AMT, Inc., is considering the purchase of a digital camera for maintenance of design specifications by feeding digital pictures directly into an engineering workstation where computer-aided design files can be superimposed over the digital pictures. Differences between the two images can be noted, and corrections, as appropriate, can then be made by design engineers. a. You have been asked by management to determine the PW of the EVA of this equipment, assuming the following estimates: capital investment = $362,000; market value at end of year six = $115,000; annual revenues = $111,000; annual expenses = $10,000; equipment life = 6 years; effective income tax rate = 27%; and after-tax MARR = 10% per year. MACRS depreciation will be used with a five-year recovery period. b. Compute the PW of the equipment's ATCFS. Click the icon to view the GDS Recovery Rates (r.) for the 5-year property class. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 10% per year. a. Calculate the PW of the EVA of this equipment. PWEVA (10%) =S (Round to the nearest hundreds.)

AMT, Inc., is considering the purchase of a digital camera for maintenance of design specifications by feeding digital pictures directly into an engineering workstation where computer-aided design files can be superimposed over the digital pictures. Differences between the two images can be noted, and corrections, as appropriate, can then be made by design engineers. a. You have been asked by management to determine the PW of the EVA of this equipment, assuming the following estimates: capital investment = $362,000; market value at end of year six = $115,000; annual revenues = $111,000; annual expenses = $10,000; equipment life = 6 years; effective income tax rate = 27%; and after-tax MARR = 10% per year. MACRS depreciation will be used with a five-year recovery period. b. Compute the PW of the equipment's ATCFS. Click the icon to view the GDS Recovery Rates (r.) for the 5-year property class. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 10% per year. a. Calculate the PW of the EVA of this equipment. PWEVA (10%) =S (Round to the nearest hundreds.)

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter15: Decision Analysis

Section: Chapter Questions

Problem 5P: Hudson Corporation is considering three options for managing its data warehouse: continuing with its...

