Question 10 A Full explain this question and text typing work only thanks A machine has a five-year life, a cost of $820,000, and annual negative operatingcash flow of -$60,000. If the required return is 12%, what is the machine'sequivalent annual cost (EAC)?$281,868O $310,699O $287,476O $165,007

Name: Question 10 A Full explain this question and text typing work only tha
Uploaded: 2024-03-20T06:50:59.000Z
Channel: Bartleby
Description: Question 10 A Full explain this question and text typing work only thanks A machine has a five-year life, a cost of $820,000, and annual negative operatingcash flow of -$60,000. If the required return is 12%, what is the machine'sequivalent annual co

Machine are used for manufacturing they have initial investment and also there are other cost…

Answered: A machine has a five-year life, a cost…

Business

Finance

A machine has a five-year life, a cost of $820,000, and annual negative opera cash flow of -$60,000. If the required return is 12%, what is the machine's equivalent annual cost (EAC)? $281,868

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 2P

See similar textbooks

Similar questions

Gardner Denver Company is considering the purchase of a new piece of factory equipment that will cost $420,000 and will generate $95,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further Instructions on internal rate of return in Excel, see Appendix C.
Average rate of returncost savings Maui Fabricators Inc. is considering an investment in equipment that will replace direct labor. The equipment has a cost of 125,000 with a 15,000 residual value and an eight-year life. The equipment will replace one employee who has an average wage of 28,000 per year. In addition, the equipment will have operating and energy costs of 5,150 per year. Determine the average rate of return on the equipment, giving effect to straight-line depreciation on the investment.
Caduceus Company is considering the purchase of a new piece of factory equipment that will cost $565,000 and will generate $135,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return In Excel, see Appendix C.
Suppose that a company is spending 60,000 per year for inspecting, 30,000 for purchasing, and 40,000 for reworking products. A good estimate of nonvalue-added costs would be a. 70,000. b. 130,000. c. 40,000. d. 90,000. e. 100,000.
A machine has a first cost of $50,000. Its market value declines by 25% annually. The operating and maintenance costs start at $2000 per year and climb by $3000 per year. The firm’s MARR is 9%. Find the minimum EUAC for this machine and its economic life.
A machine with a purchase price of R1 200 000 is estimated to eliminate manual operations by R400 000 per year.The machine is expected to have a useful life of four years. Use the information provided above to calculate the Internal Rate of Return (expressed to twodecimal places) using interpolation.
The estimated cost of a completely installed andready-to-operate 40-kilowatt generator is $32,000. Itsannual maintenance costs are estimated at $800. Theenergy that can be generated annually at full load isestimated to be 100,000 kilowatt-hours. If the valueof the energy generated is $0.09 per kilowatt-hour,how long will it take before this machine becomesprofitable? Take the MARR to be 10% and the salvage value of the machine to be $2,000 at the end ofits estimated life of 15 years.
The estimated cost of a completely installed and ready-to-operate 40-kilowatt generator is $30,000. Its annual maintenance costs arc estimated at $500. The energy that can be produced annually, at full load. is estimated to be 100,000 kilowatt-hours. I f the value of the energy produced is considered Lo be $0.()8 per kilowatt-hour. how long will it take before this generator becomes profitable? Consider the MA RR to be 9% and the salvage value of the machine to be $2,000 at the end of its es1ima1ed life of 15 years.
An existing machine in a factory has an annual maintenance cost of P40,000. A new and more efficient machine will require an Investment of P90,000 and is estimated to have a salvage value of P30,000 at the end of 8 years. Its annual expenses and maintenance and upkeep total to P22,000. If The Company expects to earn 12% compute the rate of return.
The estimated cost of a completely installed and ready-to-operate 40-kilowatt generator is $30,000. Its annual maintenance costs arc estimntcd at $500. 111e energy that can be produced annually, at full load. is estimated to be 100,000 kilowatt-hours. I f the value of the energy produced is considered Lo be $0.08 per kilowau-hour. how long will it take before this genera tor becomes profitable? Consider the MARR to be 9% and the salvage value of the machine to be $2,000 at the end of its estimated life of 15 years.
$500,000 is invested in equipment having a negligible salvage value regardless of the number of years used. O&M costs equal $125,000 the first year and increase $25,000 per year. Based on a MARR of 10%, what are the optimum replacement interval and minimum EUAC?
A process for making a laboratory-grade sodium phosphate will have a first cost of $320,000 with annual costs of $40,000 and revenue of $98,000 per year. At a return requirement of 20% per year, the payback period is closest to:a. 3 yearsb. 5 yearsc. 7 yearsd. ∞; it will never pay off