How long would it take to recover and investment of $250,000 in enhanced CNC controls that include axis control to eight axes on the milling model, if the associated income is $80,000 per year, expense is $40,000 per year, and salvage is $180,000 at end of first year and decreases by $2,0,000 every year after year one. MARR=6%.Hint: Payback period is between 4 and 8 years. please don't use software and show work

How long would it take to recover and investment of $250,000 in enhanced CNC controls that include axis control to eight axes on the milling model, if the associated income is $80,000 per year, expense is $40,000 per year, and salvage is $180,000 at end of first year and decreases by $2,0,000 every year after year one. MARR=6%.Hint: Payback period is between 4 and 8 years. please don't use software and show work

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 7E

See similar textbooks

Similar questions

The city of Oak Ridge is considering the construction of a four kilometer (km) greenway walking trail. It will cost $1,000 per km to build the trail and $300 per km per year to maintain it over its 20-year life. If the city’s MARR is 7% per year, what is the equivalent uniform annual cost of this project? Assume the trail has no residual value at the end of 20 years.
A remotely situated fuel cell has an installed cost of $2,000 and will reduceexisting surveillance expenses by $350 per year for eight years. The border security agency’s MARR is 10% per year. Solve, a. What is the minimum salvage (market) value after eight years that makes the fuel cell worth purchasing? b. What is the fuel cell’s IRR if the salvage value is negligible?
The city of Oak Ridge is considering the construction of a three kilometer (km) greenway walking trail. It will cost $1,000 per km to build the trail and $320 per km per year to maintain it over its 23-year life. If the city's MARR is 10% per year, what is the equivalent uniform annual cost of this project? Assume the trail has no residual value at the end of 23 years.
(Show the cashflow diagram if needed) A project is estimated to cost P100,000, lasts 8 years, and have a P10,000 salvage value. The annual gross income is expected to average P24,000 and annual expenses, excluding depreciation, will total P6,000. If capital is earning 10% before income taxes, determine if this is a desirable investment using PWM and FWM.
DRAW CASH FLOW DIAGRAM Calculate the capitalized cost of a project that has an initial cost of P8,000,000 and an additional cost of P250,000 at the end of every 8 years. The annual operating costs will be P150,000 at the end of every year for the first 5 years and P200,000 thereafter. In addition there is expected to be recurring major rework cost of P500,000 every 13 years. Assume i=12%
An investment of P 250,000 can be made in a project that will produce a uniform annual revenue of P 192,800 for 5 years and then have a salvage value of 10% of the first cost. Operation and maintenance will be P 72,000 per year. Taxes and insurance will be 4% of the first cost per year. The company expects capital to earn 20% before income taxes. Show whether or not the investment is justified economically using1. ROR method2. payout method
A machine that costs $12,000 is expected to operate for 10 years. The estimated salvage value at the end of 10 years is $0. The machine is expected to save the company $2,331 per year before taxes and depreciation. The company depreciates its assets on a straight-line basis and has a marginal tax rate of 40 percent. The firm’s cost of capital is 14 percent. What is the internal rate of return (IRR) for the machine? Based on the IRR criterion, should this machine be purchased?
eBook Net Present Value Method—Annuity Take a Load Off Hotels is considering the construction of a new hotel for $12,000,000. The expected life of the hotel is 6 years with no residual value. The hotel is expected to earn revenues of $12,400,000 per year. Total expenses, including straight-line depreciation, are expected to be $10,000,000 per year. Take a Load Off's management has set a minimum acceptable rate of return of 12%. a. Determine the equal annual net cash flows from operating the hotel.$fill in the blank 1 b. Calculate the net present value of the new hotel, using the present value factor of an annuity of $1 table below. If required, round to the nearest dollar. If the net present value is negative, enter the amount using a minus sign. 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…
The company uses a 10% discount rate and the total-cost approach to capital budgeting analysis. The working capital required under the new system would be released for use elsewhere at the conclusion of the project. Both alternatives are expected to have a useful life of ten years.1. The net present value of the overhaul alternative (rounded to the nearest hundred pesos) is: P(750,300) P(987,400) P(725,800) P(975,800) 2. The net present value of the new system alternative (rounded to the nearest hundred pesos) is: P(552,900) P(758,400) P(862,900) P(987,400)
For FW Method, if FW (i = MARR) = −30, then the project is economically _____________. justified barely justified sometimes justified unjustified none
A pump for a reservoir must be operated continuously (8,760 hours per year). In the event of a large storm, the electricity from the local utility’s power grid may be interrupted for an indefinite period of time. To deal with this emergency situation, two mutually exclusive backup diesel generators are being investigated. One of them will be chosen for implementation. Relevantdata are provided as follows: If salvage values of both generators are negligible and the study period is 60 years, which generator should be chosen? The MARR is 10% per year
An area can be irrigated by pumping water from a nearby river. Two competing installations are being considered. The MARR is 12% per year and electric power for the pumps costs $0.06 per kWh. Recall that 1 horsepower (hp) equals 0.746 kilowatts. (11.2, 11.3) a. At what level of operation (hours per year) would you be indifferent between the two pumping systems? If the pumping system is expected to operate 2,000 hours per year, which system should be recommended? b. Perform a sensitivity analysis on the efficiency of Pump A. Over what range of pumping efficiency is Pump A preferred to Pump B? Assume 2,000 hours of operation per year, and draw a graph to illustrate your answer.