A drug store is looking into the possibility of installing a “24/7” automated prescription refill system to increase its projected revenues by $20,000 per year over the next 5 years. Annual expenses to maintain the system are expected to be $5,000. The system will have no market value at the end of its 5-year life, and it will be depreciated by the SL method. The store’s effective income tax rate is 40%, and the after-tax MARR is 12% per year. What is the maximum amount that is justified for the purchase of this prescription refill system? Show solutions.

Q: Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost…

A: Given that, Cost of grill = $35000 Depreciation = Straight line basis over 3 years Sale value after…

Q: Angelus Press is considering replacing all of its old cash registers with new ones. The old…

A: Note: Hi! Thank you for the question, As per the honor code, we are allowed to answer three…

Q: Mamafu is considering a proposal to manufacture high-protein cricket snacks. The project would make…

A: Net Present Value: The Net Present Value is the difference between initial cash outflow and the…

Q: Kurt's Coffees has a new hot drink in mind that is expected to generate sales of 24,000 units over…

A: Excel Spreadsheet:

Q: Benford Inc. is planning to open a new sporting goods store in a suburban mall. Benford will lease…

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: Due to the ongoing COVID 19 Pandemic, Sterilic Ltd had decided to expand their sanitation product…

A: The question is related to the cost of capital and Capital Budgeting. The details are given.  Since…

Q: A supermarket is planning on piloting a self-checkout system in one of its stores. It estimates that…

A: Conventional Pay back period is the time the project takes to recover initial investment in nominal…

Q: Your firm is contemplating the purchase of a new $595,000 computer-based order entry system. The…

A: Here, Initial Investment is $595,000 Salvage Value of is $81,000 Savings before taxes every year is…

Q: Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost…

A: The capital budgeting is a technique that helps to analyze the profitability of the project.

Q: A convenience store is looking into the possibility of installing a 24/7-automated refill system to…

A: Annual worth method we need to find out total annual cost of operating the equipment and compare…

Q: Huntington Medical Center purchased a used lowfield MRI scanner 2 years ago for $445,000. Its…

A: Calculation A/P factor is shown below:

Q: The heat loss through the exterior walls of a processing plant is estimated to cost the owner $3,000…

A: Rate of return is the annual income from an investment expressed as a proportion of the original…

Q: Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost…

A: Formulas:

Q: What are the operating cash flows in each year? b. What are the total cash flows in each year? c.…

A: Operating Cash Flows: It computes whether operations of the company can be sustained and grow…

Q: If the depreciation rates are 12% in Year 1 and 18% in Year 2, what is the depreciation tax shield…

A: Depreciation expense: Depreciation expense is the reduction in a particular asset due to its use or…

Q: Your firm is contemplating the purchase of a new $1,202,500 computer-based order entry system. The…

A: NPV: Net present value is the present worth of the cash flows of the project. If the present worth…

Q: A cooperative has voted to purchase a box truck to move produce to their distribution center. The…

A: Present value computes the existing value of future benefits by discounting future worth with a…

Q: Your firm is contemplating the purchase of a new $1,344,000 computer based order entry system. The…

A: Internal Rate of Return is the rate of interest at which the net present value of a project becomes…

Q: AAA Shop is considering a project to improve their production efficiency. They are trying to decide…

A: The calculation of the depreciation as follows: The formulae used for the calculation of the…

Q: Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost…

A: Data given: Cost = $47,000 Savings on account of purchase = $23,500 Tax rate = 30%   Working:…

Q: •   Massey Machine Shop is considering a project to improve their production efficiency. They are…

A: The calculation of the NPV is shown below: Massey Machine Shop should not buy the new automated…

Q: Calculate the NPV of the truck if the interest rate on the loan is 5% pa. Calculate the NPV of the…

A: Net present value commonly known as NPV refers to the amount left after subtracting the present…

Q: Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost…

A: Formulas:

Q: Johnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will cost…

A: The operating cash flows is calculated as net Income plus depreciation, total cash flows would be…

Q: DuPree Coffee​ Roasters, Inc., wishes to expand and modernize its facilities. The installed cost of…

A: Calculation of depreciation as per MACRS table   Year  Depreciation 1 14% 2 25% 3 18% 4…

Q: Cori's Dog House is considering the installation of a new computerized pressure cooker for hot dogs.…

A: Net present value is differences between present value of cash flow and initial investment.

Q: An industrial organization has established an automated assembly line (for $240,000) that will…

A: a) Before Tax Cash Flow (BTCF) and After-Tax Cash Flow (ATCF) can be computed as follows: Result…

Q: The garden supply company is also considering taking out a loan and buying a small truck to save…

A: The question is based on the concept of NPV. As per Bartleby guidelines we are allowed to answer…

Q: Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost…

A: Operating cash flow refers to the cash generated by the company from its normal business operations.…

Q: of the following five years, with no salvage value for the equipment and no recovery of operating…

A:

Q: Boisjoly Enterprises is considering buying a vacant lot that sells for $1.4 million. If the property…

A: Hello. Since your question has multiple sub-parts, we will solve first three sub-parts for you. If…

Q: our firm is contemplating the purchase of a new $1,998,000 computer-based order entry system. The…

A: The question is related to Capital Budgeting. The details are given regading the same.

Q: A new antitheft system incorporating MEMS technology is being separately evaluated economically by…

A: Initial Investment  $                   85,000.00 MARR 8% Time Period Years 6 Salvage Value  $…

Q: A cooperative that makes value-added products like jams and jellies has voted to purchase a new…

A: In the given question we are provided with the data of a cooperative which is involved in the…

Q: Johnny's lunches is considering purchasing a new energy-efficient grill. The grill will cost $37,000…

A: The Operating Cash flow would be considered as the cash which is generated by the company after…

Q: Super Sonics Entertainment is considering borrowing money at 11 percent and purchasing a machine…

A: Net present value is a capital budgeting technique which helps in analyzing whether the capital…

Q: A drug store is looking into the possibility of installing a “24/7” automated prescription refill…

A: Discounting is a technique through which PV of future amount is computed by consider appropriate…

Q: The garden supply company is also considering taking out a loan and buying a small truck to save…

A: Payback period is defined as the number of years required to recover the initial cost of the…

Q: ull Corp. is considering selling its old popcorn machine and replacing it with a newer one. The old…

A: Present operating costs              4,000.00 Proposed Operating costs (1,500.00) Annual…

Q: An injection molding machine can be purchased and installed for $75,000. It has a GDS recovery…

A: The capital budgeting is a technique that helps to analyze the profitability of the project.

Q: A drug store is looking into the possibility of installing a "24/7" automated prescription refill…

A: To grow, firm starts various new projects. Firm can do the business at least situation of not loss…

Q: Your company is considering a purchase of a $580,000 computer-based order entry system. The system…

A: Calculating the of the depreciation expenses for the equipment. We have,Depreciation expenses =…

Q: Gull Corp. is considering selling its old popcorn machine and replacing it with a newer one. The old…

A: Formula: Profit ( loss ) = Revenues - expenses

Q: A supermarket can purchase an automated checkout machine for $100,000 (to be paid in year 0) that…

A: We will determine the present value of costs of both alternatives. The alternative with lower…

Q: Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost…

A: Computation of the operating cash flows in each year are shown as below: Formula sheet is annexed…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.