Motorsfrom two different manufacturers are being considered for application. Both motors are 50Hp, 460 volts, 3 phase, 60 cycles. Honda Motor operates at 80% efficiency and Rusi Motor operates at 89% efficiency. The expected need for the motors is 15 years. Honda Motor cost P120, 000.00 and Rusi Motor P150, 000.00. Electrical energy cost P8.00 per Kw-Hr and the motors will be operating 8 hours per day, 250 days a year. Assume taxes and insurance are 3% of first cost. Which motor is better to purchased Honda Motor or Rusi Motor?

Motorsfrom two different manufacturers are being considered for application. Both motors are 50Hp, 460 volts, 3 phase, 60 cycles. Honda Motor operates at 80% efficiency and Rusi Motor operates at 89% efficiency. The expected need for the motors is 15 years. Honda Motor cost P120, 000.00 and Rusi Motor P150, 000.00. Electrical energy cost P8.00 per Kw-Hr and the motors will be operating 8 hours per day, 250 days a year. Assume taxes and insurance are 3% of first cost. Which motor is better to purchased Honda Motor or Rusi Motor?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 19P

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Problem Solving. Solve the following problems completely. 5. Motors from two different manufacturers are being considered for application.Both motors are 50Hp, 460 volts, 3 phase, 60 cycles. Honda Motor operates at 80%efficiency and Rusi Motor operates at 89% efficiency. The expected need for themotors is 15 years. Honda Motor cost P120, 000.00 and Rusi Motor P150, 000.00.Electrical energy cost P8.00 per Kw-Hr and the motors will be operating 8 hoursper day, 250 days a year. Assume taxes and insurance are 3% of first cost. Whichmotor is better to purchased Honda Motor or Rusi Motor?
To make an item inhouse, equipment costing $250,000 must be purchased. It will have a life of 4 years, an annual cost of $80,000, and each unit will cost $40 to manufacture. Buying the item externally will cost $100 per unit. At i = 15% per year, it is cheaper to make the item inhouse if the number per year needed is:a. above 1047 unitsb. above 2793 unitsc. equal to 2793 unitsd. below 2793 units
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3. Useful lives are equal to the study period At the Motorola plant in Mesa, Arizona, it is desired to determine whether oneinch-thick insulation or two-inch-thick insulation should be used to reduce heat loss from a long section of steam pipe. The heat loss from this pipe without any insulation would cost $2.00 per linear foot per year. The one-inch insulation will eliminate 88% of the heat loss and will cost $0.60 per foot. Two-inch insulation will eliminate 92% of the heat loss and will cost $1.10 per foot. The steam pipe is 1,000 feet in length and will last for10 years. MARR = 6% per year. Which insulation thickness should be recommended?
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Hana Inc. is considering an investment in new equipment that will be used to manufacture a smartphone. The phone is expected to generate additional annual sales of 4,300 units at $275 per unit. The equipment has a cost of $399,900, residual value of $30,100, and an 8-year life. The equipment can only be used to manufacture the phone. The cost to manufacture the phone follows: Cost per unit: Direct labor $47.00 Direct materials 184.00 Factory overhead (including depreciation) 32.50 Total cost per unit $263.50 Determine the average rate of return on the equipment. If required, round to the nearest whole percent. %
An electric motor is rated at 10 horsepower (HP) and costs $800. Its full-load efficiency is specified to be 85%. A newly designed, high-efficiency motor of the same size has an efficiency of 90%, but costs $1,200. It is estimated that the motors will operate at a rated 10-HP output for 1,500 hours a year, and the cost of energy will be $0.07 per kilowatt-hour. Each motor is expected to have a 15-year life. At the end of 15 years, the first motor will have a salvage value of $50, and the second motor will have a salvage value of $100. Consider the MARR to be 8%. (Note: l HP= 0.7457kW.)(a) Determine which motor should be installed based on the PW criterion.(b) What if the motors operated 2,500 hours a year instead of 1,500 hours ayear? Would the motor selected in (a) still be the choice?
Madetaylor Inc. manufactures financial calculators. The company is deciding whether to introduce a new calculator. This calculator will sell for $140. The company feels that sales will be 18,000, 25,000, 24,000, 24,000, and 22,000 units annually for five years. Variable costs will be 20% of sales, and fixed costs are $500,000 annually. The firm hired a marketing team to analyze the product's viability, and the marketing analysis cost $500,000. The company plans to manufacture and store the calculators in a vacant warehouse. Based on a recent appraisal, the warehouse and the property are worth $4 million after tax. If the company does not sell the property today, it will sell it five years from today at the currently appraised value. This project will require an injection of net working capital at the onset of the project, $850,000. The firm recovers the net working capital at the end of the project. The firm must purchase equipment for $6,000,000 to produce the new calculators. The…
Madetaylor Inc. manufactures financial calculators. The company is deciding whether to introduce a new calculator. This calculator will sell for $140. The company feels that sales will be 18,000, 25,000, 24,000, 24,000, and 22,000 units annually for five years. Variable costs will be 20% of sales, and fixed costs are $500,000 annually. The firm hired a marketing team to analyze the product's viability, and the marketing analysis cost $500,000. The company plans to manufacture and store the calculators in a vacant warehouse. Based on a recent appraisal, the warehouse and the property are worth $4 million after tax. If the company does not sell the property today, it will sell it five years from today at the currently appraised value. This project will require an injection of net working capital at the onset of the project, $850,000. The firm recovers the net working capital at the end of the project. The firm must purchase equipment for $6,000,000 to produce the new calculators. The…