The Sweetwater Candy Company would like to buy a new machine that would automatically "dip" chocolates. The dipping operation currently is done largely by hand. The machine the company is considering costs $210,000. The manufacturer estimates that the machine would be usable for five years but would require the replacement of several key parts at the end of the third year. These parts would cost $10,200, including installation. After five years, the machine could be sold for $5,000. The company estimates that the cost to operate the machine will be $8,200 per year. The present method of dipping chocolates costs $42,000 per year. In addition to reducing costs, the new machine will increase production by 4,000 boxes of chocolates per year. The company realizes a contribution margin of $1.45 per box. A 10% rate of return is required on all investments. Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables. Required: 1. What are the annual net cash inflows that will be provided by the new dipping machine? 2. Compute the new machine's net present value.
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- The Sweetwater Candy Company would like to buy a new machine that would automatically “dip” chocolates. The dipping operation is currently done largely by hand. The machine the company is considering costs $200,000. The manufacturer estimates that the machine would be usable for five years but would require the replacement of several key parts at the end of the third year. These parts would cost $10,100, including installation. After five years, the machine could be sold for $9,000. The company estimates that the cost to operate the machine will be $8,100 per year. The present method of dipping chocolates costs $41,000 per year. In addition to reducing costs, the new machine will increase production by 8,000 boxes of chocolates per year. The company realizes a contribution margin of $1.40 per box. A 20% rate of return is required on all investments. Click here to view Exhibit 11B-1 and Exhibit 11B-2, to determine the appropriate discount factor(s) using tables.…The Sweetwater Candy Company would like to buy a new machine that would automatically “dip” chocolates. The dipping operation currently is done largely by hand. The machine the company is considering costs $200,000. The manufacturer estimates that the machine would be usable for five years but would require the replacement of several key parts at the end of the third year. These parts would cost $11,200, including installation. After five years, the machine could be sold for $9,000. The company estimates that the cost to operate the machine will be $9,200 per year. The present method of dipping chocolates costs $52,000 per year. In addition to reducing costs, the new machine will increase production by 8,000 boxes of chocolates per year. The company realizes a contribution margin of $1.60 per box. A 18% rate of return is required on all investments. Click here to view Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using tables. Required: 1. What…The Sweetwater Candy Company would like to buy a new machine that would automatically “dip” chocolates. The dipping operation currently is done largely by hand. The machine the company is considering costs $200,000. The manufacturer estimates that the machine would be usable for five years but would require the replacement of several key parts at the end of the third year. These parts would cost $11,200, including installation. After five years, the machine could be sold for $9,000. The company estimates that the cost to operate the machine will be $9,200 per year. The present method of dipping chocolates costs $52,000 per year. In addition to reducing costs, the new machine will increase production by 8,000 boxes of chocolates per year. The company realizes a contribution margin of $1.60 per box. A 18% rate of return is required on all investments. Required: 1. What are the annual net cash inflows that will be provided by the new dipping machine? 2. Compute the new machine’s net…
- The Sweetwater Candy Company would like to buy a new machine that would automatically “dip” chocolates. The dipping operation currently is done largely by hand. The machine the company is considering costs $180,000. The manufacturer estimates that the machine would be usable for five years but would require the replacement of several key parts at the end of the third year. These parts would cost $11,000, including installation. After five years, the machine could be sold for $7,000. The company estimates that the cost to operate the machine will be $9,000 per year. The present method of dipping chocolates costs $50,000 per year. In addition to reducing costs, the new machine will increase production by 6,000 boxes of chocolates per year. The company realizes a contribution margin of $1.50 per box. A 18% rate of return is required on all investments. view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables. Required: 1. What are the annual…The Sweetwater Candy Company would like to buy a new machine that would automatically "dip" chocolates. The dipping operation is currently done largely by hand. The machine the company is considering costs $240,000. The manufacturer estimates that the machine would be usable for five years but would require the replacement of several key parts at the end of the third year. These parts would cost $11,600, including installation. After five years, the machine could be sold for $5,000. The company estimates that the cost to operate the machine will be $9,600 per year. The present method of dipping chocolates costs $56,000 per year. In addition to reducing costs, the new machine will increase production by 3,000 boxes of chocolates per year. The company realizes a contribution margin of $1.80 per box. A 13% rate of return is required on all investments. Use Excel or spreadsheet to solve. Round answers to the nearest dollar. Required: 1. What are the annual net cash inflows that will be…The Sweetwater Candy Company would like to buy a new machine that would automatically dip chocolates. The dipping operation is currently done largely by hand. The machine the company is considering costs $120,000. The manufacturer estimates that the machine would be usable for 12 years, but would require the replacement of several key parts at the end of the sixth year. These parts would cost $7,800, including installation. After 12 years, the machine could be sold for about $6,000. The company estimates that the cost to operate the machine will be only $9,000 per year. The present method of dipping chocolates costs $38,000 per year. In addition to reducing costs, the new machine will increase production by 2.000 boxes of chocolates per year. The company realizes a contribution margin of $1.00 per box. A 20 % rate of return is required on all investments. Click here to view Exhibit 10-1 and Exhibit 10.2. to determine the appropriate discount factor(s) using tables. Required: 1. What…
