PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Chapter 6, Problem 33PS
Replacement decisions. You are operating an old machine that is expected to produce a
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You are operating an old machine that is expected to produce a cash inflow of $5,000 in each of the next 3 years before it fails. You
can replace it now with a new machine that costs $20,000 but is much more efficient and will provide a cash flow of $10,000 a year for
4 years.
Calculate the equivalent annual cost of the new machine if the discount rate is 15%.
Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
Equivalent annual cost of the purchase price
Should you replace your equipment now?
O Yes
No
You are operating an old machine that is expected to produce a cash inflow of $6,500 in each of the next 3 years before it fails. You can replace it now with a new machine that costs $21,500 but is much more efficient and will provide a cash flow of $12,250 a year for 4 years. Calculate the equivalent annual cost of the new machine if the discount rate is 14%.
You are operating an old machine that is expected to produce a cash inflow of $6,000 in each of the next
3 years before it fails. You can replace it now with a new machine that costs $21,000 but is much more
efficient and will provide a cash flow of $11,500 a year for 4 years.
Calculate the equivalent annual cost of the new machine if the discount rate is 15%.
Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
Answer is complete but not entirely correct.
$ (8,697.12) ►
Equivalent annual cost of the purchase price
Chapter 6 Solutions
PRIN.OF CORPORATE FINANCE
Ch. 6 - Cash flows Which of the following should be...Ch. 6 - Cash flows Reliable Electric, a major Ruritanian...Ch. 6 - Prob. 3PSCh. 6 - Prob. 4PSCh. 6 - Real and nominal flows Mr. Art Deco will be paid...Ch. 6 - Real and nominal flows Restate the net cash flows...Ch. 6 - Real and nominal flows Guandong Machinery is...Ch. 6 - Working capital Each of the following statements...Ch. 6 - Prob. 9PSCh. 6 - Project NPV Better Mousetraps research...
Ch. 6 - Project NPV A widget manufacturer currently...Ch. 6 - Project NPV Marsha Jones has bought a used...Ch. 6 - Project NPV United Pigpen is considering a...Ch. 6 - Project NPV Imperial Motors is considering...Ch. 6 - Project NPV and IRR A project requires an initial...Ch. 6 - Taxes and project NPV In the International Mulch...Ch. 6 - Depreciation and project NPV Suppose that Sudbury...Ch. 6 - Depreciation and project NPV Ms. T. Potts, the...Ch. 6 - Prob. 20PSCh. 6 - Prob. 21PSCh. 6 - Prob. 22PSCh. 6 - Equivalent annual cash flow Look at Problem 22...Ch. 6 - Equivalent annual cash flow Deutsche Transport can...Ch. 6 - Prob. 25PSCh. 6 - Mutually exclusive investments and project lives...Ch. 6 - Mutually exclusive investments and project lives...Ch. 6 - Mutually exclusive investments and project lives....Ch. 6 - Mutually exclusive investments and project lives...Ch. 6 - Mutually exclusive investments and project lives...Ch. 6 - Replacement decisions Machine C was purchased five...Ch. 6 - Replacement decisions Hayden Inc. has a number of...Ch. 6 - Replacement decisions. You are operating an old...Ch. 6 - Replacement decisions. A forklift will last for...Ch. 6 - The cost of excess capacity The presidents...Ch. 6 - Effective tax rates One measure of the effective...Ch. 6 - Equivalent annual costs We warned that equivalent...
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