It is estimated that depositing 20,000 pesos every end of the 6 months in a sinking fund that gives an interest rate of 14% compounded semi-annually, will provide the money that could replace a machine at the end of 10 years. If the machine has no salvage value, what is the cost of replacement.

Q: Salalah Methanol Co. has bought some new machinery at a cost of 1250000 OMR. The impact of the new…

A: Capital budgeting approaches are the methodologies adopted by the top-level management to evaluate…

Q: A machine is to be purchased for Php155,000; it has an estimated life of 8 years and a salvage value…

A: Sinking Fund: A sinking fund consists of periodic (usually annual) contributions to a fund in order…

Q: Draw the cash flow diagram for an investment that includes purchasing a machine that costs $50,000…

A: Cash flow: It is the inflow & outflow of cash from the company or a project.

Q: An investment of $75,000 in equipment that will reduce the time for machining self-locking fasteners…

A: Investment = 75,000 Savings each year = 20,000 Interest Rate = 10% per year

Q: What is the capitalized cost of a calendering machine that costs ₱1231,000 upon purchase, requires…

A: Initial cost (X) = P 1231000 Annual cost (A) = P 412000 Replacement cost (R) = P 89000 every 5 years…

Q: What will be the equivalent uniform annual amount that will be deposited in a bank for 15 years that…

A: Time Period 15 Initial Cost  P20,00,000.00 Additional Cost at the end evry 5th year…

Q: The price of a machine now is P 20,000 and its value will increase by 4% every year.  The machine…

A: Here, Price of Machine is P20,000 Increase in Value of Machine every year is 4% Scrap Value is P2000…

Q: CII, Inc., invests $630,000 in a project expected to earn a 12% annual rate of return. The earnings…

A: Investments: Companies invest in stocks and bonds of other companies or governmental entity to…

Q: Wayne Company is considering a long-term investment project called ZIP. ZIP will require an…

A: Expected increase in cash inflows $80,300 Less: Expected increase in cash outflows $40,000…

Q: How much money would have to be placed in a sinking fund each year to replace a machine costing…

A: Given: Costing = $20,000 Year = 10 Yield = 9% Annual growth = 5%

Q: An investment project provides cash inflows of $1,100 per year for eight years.     a. What is the…

A: Payback period is a technique used in Capital budgeting to calculate the time taken by an investment…

Q: orbet Fish Packing Company wants to accumulate enough money over the next 10 years to  pay for the…

A: Sinking fund relates to creating a fund in which an equal amount is deposited at end of each period…

Q: $25,500 today will generate cash flows of $8,800 per year for seven years. What is the project's…

A: Payback period is the no. of years required to recover the initial amount invested.

Q: The NUBD Co. is planning to purchase a new machine for P300,000. The payback period is expected to…

A: Cost of new Machine = P300,000 Depreciation = P50,000 Expected Payback Period = 5 Years

Q: The VEEtile company aims to have enough money to invest into a new grader equipment in 4 years. If…

A: In case of simple interest, interest will be same for all the 4 years as there is no compounding at…

Q: he required investment cost of a new, large shopping center is $52 million. The salvage value of the…

A: Given,  Investment=$52million  Salvage value=$18million   Project life=18 years   Annual operating…

Q: A contractor is saving money for a lucrative project. The initial cost is $175,000, annual outlays…

A: To find the money to be saved, we will have to find the present value of all the expenses using 8%…

Q: If an asset costs $65,000 and is expected to have a $5,000 salvage value at the end of its ten-year…

A: Cash payback period  = Initial  investment  /annual cash inflow

Q: A new bridge connecting Tuguegarao and Solana with a 100 year life is expected to have an initial…

A: Initial cost (IC) = $ 20,000,000 Resurfaced cost every five year (RC) = $ 1,000,000 Annual…

Q: A company estimates that a certain piece of machinery will have to be replaced in five years' time…

A: Future value of growing annuity = [P/(r-g)] *((1+r)^n - (1+g)^n / (r-g)) P = Initial payment = 2000…

Q: A special purpose machine tool set would cost $20,000. The tool set will befinanced by a $10,000…

A: The concept used to determine the effective investment to compare the present value of cash outflows…

Q: Suppose that a machine costing $9000.00 is to be replaced at the end of 7 years, at which time it…

A: Amount needed in fund at the end of 8 years = replacement cost - salvage value = 9000-900 = 8100 Now…

Q: A business set up a sinking fund so they will have a 62,000.00 to pay for a replacement piece of…

A: Please refer to the image below.

