firm needs a new small loader. It can be purchased for $20,000. The firm expects the loader to have a salvage value of $6,000 after 7 years. The maintenance cost will be $1,400 each year. The firm's interest rate is 1% per year. Compute the Equivalent Uniform Annual Worth (EUAW).
You invest in a piece of equipment costing $30,000. The equipment will beused for two years, at the end of which time the salvage value of the machineis expected to be $10,000. The machine will be used for 5,000 hours during the first year and 8,000 hours during the second year. The expected annual net savings in operating costs will be $25,000 during the first year and $40,000 during the second year. If your interest rate is 10%, what would be the equivalent net savings per machine-hour?
You purchased a stamping machine for $100,000 to produce a new line of products. The stamping machine will be used for five years, and the expected salvage value of the machine is 20% of the initial cost. The annual operating and maintenance costs amount to $30,000. If each part stamped generates $12 revenue, how many parts should be stamped each year just to break even? Assume that you require a 15% return on your investment. Answer in Excel
Rental equipment is for sale for $110,000. A prospective buyer estimates he would keep the equipment for 12 years and spend $6000 a year on maintaining it. Estimated annual net receipts from equipment rentals would be $14,400. It is estimated the rental equipment could be sold for $80,000 at the end of 12 years. If the buyer wants a 7% rate of return on his investment, what is the maximum price he should pay for the equipment?
Macoupin Mining Inc. must purchase a new coring machine that costs $60,000 and will last 15 years with a salvage value of $12,000. The annual operating expenses will be $9000 the first year, increasing by $200 each year thereafter. The annual income is $15,000 per year. If Macoupin’s MARR is 8%, determine the net future worth of the machine purchase.
You have purchased an equipment costing $20,000. The equipment will be used for two years, and at the end of two years, its salvage value is expected to be $10,000. The equipment will be used 6,000 hours during the first year and 8,000 hours during the second year. The expected annual net savings will be $30,000 during the first year and $40,000 during the second year. If your interest rate is 10%, what would be the equivalent net savings per machine-hour?