Amazon in OKC has just invested $250.000 in eaulpment having a egligible lvnge value (SV 0) regardless of when the equipment if replaced OSM cnts eal $50,000 the frst year and increase $10.000 per year. Based on a MARR of 10% What is the Equivalent Uniform Anual Cost (EUAC for Year 67 A. $106,676 B. $107.670 C. $111.132 D. $119,682
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- Break-even sales under present and proposed conditions Kearney Company, operating at full capacity, sold 400,000 units at a price of $246.60 per unit during 20Y5. Its income statement for 20Y5 is as follows: The division of costs between fixed and variable is as follows: Management is considering a plant expansion program that will permit an increase of $8,631,000 (35.000 units at $246.60) in yearly sales. The expansion will increase fixed costs by $3,600,000 but will not affect the relationship between sales and variable costs. Instructions Determine for 20Y5 the total fixed costs and the total variable costs.Break-even sales under present and proposed conditions Kearney Company, operating at full capacity, sold 400,000 units at a price of $246.60 per unit during 20Y5. Its income statement for 20Y5 is as follows: The division of costs between fixed and variable is as follows: Management is considering a plant expansion program that will permit an increase of $8,631,000 (35.000 units at $246.60) in yearly sales. The expansion will increase fixed costs by $3,600,000 but will not affect the relationship between sales and variable costs. Instructions Determine the maximum operating income possible with the expanded plant.Deuce Sporting Goods manufactures a high-end model tennis racket. The company’s forecasted income statement for the year, before any special orders, is as follows: Fixed costs included in the forecasted income statement are $400,000 in manufacturing cost of goods sold and $200,000 in selling expenses. A new client placed a special order with Deuce, offering to buy 1,000 tennis rackets for $100.00 each. The company will incur no additional selling expenses if it accepts the special order. Assuming that Deuce has sufficient capacity to manufacture 1,000 more tennis rackets, by what amount would differential income increase (decrease) as a result of accepting the special order? (Hint: First compute the variable cost per unit relevant to this decision.)
- Net present value method for a service company Coast-to-Coast Inc. is considering the purchase of an additional delivery vehicle for 70,000 on January 1, 20Y1. The truck is expected to have a five-year life with an expected residual value of 15,000 at the end of five years. The expected additional revenues from the added delivery capacity are anticipated to be 65,000 per year for each of the next five years. A driver will cost 40,000 in 20Y1, with an expected annual salary increase of 2,000 for each year thereafter. The annual operating costs for the truck are estimated to be 6,000 per year. a. Determine the expected annual net cash flows from the delivery truck investment for 20Y120Y5. b. Compute the net present value of the investment, assuming that the minimum desired rate of return is 12%. Use the present value table appearing in Exhibit 2 of this chapter. c. Is the additional truck a good investment based on your analysis? Explain.Youngstown Construction plans to discontinue its rooting segment. Last year, this segment generated a contribution margin of $65.000 and incurred $70.000 in fixed costs. Discontinuing the segment will allow the company to avoid half of the fixed costs. What effect is expected to occur to the companys overall profit? A. a decrease of $5,000 B. a decrease of $30,000 C. a decrease of $5,000 D. an increase of $30,000A special-purpose machine toolset would cost $30.000. 1l1e entire capitalexpenditure ($30.000) is 10 be borrowed with the stipulation that it be repaid by two equal end-of-year payments at 12% compounded annually. 11rn tool is expected to provide annual savings (in the material) of $45,000 for two years and is to be depreciated by the MACRS Three-year recovery period.111is special machine tool will require annual O&M costs in the amount of $12,000.111e salvage value at the end of two years is expected 10 be $9,000. Assuming a marginal tax rate of 40% and MARR of 15%. what is the net present worth of this project?
- A 1000ft (one lane) asphalt road costs P3.8M. It requires no upkeep until the end of 3 years when P80,000 will be needed for repairs. After this P90,000 will be needed for repairs at the end of each year for the next 4 years, then P120,000 thereafter. Rework cost of 1.5M is expected every 6 years. If money is worth 11% compounded annually, what was would be the equivalent uniform annual cost for a 20-year period.An industrial firm can purchase a certain machine for $40.000. A down payment of S-1.000 is required. and the balance can be paid in five eq ual year-end installments at 7% interest on the unpaid balance. As an alternative. the machine can be purchased for $36,000 in cash. If the firm 's MARR is 10%, determine which alternative should be accepted using the annual- equivalence method.Certain new machinery, when placed in service, is estimated to cost $180,000. It is expected to reduce net annual operating expenses by $36,000 per year for 10 years and to have a $30,000 MV at the end of the 10th year. Solve, (a) Develop the ATCFs and BTCFs. (b) Calculate the before-tax and after-tax IRR. Assume that the firm is in the federal taxable income bracket of $335,000 to $10,000,000 and that the state income tax rate is 6%. State income taxes are deductible from federal taxable income. This machinery is in the MACRS (GDS) five-year property class. (c) Calculate the after-tax PW when the after-tax MARR = 10% per year. In this example, the study period is 10 years, but the property class of themachinery is 5 years. Solve by hand and by spreadsheet.
- An electric power generating project has a first cost of $447,946 and annual operating costs of $30,000. There is a $180,000 overhaul cost in Year 8. The facility will have a salvage value of $75,000 at the end of Year 15. What is the minimum annual revenue for a breakeven PW at i=10%? Answer to the nearest whole dollar, and enter only the number. PLEASE USE EXCEL AND SHOW FORMULASThe maintenance cost of a certain equipment is P80,000.00 per year for the first 5 years, P120,000.00 per year for the next 5 years, cost of overhaul at the end of the 5th year and the 8th year is P280,000.00. Find the equivalent uniform annual cost of maintenance if money is worth 6% compounded annually? Answer. P149,403.62Godo AAU Company is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment costs $371,200 and has a 6-year life and no salvage value. AAU Company requires at least an 9% return on this investment. The expected annual income for each year from this equipment follows: (PV of $1, FV of $1, PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Sales of new product$ 232,000Expenses Materials, labor, and overhead (except depreciation)81,000Depreciation—Equipment61,867Selling, general, and administrative expenses23,200Income$ 65,933(a) Compute the net present value of this investment. (b) Should the investment be accepted or rejected on the basis of net present value?