Compare the two following alternatives in terms of future worth using MARR = 6% Alternative 1: First cost: 45,000 Yearly cost 6,000 Salvage value: 8,000 Lifetime: 3 Alternative 2: First cost: 68,000 Yearly cost 4,000 Salvage value: 13,000 Lifetime: 6 Your answer: O Alt 1: $-432,346, Alt 2: $-77,952 Alt 1: $-141,753, Alt 2: $-111,361

Compare the two following alternatives in terms of future worth using MARR = 6% Alternative 1: First cost: 45,000 Yearly cost 6,000 Salvage value: 8,000 Lifetime: 3 Alternative 2: First cost: 68,000 Yearly cost 4,000 Salvage value: 13,000 Lifetime: 6 Your answer: O Alt 1: $-432,346, Alt 2: $-77,952 Alt 1: $-141,753, Alt 2: $-111,361

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Alternative I has a first cost of $50,000, will produce an $18,000 net annual benefit over its 10-year life and be salvaged for $5,000. Alternative II costs $150,000 and has a salvage value of $50,000 after its 10-year useful life. If interest is 15%, what is the minimum amount of annual benefit that Alternative II must produce to make it the preferred choice? (a) This value can not be determined from the data given. (b) $23,500 (c) $31,450 (d) $35,708?
Compare the alternatives shown on the basis of their capitalized costs using a MARR of 10% per year. Alternative M N First cost, $ −195,000 −750,000 Annual operating cost, $ per year −70,000 −11,000 Salvage value, $ 8,000 1,000,000 Life, years 5 ∞ The capitalized cost for alternative M is $− , and the capitalized cost for alternative N is $− . The best alternative selected on the basis of their capitalized costs is alternative
Compare three alternatives on the basis of their capitalized costs at i = 13% per year and select the best alternative. Alternative E F G First Cost $-85,000 $-325,000 $-825,000 AOC, per Year $-65,000 $-20,000 $-6,000 Salvage Value $25,000 $75,000 $500,000 Life, Years 2 4 ∞ The capitalized cost of alternative E is $ , alternative F is $ , and alternative G is $ . The best alternative is E G F .
Calculate the conventional benefit-cost ratio for the alternative: Initial Investment 150000 Revenues 50000 Costs 20000 Salvage Value 50000 Useful life 10 MARR 0.1 Select one: a. 1.2114 b. 1.3130 c. 1.4659 d. 1.3681 e. 1.2960
Compare the following alternatives based on the rate of return analysis assuming that the MAAR is 15% per year. Project A Project B Initial Cost $60.000 $90.000 Annual cost of operation 15.000 8.000 Annual cost of reparation 5.000 2.000 Annual increase of the repair 1.000 1.500 Salvage value 8.000 12.000 Life, years 15 15
Compare two alternatives, A and B, on the basis of a present worth evaluation using i = 10% per year and a study period of 8 years. Alternative A B First cost, $ −15,000 −28,000 Annual operating cost, $/year −6,000 −9,000 Overhaul in year 4, $ — −2000 Salvage value, $ 3,000 5,000 Life, years 4 8
Should you replace the Defender?MARR: 12% ❑ Given: DefenderMarket price: $100,000Remaining useful life: 3 yearsSalvage value: $25,000O&M cost: $8,000 ChallengerCost: $150,000Useful life: 3 yearsSalvage value: $55,000O&M cost: $6,000
Consider a project with the following information: Initial fixed asset investment = $515,000; straight-line depreciation to zero over the 4-year life; zero salvage value; price = $47; variable costs = $29; fixed costs = $207,000; quantity sold = 102,000 units; tax rate = 21 percent. How sensitive is OCF to changes in quantity sold? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Change in OCF/ Change in Q =?
Consider a project with the following information: Initial fixed asset investment = $515,000; straight-line depreciation to zero over the 4-year life; zero salvage value; price = $47; variable costs = $29; fixed costs = $207,000; quantity sold = 102,000 units; tax rate = 21 percent. How sensitive is OCF to changes in quantity sold? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) find the change in OCF/Change in Q
Cost of the investment $ 32,000 Annual cost savings $ 9,000 Estimated salvage value $ 3,000 Life of the project 5 years Discount rate 10% Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using the tables provided. The net present value of the proposed investment is closest to: (Round your intermediate calculations and final answer to the nearest whole dollar amount.) Multiple Choice $2,119 $3,982 $1,863 $20,000
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Given the following information and assuming straight-line depreciation to zero, what is the IRR of this project? Initial investment = $400,000; life = four years; cost savings = $125,000 per year; salvage value = $20,000 in year 5; tax rate = 34%; discount rate = 12%.Multiple Choice7.51%9.43%10.24%6.25%8.15%