ITEM: MACHINE A: MACHINE B: First Cost P2,000,000.00 P3,000,000.00 Annual operating P325,000.00 P250,000.00 cost Annual labor cost Insurance and taxes Payroll taxes Estimated life P500,000.00 P320,000.00 4% 10% 12 yrs. 4% 10% 12 yrs. If the minimum ROR is 25%, What is the annual cost of Machine A & B using present worth method?
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- (Measuring risk and rate return) Given the following holding-period returns, calculate the standard deviation for the market. answer is 6.02 Month Champ Inc. Market 1 2.8% 1.8% 2 3.2% 1.2% 3 9.0% 11.0% 4 -2.6% -1.0% 5 -2.9% -4.7% 6 12.0% 8.0%The following are data from a production, calculate; The Break-even point in terms of sales value and in . The production demand is at 20,000 units. What is the cw1ent production profit? If the management decides to lower dow11its selling price by 50% given the same demand, will this be a sound decision? Justify. Monthly Fixed Factory Overhead Cost = P600,000 Monthly Fixed Selling Overhead Cost = Pl20,000 Va1iable Manufacturing Cost per Unit = P220 Va1iable Selling Cost per Unit = P30 Variable Distribution Cost per Units = P50 Selling Price per limit = P400Your firm uses a continuous review system and operates52 weeks per year. One of the SKUs has the followingcharacteristics.Demand 1D2 = 20,000 units>yearOrdering cost 1S2 = $40>orderHolding cost 1H2 = $2>unit>yearLead time 1L2 = 2 weeksCycle@service level = 95 percentDemand is normally distributed, with a standard deviation ofweekly demand of 100 units.Current on-hand inventory is 1,040 units, with no scheduledreceipts and no backorders.a. Calculate the item’s EOQ. What is the average time, inweeks, between orders?b. Find the safety stock and reorder point that provide a95 percent cycle-service level c. For these policies, what are the annual costs of (i) holdingthe cycle inventory and (ii) placing orders?d. A withdrawal of 15 units just occurred. Is it time to reor-der? If so, how much should be ordered?
- 9. A company is considering a £70,000 investment in a machine that would produce 10,000 items per year for 3 years before being sold for £10,000; these would incur £7 of variable costs and sell for £12 each. Extra fixed costs incurred would be £23,000 pa. Adrian has 10% cost of capital and has calculated the NPV to be £4,632. Tax can be ignored. What is the sensitivity of the decision to changes in the estimate of sales volume? A) 1.6% B) 2.7% C) 3.7% D) 6.9%Menkin’s Tools produces low-cost steel tools. One of their most popular tools is a steel wrench that comes in three sizes. Each of the three wrenches is forged in hydraulic presses. Data for the forging presses are given below? FC VC SP A $ 200,000 $ 6.00 $ 20.00 B $ 150,000 $ 4.50 $ 18.00 C $ 275,000 $ 3.25 $ 15.00 What is the breakeven point (in units) for Press A? 10,657 11,111 12,432 14,286 What is the breakeven point (in units) for Press B? 10,657 11,111 12,432 13,346 What is the breakeven point (in units) for Press C? 14,896 18,865 20,960 23,404Cost component Alpha Beta Charlie development 100,000 immediately 150,000 year 1 10,000 immediately None Programming 45,000 immediately 35,000 year 1 45,000 immediately 30,000 year 1 None Operations 50,000 1-10 80,000 years 1-10 150,000 years 1-10 support 30,000 1-10 40,000 years 1-10 none If each system is expected to have a 10-year life, 1. calculate the net present value for each system if the cost of capital is 8%. 2. Specify which system should be selected and why
- Amex Toy Makers, Inc. markets toys they know pose a possible serious hazard to children under certain circumstances. Does Amex have an ethical duty to remove the toys from the market, even if the injuries only occur in a limited number and only when misused? Why or why not? Explain your answr.r.Canuck Oil Corporation is a Canadian crude oil producer. Today is July 15. Canuck’s estimated oil production level in three months’ time will be 100,000 barrels. The current spot price for crude oil is US$90.29 per barrel. Between January 15 and now, crude oil prices have fluctuated from a high of $110.82 to a low of $90.56. Due to the unstable nature of crude oil prices, Canuck Oil’s financial manager, Mr. Petro Stark would like to hedge the crude price risk using crude oil futures contracts. Petro found the following information on futures contracts expiring in September, October, and November: Delivery month Last Change Prior settlement Open High Low Volume September 90.79 –0.58 91.37 91.24 91.44 89.76 9067 October 92.18 –0.48 92.66 92.89 95.22 89.30 5229 November 90.13 –0.35 90.48 90.22 90.55 89.08 1685 Contract size: 1,000 barrels Contract currency: US dollar September expiry: September 16 October…You're managing a project using the earned value management for cost management. The project planned value (PV) is $200,000. The project earned value (EV) is $100,000. The actual cost (AC) is $150,000. What is the cost variance (CV) for the project? a. -50,000 b. 100,000 c. -100,000 d. 150,000
- A firm is considering purchasing equipment to manufacture a new product. The equipment will cost $3M, and expected net cash inflowsare $0.35M indefinitely. If market demand for theproduct is low, then over the next five years thefirm will have the option of discarding the equipment on a secondary market for $2.2M. Assume thatMARR = 12%, s = 50%, and r = 6%. What isthe value of this investment opportunity for the firm?1. Choose True or False for each of the following statements: a) Sensitivity analysis is concerned with determining how much variation infinancial data, the decision maker can have to affect the economic decision. b) Useful life is a period of time that yields the minimum equivalent uniformannual cost of owning and operating as asset. c) Depreciation is a reduction in value of an asset, which reflects its actualusage during ownership. d) In an optimistic estimation of MARR, we expect to see a lower MARR thanthat of pessimistic. e) If one of extreme FW values, i.e., optimistic and pessimistic scenarios, ofan alternative is positive and another one is negative, a go-decision ismade without further analysis. f) Recovery period refers to the depreciable life of an asset. g) Spider plot is used to show the amount of changes on the value of morethan one factor at a time. h) The book value at the end of useful life might not be equal to the salvagevalue when declining balance with switchover…I want you to provide me the Cash Flow diagram of the problem. Only cash flow diagram, the solution is already there. Thanks in advance! The annual estimated cash flow is $140,000. The salvage value will be 12% of the initial price after 5 years. The discount rate (r) is 18% Let us assume the initial price of the doughnut machine be X. PV of cash inflows=PV of cash outflows$140,000×PVAF4,18%+.12X×PVF5,18%=X$140,000×2.69006180465+.12X×0.43710921621=X$376,608.652651=X-0.05245310594$376,608.652651=0.94754689406XX=$397,456.479475 The maximum purchase price of the doughnut machine is $397,456.48.