Essay on Capital Purchase Justification

Purchasing new MRI scanners for the hospital is a good idea for the hospital because although expensive for the first time purchase, the maintenance issues will be less. Any product reused or refurbished automatically requires more maintenance. The only time a refurbished item is very good in comparison to the average life span of a new one is if all of the mechanics have been completely replaced with brand new pieces and the body of the machine is the only thing refurbished but that would be very unlikely. Maintenance costs is what will be cut over time and in the end the hospital will be happy that they purchased new medical machinery. It ensures that the machine will do the job correctly the first time around and doctors have more accurate results for patients.

Finally, in order to complete a more accurate comparison between the two projects, we utilized the EANPV as the deciding factor. Under current accepted financial practice, NPV is generally considered the most accurate method of predicting the performance of a potential project. The duration of the projects is different, one lasts four years and one lasts six years. To account for the variation in time frames for the projects and to further refine our selection we calculated the EANPV to compare performance on a yearly basis.

This charge is also another revenue stream for the hospital and contributes to the ROI of the equipment. GE, which is the manufacturer of the equipment, indicates that the equipment has a viable life span of up to 15 years, but the warranty only covers the first 6 years of use (Price, 2011). The above figures are a clear indication that the MRI equipment can provide the hospital with an adequate return on investment. These figures, the machine’s lifespan, and the growing demand for MRI scans serve to justify the purchase of the equipment. Other factors that enhance the returns from the equipment include:

The three scenarios illustrated above clearly shows that the investment in the new machine creates greater value to the company, unless there should be some unexpected turnout in sales. By acquiring the Vulcan Mold-Maker machine Fonderia di Torino S.p.A will be able to replace labor intensive required semi-automated machines with automated machines, thus reducing medical claims. The company will also benefit from higher levels of product quality and lower scrap rates. Labor costs will be reduced by almost 298,334.4

1.What are conversion factors? Why were conversion factors developed? How do they impact on which bond is cheapest to deliver? Under what conditions would there be no cheapest to deliver? Explain in detail.

The current machine is more than adequate for what we do. I know at some point maintenance will price us into a new machine and Peter has already sent us an estimate.

Our approach is an active security selection with passive asset allocation. We invest heavily in common stocks, but vary our holdings to include companies of all sizes and industry groups. We seek to achieve sufficient diversification by abstaining from investing more than 5% of the total assets in a single security unless it has significant upside potential, and we make an exception for ETFs and index funds as they represent a basket of securities. Our main goal is to identify and invest in common stocks with high potential for both short- and long-term capital appreciation. Our secondary goal is to invest in common stocks with steady income. When potential for rewards are high, we also enter into derivative

-Martin Industries just paid an annual dividend of $1.30 a share. The market price of the stock is $36.80 and the growth rate is 6.0 percent. What is the firm's cost of equity?

Life insurance is meant to provide funds to replace a breadwinner's to protect and support dependents. Chad and Haley are dependents, not income providers. Therefore, the purchase of life insurance is unnecessary and not recommended. The Dumonts should use the money they would spend on policies for the children to increase their own coverage.

For the case of GE Capital Canada, Clark Carriers submitted a request for a loan amounting to $270000. It was first confirmed that Clark Carriers met the minimal requirements set out by the commercial equipment financing division of GE for loans. Cash flow was then analyzed to ensure that Clark Carriers has sufficient cash flow from operations to make payments on current loans. Next the financial ratios were analyzed to ensure that Clark Carriers was efficient in its profitability, liquidity, stability, efficiency and growth in which they proved to achieve positive outcomes in all areas, especially profitability.

ML had developed a policy of selling manual machines and renting automatic machines. Manual machines did not cost much, did not require service, and could be modified to attach different fasteners inexpensively. Automatic machines were rented on an annual basis because they would have been more expensive to sell and it provided annual income to ML. However, about 700 of the rented machines were returned each year. During the time that machines were in inventory, ML would modify the machines to attach different fasteners. This was expensive with an average cost per modification of $2000. If all 700 machines were modified during a given year this would have cost $1.4 million per year. It was also industry practice to provide preventative maintenance and

We are providing below the assumptions and other calculations we used while computing the WACC and the cash flows.

EnCana Corporation (EnCana) is one of North America’s leading natural gas producers. It is among the largest holders of natural gas and oil resource lands onshore North America and is a technical and cost leader in the in-situ recovery of oil sands bitumen. EnCana’s other operations include the transportation and marketing of crude oil, natural gas, and natural gas liquids; as well as the refining of crude oil and the marketing of refined petroleum products. Its operations are located in Canada, the US, Ecuador, and the UK.

The relationship between capital structure and firm value has been discussed frequently in the literature by different researcher accordingly, in both theoretical and empirical studies. It has also been discussed that whether the firm has any optimal capital structure that has been adopted by an individual firm, or whether the proportions of debt usage is completely irrelevant to the individual firm value.

My dad has a textile business, involved in embroidery and painting of the fabric. I have been visiting my dad’s office complex and observing the whole process of clothes manufacture. The most important asset for the business is a large machine required for whole painting process. The existing machine with the business is in use from past 4 years and has to be discarded due to some operational issues. As a student of finance, I will analyze the option of replacing this machine with a new one. In analyzing various options from where to purchase the machine, I searched for various dealers, and compared the products with the prices they offered. I narrowed down the choice to one machine provided by Stihl Machinery Co., Ltd. But then dad’s financial manager, Mr. David Jones, asked me to reconsider the option. He suggested that the existing machine can still run for another 5 years and the new machine is also expected to work for just five years. Also, the price of the new machine is quite high so it is better to continue using the same old machine. On this argument, I decided to do a detailed analysis of the option to replace the old machine. Only after the financial analysis, I will decide and suggest whether to buy the new machine or not.