An investment of $20.000 in new equipment will generate income of $7000 per year for 3 years, at which time the machine can be sold for an estimated $8000. If the company's MARR Is 15% per year, the equation that can be used to solve for i is: 0 = -20,000 + 7000(PIAI3) + 8000(P/F,.3) Select one: O True False
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- An engineer must recommend one of two machines for integration into an upgradedmanufacturing line. She obtains estimates from two salespeople. Salesman A gives her theestimates in future (then-current) dollars, while saleswoman B provides the estimates in today’s(constant-value) dollars. The company has a MARR of a real 15% per year, and it expectsinflation to be 5% per year. Use PW analysis to determine which machine the engineer shouldrecommend.The first cost of an electric rebar bender is P346,000 and a salvage value of P47,000 at the end of its life for 5 years. Money is worth 5.9% annually. If there is no salvage value and the annual maintenance cost is P15,000, find the annual cost of perpetual service.E3 Your company plans to raise price on product A by 5% per year. Due to competition, sales volume from product A is expected to decline at 10% per year. Revenue will be $5M for this year. Alternatively, based on the projection from the marketing department, you may reduce the sales volume decline from 10% to 5% if the price is kept unchanged. The product will be discontinued at the end of year 5 for both scenarios. If the firm's TVOM is 10%, Determine the revenue cash flow streams for both alternatives. What is the Excel financial function to compute PW of the revenue streams?
- Nadine Chelesvig has patented her invention. She is offering a potential manufacturer two contracts for the exclusive right to manufacture and market her product. Plan A calls for an immediate single lump sum payment to her of $30,000. Plan B calls for an annual payment of $1,000 plus a royalty of $0.50 per unit sold. The remaining life of the patent is10 years. Nadine uses a MARR of 10%/year. Solve, a. What must be the uniform annual sales volume of the product for Nadine to be indifferent between the contracts, based on a present worth analysis? b. If the sales volume is below the volume determined in (a), which contract would the manufacturer prefer?A construction firm is considering purchasing equipment that will reduce cost by P40,000. The equipment costs P300,000 and has a salvage value of P50,000 and a life of 7 years. The annual maintenance cost is P6,000. While not used by the firm, the equipment can be rented to others to generate an income of P10,000 per year. If the money can be invested for 8% return, is the firm justified in buying the equipment? (USE ROR Method) a. None of the choices b .I do not care c. No d. YesKaneb is evaluating two alternative pipeline welders. Welder A costs $310,000, has a 7-year life, and is expected to generate net cash inflows of $78,000 in each of the 7 years. Welder B costs $320,000, has a 5-year life, and is expected to generate annual net cash inflows of $68,900 in each of the 5 years. Kaneb's cost of capital is 16%. Using the equivalent annual annuity method, which alternative should be chosen and what is its NPV?
- An item is purchased for P200000. Annual cost is P20 000. Using 8%, what is the capitalized cost(P) of perpetual service?A new office building is expected to produce the initial net operating income (NOI) of $10 at time 1. The NOI is expected to grow 5% per year, and the investor expects an annual IRR of 15%. If the construction cost is $90, what is the land value at time 0?Abigail invests P4,520 for a period from January 26 to November 12, 2004. Given that the exact interest rate on the investment is 11.5% per year, what sum, in pesos, will be collected?
- An old machine cost P48,000.00 a year to maintain. What expenditures for anew machine is justified if no maintenance will be acquired for the first 3 years,P12,000.00 per year for the next 7 years, and P48,000 a year thereafter?Assume money to cost 4% compounded annually and no other costs to beconsidered.Matchim's Paving is investing in a new wider paving machine that will cost $131000, which is expected to return $22500 per year of the next 12 years. At the end of the 12 years the paving machine is expected to have a salvage value of $20000. Assuming the cash flow is at the end of the year, what is the Pay Back Period, in years, for the project?Find the ROR using trial and error and linear interpolation for the following: The initial cost at 0 time, P = 280,000 The annual cost (A = 10,000) The salvage at year 10, F = 600,000 n= 10