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AMT, Inc., is considering the purchase of a digital camera for maintenance of design specifications by feeding digital pictures directly into an engineering workstation where computer-aided design files can be superimposed over the digital pictures. Differences between the two images can be noted, and corrections, as appropriate, can then be made by design engineers. Solve, a. You have been asked by management to determine the PW of the EVA of this equipment, assuming the following estimates: capital investment = $345,000; market value at end of year six = $120,000; annual revenues = $120,000; annual expenses = $8,000; equipment life = 6 years; effective income tax rate = 50%; and after-tax MARR = 10% per year. MACRS depreciation will be used with a five-year recovery period. b. Compute the PW of the equipment’s ATCFs. Is youranswer in Part (a) the same as your answer in Part (b)?
AMT, Inc., is considering the purchase of a digital camera for the maintenance of design specifications by feeding digital pictures directly into an engineering workstation where computer-aided design files can be superimposed over the digital pictures. Differences between the two images can be noted, and corrections, as appropriate, can then be made by design engineer. The capital investment requirement is P345,000 and the estimated market value of the system after a six-year study period is P115,000. Annual revenues attributable to the new camera system will be P120,000, whereas additional annual expenses will be P7,000. The corporation's MARR is 20% per year. Show whether this is a desirable investment by using the ERR method.
AMT, Inc., is considering the purchase of a digital camera for the maintenance of design specifications by feeding digital pictures directly into an engineering workstation where computer-aided design files can be superimposed over the digital pictures. Differences between the two images can be noted, and corrections, as appropriate, can then be made by design engineer. The capital investment requirement is P345,000 and the estimated market value of the system after a six-year study period is P115,000. Annual revenues attributable to the new camera system will be P120,000, whereas additional annual expenses will be P7,000. The corporation's MARR is 20% per year. Show whether this is a desirable investment by using the annual worth method.
AMT, Inc., is considering the purchase of a digital camera for the maintenance of design specifications by feeding digital pictures directly into an engineering workstation where computer-aided design files can be superimposed over the digital pictures. Differences between the two images can be noted, and corrections, as appropriate, can then be made by design engineer. The capital investment requirement is P345,000 and the estimated market value of the system after a six-year study period is P115,000. Annual revenues attributable to the new camera system will be P120,000, whereas additional annual expenses will be P20,000. The corporation's MARR is 20% per year. Show whether this is a desirable investment by using the Annual Worth Method (use capital recovery formula).
An existing robot is used in a commercial material laboratory to handle ceramic samples in the hightemperature environment that is part of several test procedures. Due to changing customer needs, the robot will not meet future service requirements unless it is upgraded at a cost of $2,000. Because of this situation, a new advanced technology robot has been selected for potential replacement of the existing robot. The accompanying estimates have been developed from information provided by some current users of the new robot and data obtained from the manufacturer. The firm’s before-tax MARR is 25% per year. Based on this information,should the existing robot be replaced? Assume that a robot will be needed for an indefinite period.
A process control manager is considering two robots to improve materials handling capacity in the production of rigid shaft couplings that mate dissimilar drive components. Robot X has a first cost of $84,000, an annual M&O cost of $31,000, a $40,000 salvage value, and will improve revenues by $96,000 per year. Robot Y has a first cost of $146,000, an annual M&O cost of $28,000, a $47,000 salvage value, and will increase revenues by $119,000 per year. The company’s MARR is 15% per year and it uses a 3-year study period for economic evaluations. Which one should the manager select (a) on the basis of ROR values, and (b) on the basis of the incremental ROR value? (c) Which is the correct selection basis? Perform the analysis by hand or spreadsheet, as instructed.
The management of Brawn Engineering is considering three alternatives to satisfy an OSHA requirement for safety gates in the machine shop. Each gate will completely satisfy the requirement, so no combinations need to be considered. The first costs, operating costs, and salvage values over a 5-year planning horizon are shown below. Show the comparisons and internal rates of return used to make your decision:
Ned Thompson Labs performs tests on superalloys, titanium, aluminum, and most metals. Tests on metal composites that rely upon scanning electron microscope results can be subcontracted or the labs can purchase new equipment. Evaluate the sensitivity of the economic decision to purchase the equipment over a range of ±20% (in 10% increments)of the estimates for P, AOC, R, n, and MARR (range on MARR is 12% to 18%). Use the AW method and plot the results on a sensitivity graph. For which parameter(s) is the AW most sensitive? least sensitive? First cost, P = $-180,000 Salvage, S = $20,000 Life, n = 10 years Annual operating cost, AOC=$-30,000 per year Annual revenue, R = $70,000 per year MARR = 15% per year
What would the capital investment amount for pump SP240 have to be such that the firm would be indifferent as to which pump model isselected? You are a member of an engineering project team that is designing a new processing facility. Your present design task involves the portion of the catalytic system that requires pumping a hydrocarbon slurry that is corrosive and contains abrasive particles. For final analysis and comparison, you have selected two fully lined slurry pump units, of equal output capacity, from different manufacturers. Each unit has a large diameter impeller required and an integrated electric motor with solid-state controls. Both units will provide the same level of service (support) to the catalytic system but have different useful lives and costs. The new processing facility is needed by your firm at least as far into the future as the strategic plan forecasts operating requirements. The MARR is 20% per year. Based on this information, which slurry pump should you…
The production department is proposing the purchase of an automatic insertion machine. It has identified three machines and has asked the accountant to analyze them to determine which one has the best average rate of return. Line Item Description Machine A Machine B Machine C Estimated average income $47,060.44 $72,961.50 $73,785.60 Average investment 336,146.00 243,205.00 491,904.00 a. Machine C b. Machine A c. Machines B and C have the same preferred average rate of return. d. Machine B
The production department is proposing the purchase of an automatic insertion machine. It has identified three machines and has asked the accountant to analyze them to determine which one has the best average rate of return. Machine A Machine B Machine C Estimated average income $43,866.76 $73,406.10 $62,231.25 Average investment 313,334.00 244,687.00 414,875.00
In order to try to improve the efficiency of the distribution activities at Zecon, Mr. McDowall was considering implementing a new order processing system. A software company that specialised in order processing and distribution software had recently approached him. The new system looked very appealing, but seemed quite expensive: a start-up investment of $1.5 million dollars for new computer equipment. Mr. McDowall had therefore been considering the ramifications of this new system, and estimated the following: Inventories will be reduced $3million Transportation consolidations would reduce transportation costs by $850,000 per year Warehousing costs of $200,000 per year will be eliminated The new order processing system will incur annual operating costs of $300,000 The new system will provide management with 4 additional days for planning production operations, thereby reducing costs of goods sold by 3% of current costs. Calculate the change in Return on Assets for…