Ch 25 pro 8 Please provide instructions. Cash Payback Period, Net Present Value Analysis, and Qualitative Considerations The plant manager of Shannon Electronics Company is considering the purchase of new automated assembly equipment. The new equipment will cost $48,000. The manager believes that the new investment will result in direct labor savings of $16,000 per year for 10 years. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.353 2.991 6 4.917 4.355 4.111 3.785 3.326 7 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 a.  What is the payback period on this project? years b.  What is the net present value, assuming a 10% rate of return? Use the table provided above. Round to the nearest whole dollar. Net present value $ c.  What else should the manager consider in the analysis?  Liz C

Chapter 3 Financial Mathematics (Exercises) Future Value Calculations Exercise 1: (answers on page 347) 1) A factory purchases new equipment which costs R5,2 million. It depreciates at a rate of 12,5% per annum on a reducing balance. The replacement cost of the equipment escalates at a rate of 7,5% per annum. A sinking fund is set up to pay for the new machinery in 6 years' time. If the sinking fund earns 9% p.a. compounded monthly, determine: a) The book value of the old equipment in 6 years' time. b) The cost of the new equipment in 6 years' time. C) The value the sinking fund must attain, if the book value of the current equipment is used towards the cost of the new equipment. d) The monthly payments that need to be made into the sinking fund if payments commence one month after the current equipment is purchased and will continue until the new equipment is purchased. The

QUESTION 10 Georgia Mills Company (GMC) purchase a milling machine, which it intends to use for the next five years, for $180,000. This machine is expected to save GMC $35,000 during the first operating year. Then, the annual savings are expected to decrease by 3% each subsequent year over the previous year due to increased maintenance costs. Assuming that GMC would operate the machine for an average of 5,000 hours per year and that the machine would have no appreciable salvage value at the end of the five year period, determine the equivalent dollar savings per operating hour at 15% interest compounded annually. OA $3.24 lost per hour OB. $4.09 lost per hour OC $6.74 lost per hour D.$5.92 lost per hour

QUESTION 10 A project will produce operating cash flows of $57,000 a year for 3 years. During the life of the project, inventory will be lowered by $10,000 and accounts receivable will increase by $20,000. Accounts payable will decrease by $5,000. The project requires the purchase of equipment at an initial cost of $90,000. The equipment will be salvaged at the end of the project creating a $17,000 after-tax cash inflow. At the end of the project, net working capital will return to its normal level. What is the net present value of this project given a required return of 12%? $48,772.08 $54,681.35 $56,209.19 $42,908.17 $44,141.41