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- A process plant making 5000kg /day of a product selling for $1.75 per kg has annual directproduction costs of $2 million at 100 percent capacity and other fixed costs of $700,000. What isthe fixed charge per kg at the break-even point? If the selling price of the product is increased by10 percent, what is the dollar increase in net profit at full capacity if the income tax rate is 35percent of gross earnings?An industrial firm is considering purchasingseveral programmable controllers and automatingthe company’s manufacturing operations. It is estimated that the equipment will initially cost $120,000,and the labor to install it will cost $25,000. A servicecontract to maintain the equipment will cost $5,000per year. Trained service personnel will have to behired at an annual salary of $50,000. Also estimatedis an approximate $10,000 annual income-tax savings (cash inflow). How much will this investment inequipment and services have to increase the annualrevenues after taxes in order to break even? Theequipment is estimated to have an operating life of10 years with no salvage value because of obsolescence. The firm’s MARR is 12%Please use a financial calculator to solve. Be sure to list your steps. You are evaluating two different silicon wafer milling machines. The Techron I costs $237,000, has a three-year life, and has pretax operating costs of $62, 000 per year. The Techron II costs $ 415,000, has a five - year life, and has pretax operating costs of $ 35,000 per year. For both milling machines, use straight - line depreciation to zero over the project's life and assume a salvage value of $39, 000. If your tax rate is 21 percent and your discount rate is 8 percent, compute the EAC for both machines. (Your answer should be a negative value and indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
- A water supply system is being considered for a small district. The system requires an initial investment of P8M, will operate for 15 years and will be sold for P0.4M after that time. Annual operations and maintenance costs is expected to be P48 000.00 for the first year and is expected to increase by P12 000.00 each year thereafter. Determine the annual cost of this project using i= 11%. (Ans. - P1,210,425.43)-PLEASE USE AN ACTUAL FORMULA NOT EXCELMr. Bacani borrowed money from the bank. He received from the bank P1,842 andpromised to repay P2,000 at the end of 10 months. Determine the rate of simpleinterest.· A. 12.19 %· B. 12.03 %· C. 11.54 %· D. 10.29 %When buying a luxury truck, three documents are signed, each one for $150,000.00, with expiration in one, two and three months. Instead, it is proposed to make two equal payments, the first in one month and the second in two months. Calculate the amount of each of the payments if the automaker collects a nominal 12.5% capitalized monthly.
- 10. Given that the discount rate is 11.5%, what is the equivalent uniform annual cash flow of the following stream of cash flows? YEAR 0 - P100,000 YEAR 1 - P200,000 YEAR 2 - P300,000 YEAR 3 - P135,000You invested $100,000 in a project and received $40,000 at n = 1, $40,000 atn = 2, and $30,000 at n = 3 years. You need to terminate the project at the end of year 3. Your interest rate is 10%; what is the project balance at the time of termination?(a) Gain of $10,000(b) Loss of $8,039(c) Loss of $10,700(d) Just break evenHajia Timber Ltd (GTL) produces and exports lumber and planks. It owns a plant whichhas value of GHC 1,800,000 as at 1 January 2010. The government of Ghana,passes alegislation that restricts the exportation of lumber. Consequently GTL has to reduceproduction by 40%. Cash flow forecast for the next five years included in the budgetsubmitted for management approval in January 2010 shows the following:Year Cash flows (GHC)2010 552,0002011 506,0002012 376,0002013 250,0002014 560,000The cashflow forecast for 2014 includes expected proceeds from disposal of the plant. Thecash flow projections also ignore the effects general upwards movement in prices.It is estimated that if the plant is sold in January 2010, it would realize the net proceeds ofGHC 1,320,000. The costs of capital for GBL is 15% (ignoring inflationary effect)RequiredCalculate the recoverable amount of the plant and impairment loss (if any).
- How do you calculate the PVIFA for the equation: EAC = NPV / Annutiy factor How would you use the financial calculator to solve for EAC and PVIFA? You are evaluating two different silicon wafer milling machines. The Techron I costs $270,000, has a three-year life, and has pre-tax operating costs of $69,000 per year. The Techron II costs $475,000, has a five-year life, and has pre-tax operating costs of $36,000 per year. Both milling machines are in Class 8 (CCA rate of 20 percent per year). Assume a salvage value of $45,000. If your tax rate is 35 percent and your discount rate is 10 percent, compute the EAC for both machines. Which do you prefer? Why?2.5. An electric cooperative is considering the use of a concrete electric pole in the expansion of its power distribution lines. A concrete pole costs P18,000 each end will last 20 years. The company is presently using creosoted wooden poles which cost P12,000 per pole and will last 10 years. If money is worth 12 per cent, which pole should be used. Assume annual taxes amount to 1 per cent of first cost and zero salvage value in both casesA man is considering putting up his own enterprise, where an investment of 800,000Php will be required and will take 15 years to recoup . He estimates his annual sales at 800,000Php along with the following operating costs. Materials ............................. 160,000Php/ yearLabor ............................. 280,000Php/ yearOverhead ............................. (40,000 + 10% of sales) Php/ yearSelling Expense............................. 60,000Php/ yearThe man will give up his regular job paying 216,000 Php per year and devote all his time to the operation of his business, this will result in decreasing his labor cost by 40,000Php per year, material cost by 28,000Php per year and overhead cost by 32,000 Php per year. If the man expects to earn at least 20% of his capital, should he invest? solve in the present worth cost method