A new high-efficiency motor is being considered for a large compressor. The new motor will cost $20,000 but will save $8000 per year in electricity. If the firm’s MARR is 15%, what is the discounted payback period?

Q: Gluon Inc. is considering the purchase of a new high pressure glueball. It can purchase the glueball…

A: Calculation of Annual Depreciation Tax Shield:

Q: The plant manager at a company would like to perform an analysis for a new $250,000 machine. If she…

A: Payback period method is a traditional method used in capital budgeting decisions which is used to…

Q: A precision lathe costs $11,300 and will cost $26,500 a year to operate and maintain. If the…

A: Here, Lathe Costs is $11,300 Operation and Maintenance Cost is $26,500 Time Period is 4 years…

Q: A computer call center is going to replace all of its incandescent lamps with more energy efficient…

A: Given information: Total estimated savings per year is $1,875 Initial investment is $4,900

Q: Bernard Productions, a motion picture producer, is considering the purchase of a new movie camera.…

A: Calculation of cash outflows on new camera = Purchase price = - P 30000

Q: A company plans to modernize its facilities in 8 years. They estimate saving $5,000 per month if…

A: Estimated saving Per Month = $5,000.00 Time Period(Years) = 8 Salvage Value = $29,700.00 Nominal…

Q: John's cafe is considering the purchase of a waffle maker that cost $10,000. The waffle maker has an…

A: Net present value (NPV) is the value of all the cash flow of the investment (positive and negative)…

Q: A heat exchanger costs $36,000, but it will save $5000 per year in energy costs. If the interest…

A: Present Value is the method by which we get to know the present value of the future cash flows. We…

Q: You are considering a luxury apartment building project that requires an investment of $12,500,000.…

A: For this we have to do NET PRESENT VALUE (NPV) analysis.

Q: A new process for manufacturing lead pencils will have a first cost of $35,000 and annual costs of…

A: Given, Initial Cost = $35,000 Annual cost = $17,000 Annual extra income = 22,000

Q: An engineering company needs to decide whether or not to build a new factory. The costs of building…

A: In this we have to calculate present value of all and decide what is required period.

Q: You purchase a machine. It costs $75,000 and will expand cash flow by $1,000 /month in year 1…

A: To Find: NPV  IRR

Q: A company is considering expanding their production capabilities with a new machine that costs…

A: Present value is the value of future cashflow dicounted at specified rate to today's date. formula:…

Q: A firm is considering a project with a 5-year life and an initial cost of $1,000,000. The discount…

A: Initial cost = -$1000000 After tax cash flow Year 1 – 3 = 2500*120 = $300,000 Abandon option, After…

Q: Calculate the NPV of this investment​ opportunity, assuming all cash flows occur at the end of each…

A: Net Present Value: NPV represents the project's present worth considering the annual cash flows and…

Q: Bailey, Inc., is considering buying a new gang punch that would allow it to produce circuit boards…

A: The amount which is invested by an investor in any security is known as investment. It can be done…

Q: The CFO of HairBrain Stylists is evaluating a project that costs $42, 000. The project will generate…

A: Net present value (NPV) is the value of the project computed by subtracting present value of future…

Q: A new computer system will require an initial outlay of $15,000 but it will increase the firm's cash…

A: NPV = Present Value of cash inflow (PVCI) - Present Value of cash outflow (PVCO)

Q: The system in an energy conservation option has a first cost of $25 $2,000 per year maintenance and…

A: NPV is $740 after 15 years.  Hence the option is feasible

Q: Gluon Inc. is considering the purchase of a new high pressure glueball. It can purchase the glueball…

A: Calculation of equivalent annual savings: Answer: Equivalent annual savings is $4,080.11

Q: A new engineer is evaluating whether to use a larger-diameter pipe for a water line. It will cost…

A: The present worth of an investment is the net current worth of a project computed by deducting the…

Q: A small family business wants to expand and is planning to start an investment, which will cost an…

A: Net present value is the technique used in capital budgeting to evaluate the acceptability of the…

Q: You want to buy a new machine. It's going to cost $200,000 and have a salvage value of $15,000 after…

A: Here, Cost = $200,000 Salvage value = $15,000 Time period = 7 years Annual operating costs =…

Q: An energy conservation option with a first cost of $10,000 is installed. It requires $600 per year…

A: Life cycle costing is the calculation of the total amount which an entity will spend throughout the…

Q: The Coca-Cola Company are looking to go for a project that will require an initial investment of $…

A: Cost will include the initial cost of project and the annual expenditure. Present equivalent cost is…

Q: A small family business wants to expand and is planning to start an investment, which will cost an…

A: Since, NPV = PV(cash inflows) - initial investment MARR = 12% compounded semi-annually Number of…

Q: The CFO of HairBrain stylists is evaluating a project that costs $42,000. The project will generate…

A: Given information: Project costs $42,000 Cash flow generates $11,000 for 5 years Rate of return is…

Q: Crow Corporation, a company that specializes in precision metal fabrication, is conducting a study…

A: Given information: Interest rate is 12% Number of years is 2 Cost is $260,000

Q: A firm might purchase a computerized quality control system. The proposed system will cost $76,000,…

A: DISCOUNTED PAYBACK PERIOD FORMULA: discounted payback period=period prior to full…

Q: Bailey, Inc., is considering buying a new gang punch that would allow them to produce circuit boards…

A: It is a discount rate at which the net present value equal to zero.

Q: worthwhile to invest in the insulation? What is the payback period of the investment?

A: Reduction in fuel = P190000 × 20% = P38000  Less: Annual cost of taxes and insurance = 5% of P120000…

Q: New manufacturing equipment costs $225,000, salvage value is $25,000, and average annual earnings of…

A: a) Average annual rate of return = Average Annual Earning per year / Investment value

Q: What should the resale value of a machine if it is bought at $100,000 that will produce a net…

A: The annual return seems to be the rate of return on investment over time, given as a time-weighted…

Q: You are considering the purchase of a new high-efficiency machine to replace older machines now. The…

A: Cost Accounting: It is the process of collecting, recording, analyzing the cost, summarizing cost,…

Q: BRAC is considering investing $100000 in a new machine with an expected life of 5 years. The machine…

A: The question is related to the Capital Budgeting and risk and uncertainity in capital budgeting…

Q: A robot’s first cost is $40,000, and its market value declines by 20% annually. The operating and…

A: Equivalent Uniform Annual Cost (EUAC) refers to the annual cash flows generated in the form of…

Q: The investment of $500,000 in an SMP machine is expected to reduce manufacturing costs by $92,500…

A: External rate of return equates the future worth of positive cash flows using MARR to the future…

Q: You are considering a project which will cost $140,000.  It is expected to bring in incomes of…

A: Initial cost = $140,000 Annual income (C) = $45,000 Period (n) = 5 Years Discount rate (r) = 0.12…

Q: Two alternative pumps are being compared. Pump A costs $5200, will save $1275 per year in operating…

A: Information Provided: Pump A costs = $5200 Pump A savings = $1275 per year Pump B costs = $6000 Pump…

Q: Amphenol manufactures motor power connectors and is considering upgrading the production equipment…

A: Future worth (FW) is the value of present worth of a cash flow to be received on a future date with…

Q: a) The Coca-Cola Company are looking to go for a project that will require an initial investment of…

A: Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: The Wildwood Widget Company needs a milling machine for its new assembly line. The machine presently…

A: Present worth analysis is an analysis in which we convert all the cash flows to present worth using…

Q: Wooltech Industries is considering the purchase of two knitting machines. The Super X Knitter costs…

A: Here , we are going to calculate equivalent annual costs for both the machines.

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.