4abc. Help me answer the given question. Do not round off answers while solving, instead just the final answer will be rounded off to two decimal places. A European candy manufacturing plant manager must select a new irradiation system to ensure the safety of specific ingredients,while being economical. The two alternatives available have the following estimates:SystemFirst Cost, $CFBT, $ per YearLife, YearsAAdd your answer-120,00060,0003B-75,00020,0005The company is in the 35% tax bracket and assumes classical straight line depreciation for alternative comparisons performed at anafter-tax minimum acceptable rate of return (MARR) of 8% per year. A salvage value of zero is used when depreciation is calculated;however, system B can be sold after 5 years for an estimated 10% of its first cost. System A has no anticipated salvage value.Determine which is more economical using an annual worth (AW) analysis worked by hand.The annual worth for system B, (in $)Round to the nearest two (2) decimal places

In annual equivalent method we try to find annual equivalent benefits from the projects and select…

A European candy manufacturing plant manager must select a new irradiation system to ensure the safety of specific ingredien while being economical. The two alternatives available have the following estimates: System First Cost, $ A -120,000 B -75,000

A European candy manufacturing plant manager must select a new irradiation system to ensure the safety of specific ingredien while being economical. The two alternatives available have the following estimates: System First Cost, $ A -120,000 B -75,000

