pare parts to order with the rayage value of $75 each. The distril FREQUENCY
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- choose the best answer (mcqs) just choose the no need of any explanation 1) Management of Plascencia Corporation is considering whether to purchase a new model 370 machine costing $498,000 or a new model 220 machine costing $469,000 to replace a machine that was purchased 6 years ago for $453,000. The old machine was used to make product I43L until it broke down last week. Unfortunately, the old machine cannot be repaired.Management has decided to buy the new model 220 machine. It has less capacity than the new model 370 machine, but its capacity is sufficient to continue making product I43L.Management also considered, but rejected, the alternative of simply dropping product I43L. If that were done, instead of investing $340,000 in the new machine, the money could be invested in a project that would return a total of $478,000.In making the decision to buy the model 220 machine rather than the model 370 machine, the differential cost was: A $29,000 B $45,000 C $25,000…Q18. A process control manager is considering two robots to improve materials-handling capacity in the production of rigid shaft couplings that make dissimilar drive components. Robot X has a first cost of $76,000, an annual M&O cost of $31,000, and $42,000 salvage value, and it will improve revenues by $96,000 per year. Robot Y has a first cost of $146,000, an annual M&O cost of $28,000, and $47,000 salvage value, and it will increase revenues by $121,000 per year. The company’s MARR is 46% per year, and it uses a 3-year study period for economic evaluations. Calculate the incremental ROR, and identify the robot the manager should select. The incremental ROR is The manager should select robot ?31. Autobot Systems Inc. Is evaluating three robot proposals for use in its assembly line. Information regarding these proposals are as follows: Robot 1 Robot 2 Robot 3 Initial Cost P2 000 000.00 P3 000 000.00 P1 500 000.00 Annual Operating Cost 150 000.00 200 000.00 100 000.00 Annual Savings 1 200 000.00 1 300 000.00 1 200 000.00 Useful Life, years 3 6 2 Assuming a salvage value of 10% and a 17% MARR, determine which robot should be preferred using AW analysis. (Ans. AT1=P201 367.37; AT2=P296 740.03; AT3=P222 880.18; select robot 2)
- Question 4 You are contemplating leaving your full-time employment to concentrate your ability on the marketing of a new low-energy portable heater. You have spoken to a group of manufacturers of similar product, and you have produced the following data based upon the production of 1200 heaters in the six months to December 31, 2021. R R Unit selling price 160 Less: Direct materials 50 Direct labour 30 Fixed Overheads: Admin 4.00 Rent 7.50 Rates…Question 2:ABC Company has two projects:A: It is considering to purchase an equipment to be attached with the main manufacturing machine. Theequipment will cost $6,000 and will have annual cash inflow by $2,200. The life of the equipment is 6 years.After 6 years, it will have no salvage value. The management wants a 20% return on all investments.B: It is planning to reduce its labor costs by automating a critical task that is currently performed manually.The cost to purchase a new machine is $15,000. The installation of machine can reduce annual labor cost by$4,200. The life of the machine is 15 years. The salvage value of the machine after fifteen years will be zero.The required rate of return of Smart Manufacturing Company is 25%.a) Will you go ahead with this project A? Explain.b) Will you go ahead with this project B? Explain.c) What about if these two projects are two mutually exclusive ones?d) Will IRR and NPV always give you the same results?Question 5 You are contemplating leaving your full-time employment to concentrate your ability on the marketing of a new low-energy portable heater. You have spoken to a group of manufacturers of similar product, and you have produced the following data based upon the production of 1200 heaters in the six months to December 31, 2021. R R Unit selling price 160 Less: Direct materials 50 Direct labour 30 Fixed Overheads: Admin 4.00 Rent 7.50 Rates…
- Question 7 You are contemplating leaving your full-time employment to concentrate your ability on the marketing of a new low-energy portable heater. You have spoken to a group of manufacturers of similar product, and you have produced the following data based upon the production of 1200 heaters in the six months to December 31, 2021. R R Unit selling price 160 Less: Direct materials 50 Direct labour 30 Fixed Overheads: Admin 4.00 Rent 7.50 Rates…Question 11 You are contemplating leaving your full-time employment to concentrate your ability on the marketing of a new low-energy portable heater. You have spoken to a group of manufacturers of similar product, and you have produced the following data based upon the production of 1200 heaters in the six months to December 31, 2021. R R Unit selling price 160 Less: Direct materials 50 Direct labour 30 Fixed Overheads: Admin 4.00 Rent 7.50 Rates…ANSWER IS 9%. PLEASE SHOW YOUR SOLUTION MANUALLY. (don't use excel or financial calculator) Michael Company is considering the purchase of new computer equipment to improve its production scheduling. This new equipment will cost $300,000, with working capital of $25,000 to be committed for the life of the asset. The equipment will have an estimated useful life of four years, with no residual (salvage) value. Michael Company uses the straight-line depreciation method. Management estimates that the equipment will reduce scheduling costs by $64,800 after-tax per year. In addition to the cost savings, the equipment will provide a tax shield based on depreciation. Michael Company has an average income tax rate of 40%, and a minimum required return for similar investments of 9.5%. Determine the internal rate of return (IRR)
- Appendix Four (Equipment Replacement Decision)Objective: The proposed manufacturing plant has a food packaging equipment. The analysis would provide Jacob with decision support as to use that equipment or procure a new one. Scenario:The current equipment was purchased eight years ago for $ 750,000 and has eight useful years remaining. The new machine will cost $ 380,000 and will have the same useful life remaining as the old machine and will have zero disposal value. Currently the annual operating cost is $ 110,000 and will reduce by 50% if the new equipment is purchased. If the new equipment is procured, it will need to be shut down once a year for maintenance purposes. Opportunity cost of the shut down period is as follows:• $ 6,000 in each of the years 1-3• $ 8,000 in each of the years 4 and 5• $ 10,000 in each of the years 6 and 7The old equipment will have limited use and can only fetch $ 120,000 when disposed off at this time.Methodology:The group would calculate the net…Problem 7. Mochit Co. is deciding whether-to purchase a new machine for their operation or to keep using their existing machine. old machine new machine Original cost $22,400 $27,500 Useful life 8 years 5 years Current age 3 years Remaining life 5 years 5 years Accum. Depreciation $8,400 0 Book value $14,000 Disposal value $5,000 Annual operating cost $10,600 $5,400 Required: Calculate the difference in total cost over the next 5 years under both alternatives and determine if it is better to keep the existing machine or replace it with the new machine ?An auto repair company needs a new machine that will check for defective sensors. The machine has an Initial investment of $224,000. Incremental revenues, including cost savings, are $120,000, and Incremental expenses, including depreciation, are $50,000. There is no salvage value. What is the accounting rate of return (ARR)?