Q: An investment of $165,000 yields a net annual income of $45,000 for 5 years with no salvage value.…

A: The rate at which cash flows from the project are reinvested to earn return is known as reinvestment…

Q: An investment project provides cash inflows of $950 per year for eight years. a. What is the project…

A: Payback period is the period in which the initial investment is recovered by the entity. Shorter the…

Q: A mining firm makes annual deposits of $400,000 into a reclamation fund for 25 years. If the firm…

A: Interest: It can be defined as a payment or a charge that is made by the borrower to a lender.

Q: A water Reservoir will have a first cost of Php 10,000,000,000, an annual maintenance cost of…

A: First cost (C) = Php 10,000,000,000 Annual maintenance cost (A) = Php 35,000,000 Reconstruction cost…

Q: Part of the income that a machine generates is put into a sinking fund to pay for replacement of the…

A: Using Excel NPER function

Q: A new project will cost $40,000 to fund today, and an additional $40,000 next year.  The device…

A: Net Present Value: It helps in analyzing the project's profitability and is computed from the…

Q: Kermit is considering purchasing a new computer system. The purchase price is $141,209. Kermit will…

A: Net Present Value is defined as the present value of the cash flows of the company at required rate…

Q: per year for the first 10 years and $1000 per year, for the 10 years past the initial maintenance…

A: The current value of a future sum of money or stream of cash flows, given a specified rate of…

Q: The annual maintenance costs of a tunnel, which is considered to have an infinite life, are worth…

A: Capitalized cost can be defined as that cost which is regularly added to the original cost of a…

Q: s of $40,000 each year, the cash payback period is

A: Cash Payback Period = Initial Investment/Annual Cash Inflows      = 240000/40000      = 6 YEARS

Q: NOVA Company is considering a long-term investment project called STUDY. STUDY will require an…

A: Net annual cash inflow = Annual cash inflow - annual cash outflow = 79000-40000 = $39000

Q: A special-purpose machine toolset would cost $20,000. The toolset will befinanced by a $10,000 bank…

A: Use the MACRS table for the purpose of depreciation as shown below

Q: Spero Industries has purchased new equipment that will provide an annual cash savings of $6,300 over…

A: Solution: Annual cash savings from new equipment = $6,300 Life of project = 7 years IRR of new…

Q: An investment project provides cash inflows of $735 per year for eight years.   a. What is the…

A: A method of capital budgeting that helps to evaluate the time period a project requires to cover its…

Q: The required investment cost of a new, large shopping center is $50 million. The salvage value of…

A: Cost of a shopping center= $50 million Salvage value of the project= $20 million Project’s life= 15…

Q: The Longganisa Builders Co. agreed to pay P100,000.00 for a new bulldozer with an expected life of…

A: Increase in annual earnings (A) = P 12000 r = 12% n = 20 years

Q: Determine the amount needed now to purchase a machine for P100,000, provide an annual fund of…

A: Initial cost of machine = P 100,000 Annual cost = P 15,000 Life of machine = 10 Years Discount rate…

Q: Consider a mechanical device that will cost $ 20,000 when purchased. Maintenance will cost $1000…

A: In a cash flow diagram, all the cash flows are shown in a graphical manner.

Q: Cargojet Corp. is preparing for the replacement of one of its jets in three years by making payments…

A: The question is based on the concept of  sinking fund to accumulate the required amount at end . The…

Q: You invest in a piece of equipment costing $30,000. The equipment will beused for two years, at the…

A: Calculation of the equivalent net savings per machine hour is shown:

Q: A new machine will cost P17000 and will have an estimated salvage value of P11000 in five years.…

A: Total first cost (C) = P 17000 + P 5000 = P 22000 Total salvage value (S) = P 11000 + P 2500 = P…

Q: A mining firm must deposit funds in a “reclamation” account each quarter. The account must have $25…

A: A concept that implies the future worth of the money is lower than its current value due to several…

Q: The costs associated with a small X-ray inspection system are $40,000 now and $24,000 per year, with…

A: given, initial investment = $40,000 annual cost = $24000] salvage value = $6000 year =3 real…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.