. A machine cost P10M and will have scrap value of 10% of the first cost at the end of 10 years. If money is worth 12%. Find the annual investment and the capitalized cost of the machine.
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1. A machine cost P10M and will have scrap value of 10% of the first cost at the
end of 10 years. If money is worth 12%. Find the annual investment and the
capitalized cost of the machine.
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Solved in 2 steps
- Example: Consider a machine that costs 20000 TL and has a useful life of 5 years. Let the scrap value be 4000 TL at the end of 5 years. Let the annual operating and maintenance cost be 500 TL. The business expects to earn 5000 TL/year thanks to this machine. If l=10%, buy this machine?A five-year project has an initial fixed asset investment of $613,600, an initial net working capital investment of $22,200. The project will have an annual operating cash flow (OCF) of (-$76,540). The fixed asset is fully depreciated over the life of the project and has no salvage value. The net working capital will be recovered when the project ends. The required return is 11.7 percent. What is the project's equivalent annual cost, or EAC? O-$248,052.76 O-$182,309.18 O-$147,884.01 O $242,212.224) Which of the following power plants is better investment, assuming 8% interest on the sinking fund and no salvage value in either case, taxes/insurance at 10% and interest on capital at 12%. Use ROR and Present Worth Method. - Coal plant which costs P1M, last 10 years and cost annually P100k to operate. - Fuel-oil plant which costs P800k will last 7 years and cost annually P70k to operate.
- An investment project costs P. It is expected to have an annual net cash flow of 0.125P for 20 years. A) What is the project’s payback period? B) What is the annual interest rate?Cfood Co. is considering acquisition of Tfood Co. Some financial information on the two companies is given below (in $ million): Cfood Co. Tfood Co. Price per share 49 13 # of shares 10 2.5 Market value 490 32.5 If Cfood acquires Tfood, the operating cost (after-tax) can be reduced by $2m, and sales (after-tax) can be increased by $3m (the synergies) per year in perpetuity. The cost of capital is 19%. Cfood is considering two alternatives for the acquistion: 1. buying all the shares of Tfood at $15.6 per share. 2. issuing 1 shares for every 3 shares of Tfood Workout on this merger deal and answer the following questions. i. What is the economic gain from the merger? ii. What will be the NPV of merger under cash offer? iii. What will be the market value of merged company (Cfood after the acquition of Tfood) under the cash offer?Cfood Co. is considering acquisition of Tfood Co. Some financial information on the two companies is given below (in $ million): Cfood Co. Tfood Co. Price per share 49 13 # of shares 10 2.5 Market value 490 32.5 If Cfood acquires Tfood, the operating cost (after-tax) can be reduced by $2m, and sales (after-tax) can be increased by $3m (the synergies) per year in perpetuity. The cost of capital is 19%. Cfood is considering two alternatives for the acquistion: 1. buying all the shares of Tfood at $15.6 per share. 2. issuing 1 shares for every 3 shares of Tfood Workout on this merger deal and answer the following questions. i. What is the economic gain from the merger? ii. What will be the NPV of merger under cash offer? v. What is the cost of merger under stock offering? Also compute the merger's NPV for Cfood's original shareholders. i. What is the economic gain from the merger? ii. What…
- ECONOMICS (UPVOTE WILL BE GIVEN. CHOOSE THE CORRECT ANSWER. NO LONG EXPLANATION NEEDED. BOX THE FINAL ANSWER.) If the present worth of a project is given and you want to know its annual equivalent value, which working equation shall you use? A. PW = AW(P/A, i%,N) B. AW(%) = R – E – CR(i%) C. AW = PW(A/P, i%,N) D. AW = PW(P/A, i%,N)Consider a project that will bring in upfront cash inflows for the first two yearsbut require paying some money to close the project in the third year. A0 A1 A2 $6500 $4500 $13000 This is a simple borrowing project. Determine the borrowing rate of returnAN INVESTMENT OF P270,000.00 ON COMPUTER SHOP WILL HAVE THE FOLLOWING DATA: UNIFORM ANNUAL REVENUE-P185,000.00 FOR 5 YEARS OPERATION AND MAINTENANCE-P85,000.00/YEAR TAXES/INSURANCE-5% OF THE FIRST COST SALVAGE VALUE OF THE COMPUTERS AFTER 5 YEARS-10% OF INVESTMENT EXPECTED EARNINGS ON CAPITAL- 25% PROVE THAT THIS INVESTMENT IS JUSTIFIABLE OR NOT BY USING PRESENT WORTH METHOD PLEASE GIVE FULL AND DETAILED SOLUTION
- You are considering buying a 10-year-old machine for $280, or a new fuel-efficient machine for$600. The new machine will save you $5 per month on your fuel bill, and you will be able to sellit for $300 in 10 years. The used machine will have no resale value at that time. Assume theinterest rate is 3% per year. According to the information given, which machine will you buy?Financial information about a dam project is presented in the table below. Initial investment cost ($) 340,000 Operation-maintenance expenses (annual) ($) 57,000 High repair-maintenance cost (at 10th year) ($) 411,000 Salvage value ($) 44,000 Economic life of the dam 25 years Annual interest rate 15% The kilowatt hour (kWh) of electricity will be sold at $0.45. Under these conditions, how much electricity should the dam produce annually to cover the construction costs?7 An equipment’s cost is P50,000 with an economic life of 10 years. The equipment can be sold at P5,000 after 10 years. At what price can the equipment be sold after 5 years. (a) Using Straight line Method. (b) Using Sum of the years digit method. (c) Using Double Declining Balance Method (d) Using Declining Balance Method (e) Using Sinking Fund at 5%.