- The Sweetwater Candy Company would like to buy a new machine for $220,000 that automatically "dips" chocolates. The manufacturer estimates the machine would be usable for five years but would require replacement of several key parts costing $10,300 at the end of the third year. After five years, the machine could be sold for $6,000. The company estimates the cost to operate the machine will be $8,300 per year. The present labor-intensive method of dipping chocolates costs $43,000 per year. In addition to reducing costs, the new machine will increase production by 5,000 boxes of chocolates per year. The company realizes a contribution margin of $1.50 per box. A 15% rate of return is required on all investments. Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables. Required: 1. What are the annual net cash inflows provided by the new dipping machine? 2. Compute the new machine's net present value.The Sweetwater Candy Company would like to buy a new machine that would automatically “dip” chocolates. The dipping operation is currently done largely by hand. The machine the company is consideringcosts $120,000. The manufacturer estimates that the machine would be usable for 12 years but wouldrequire the replacement of several key parts at the end of the sixth year. These parts would cost $9,000, including installation. After 12 years, the machine could be sold for $7,500.The company estimates that the cost to operate the machine will be $7,000 per year. The presentmethod of dipping chocolates costs $30,000 per year. In addition to reducing costs, the new machine willincrease production by 6,000 boxes of chocolates per year. The company realizes a contribution margin of$1.50 per box. A 20% rate of return is required on all investments.Required:(Ignore income taxes.)1. What are the annual net cash inflows that will be provided by the new dipping machine?2. Compute the new machine’s…Realforce is considering making a new mechanical keyboard. The company has spent $200,000 in research for a silent mechanical switch, which they can use on the new keyboard. Realforce estimates that they can sell $5,000 units of the new keyboard per year at $250 per unit for the next 4 years. The production cost per keyboard is $200. The fixed costs for the project will run $50,000 per year. To start the production, Realforce has to invest a total of $400,000 in manufacturing equipment, The equipment will be 100 percent depreciated over a straight line basis for the next 4 years and become valueless at the end of the project. The tax rate is 35 percent and the discount rate is 15 percent. a) What is the operating cash flow for this project? b) What is the project's NPV? c) Suppose that the manu facturing equipment will have a market value of $18,000 at the end of the project and the project requires an initial investment in net working capital of $10,000, which is fully recoverable at…
- In a bio-based material recycling company, the operation managers are considering a twin-screw extruder with a price of 12,000 OMR and another 2,000 OMR will be spent for shipping and installation of the extruder. The estimated net income generated from this machine is 3,500 OMR per year. The extruder will be used for 5 years, and then it will be sold for an estimated market value of 2,500 OMR. The extruder MARCS property class is 5 years. If the effective income tax rate (t) is 40% and the after-tax MARR is 10%. (a) What is the after-tax IRR for this project? (use trial and error procedure and GDS) (b) Should this extruder be purchased by the company?A Cookie Company has negotiated to introduce a new cookie for 6 years. The cookie would be purchased in boxes from a manufacturer for $100 per box and sold to supermarkets for $200 per box. Annual sales is expected to be 5 000 boxes. The estimated annual cash expenses to sell the new product would be $180,000. The cost of the equipment to package the cookies is $300 000, and the working capital needed is $400 000. After 5 years, the equipment will need to be repaired and maintained at a cost of $25 000. After 6 years, the residual value of equipment will be $50 000. The working capital would be released at the end of 6-year period. The rate of discount of the company is 16%. Required: Compute net present value (NPV) of the new product. Do not compute income tax. Would you recommend the company proceed with this new venture?ces Esquire Company needs to acquire a molding machine to be used in its manufacturing process. Two types of machines that would be appropriate are presently on the market. The company has determined the following: Machine A could be purchased for $69,000. It will last 10 years with annual maintenance costs of $2,200 per year. After 10 years the machine can be sold for $7,245. Machine B could be purchased for $57,500. It also will last 10 years and will require maintenance costs of $8,800 in year three, $11,000 in year six, and $13,200 in year eight. After 10 years, the machine will have no salvage value. Required: Assume an interest rate of 8% properly reflects the time value of money in this situation and that maintenance costs are paid at the end of each year. Ignore income tax considerations. Calculate the present value of Machine A & Machine B. Which machine Esquire should purchase? Note: Do not round intermediate calculations. Round your final answers to nearest whole dollar…