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A piece of production equipment is to be replaced immediately because it no longer meets quality requirements for the end product. The two best alternatives are a used piece of equipment (E1) and a new automated model (E2). The economic estimates for each are shown in the accompanying table. The MARR is 15% per year. Solve, a. Which alternative is preferred, based on the repeatability assumption? b. Show, for the coterminated assumption with a five-year study period and an imputed market value for Alternative B, that the AW of B remains the same as it was in Part (a). [And obviously, the selection is the same as in Part (a).] Explain why that occurs in this problem.
Parker Hannifin of Cleveland, Ohio, manufactures CNG fuel dispensers. It needs replacement equipment to streamline one of its production lines for a new contract, but it plans to sell the equipment at or before its expected life is reached at an estimated market value for used equipment. Select between the two options using the corporate MARR of 15% per year and a future worth analysis for the expected use period. Option D E First Cost $-88,000 $-98,000 AOC, per Year $-11,000 $-24,000 Expected Market Value $5,500 $14,500 Expected Use 3 years 6 years The future worth of option D is $ . The future worth of option E is $ . Option (Click to select) D E is selected.
Copycat manufacturing company is subject to 30% income tax rate has the following operating data: Selling price per unit, P60; variable cost per unit, P22 and fixed cost of P504,000. Management plans to improve the quality of its product by replacing a component that costs P3.50, with a higher grade material that costs P5.50 and acquiring a P180,000 packing machine over a 10 year life with no estimated salvage value using the straight line method of depreciation. If the company wants to earn an after tax income of P201,600, how many units must it sell under the new proposal?
A metal plating company is considering four different methods for recovering by-product heavy metals from a manufacturing site’s liquid waste. The investment costs and annual net incomes associated with each method have been estimated. All methods have an 8-year life; the MARR is 11% per year; and an AW-based ROR analysis is required. (a) If the methods are independent (because they can be implemented at different plants), which ones are acceptable? (b) If the methods are mutually exclusive, determine which one should be selected. Method First Cost, $ Salvage Value, $ Annual Net Income, $/Year A −30,000 +1,000 +4,000 B −36,000 +2,000 +5,000 C −41,000 +500 +8,000 D −53,000 −2000 +10,500
e. Unrelated to the new product, Cory is analyzing two mutually exclusive machines thatwill upgrade its manufacturing plant. These machines are considered average-riskprojects, so management will evaluate them at the firm’s 10% WACC. Machine Xhas a life of 4 years, while Machine Y has a life of 2 years. The cost of each machineis $60,000; however, Machine X provides after-tax cash flows of $25,000 per year for4 years and Machine Y provides after-tax cash flows of $42,000 per year for 2 years. Themanufacturing plant is very successful, so the machines will be repurchased at the endof each machine’s useful life. In other words, the machines are “repeatable” projects.1. Using the replacement chain method, what is the NPV of the better machine?2. Using the EAA method, what is the EAA of the better machine?
A firm is trying to choose between two machines to manufacture a new line of office furniture. The financial data for each machine have been compiled as follows: The firm's marginal tax rate is 40% and uses a 15% discount rate to value the projects. Also, assume that the required service period is indefinite. Using the replacement chain method (machine B can be replaced with an identical machine at the end of year 3), determine which project should be adopted after tax.(a) Machine A.(b) Machine B.(c) Either machine.(d) Neither machine.
CleanTech manufactures equipment to mitigate the environmental effects of waste. (a) If Product A has fixed expenses of $15,000 per year and each unit of product has a $0.20 variable cost, and Product B has fixed expenses of $5000 per year and a $0.50 variable cost, at what number of units of annual production will A have the same overall cost as B? (b) As a manager at CleanTech what other data would you need to evaluate these two products?
Polytec Chemical, Inc. must decide between two additives to improve the dry-weather stability of its low-cost acrylic paint. Additive A will have an equipment and installation cost of $125,000 and an annual cost of $55,000. Additive B will have an installation cost of $175,000 and an annual cost of $35,000. If the company uses a 5-year recovery period for paint products and a MARR of 20% per year, which process is favored on the basis of an incremental rate of return analysis? Also, write the function to display Δi*
Steele Insulators is analyzing a new type of insulation for interior walls. Management has compiled the following information to determine whether or not this new insulation should be manufactured. The insulation project has an initial fixed asset requirement of $1.3 million, which would be depreciated straight- line to zero over the 10-year life of the project. Projected total contribution margin is $1,121,000 and the anticipated annual EBIT is $222,000. Assume that the corporate tax rate (τ) is 35%. i) What is the degree of operating leverage for this project? ii) If sales fall by 10%, what is the impact on OCF?
A decision has to be taken by a firm whether or not to initiate manufacture of a new product called Sony. The following data has been established; A market research study carried out three month ago into the sales potential of Sony cost ¢25,000.00. A new machine would be required to be purchased at a cost of ¢100,000.00 solely to make Sony. A nil scrap value is anticipated and it is the firm’s policy to write off depreciation on a straight line basis over 5 years. Sony would be manufactured in a factory owned by the firm, the annual depreciation charged of which is ¢8,000.00. A present the factory is sublet at 17,500.00 per annum. The labour required at Sony are; NORMAL WAGE RATES PER HOUR DETAILS HOURS/UNIT OF SONY FIRST YEAR SUBSEQUENT YEAR Skilled 4 8.00 8.50 Semi-skilled 3 7.20 7.60 Unskilled 2 6.80 6.85 It is expected that there would be shortage of skilled labour in the first year only, so the manufacture of Sony, will make it…
Bruell Electronics Co. is developing a new product, surge protectors for high-voltage electrical flows. The cost information below relates to the product: Unit Costs Direct materials P 3.25 Direct labor 4.00 Distribution 0.75 The company will also be absorbing P120,000 of additional fixed costs associated with this new product. A corporate fixed charge of P20,000 currently absorbed by other products will be allocated to this new product. Bruell is subject to a tax rate of 30%. How many surge protectors (rounded to the nearest hundred) must Bruell Electronics sell at a selling price of P14 per unit to gain P30,000 additional income after taxes?
Liv Enterprise is considering a national launch of 2 corn chip products under project A and B. The National launch will require the following:Additional manufacturing equipment; Project A: K900, 000.00 and Project B: K1, 000,000.00 Upgrading Existing Facilities; Project A: K100, 000.00 and Project B: K400,000.00 Both of the above would be paid for at the outset and would be depreciated in the accounts over a five year period using straight line with a residual value of for both for Project A and B of zero.Projected revenues and costs over a period of five years are given in table below:Project AYear Revenue Costs1 K1,200,000.00 K1,340,000.002 K2,000,000.00 K1,670,000.003 K2,000,000.00 K1,520,000.004 K2,250,000.00 K1,685,000.005 K2,250,000.00 K1,685,000.00 Project B Year Revenue Costs1 K1,300,000.00 K1,460,000.002 K2,100,000.00 K1,520,000.003 K2,200,000.00 K1,400,000.004…

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