Remodeling an office will cost $25,000 and will generate savings of $3,000 the first year, $4,000the second year, and $5,000 per year thereafter. How long will it take to recoup the initial cost ofremodeling?

Q: A homeowner is considering an upgrade of a fuel-oil-based furnace to a natural gas unit. The…

A: New machine install price = 2500 Cost of natural gas per month =  60*12  = 720 Fund cost = 9%…

Q: The plant manager at a company would like to perform an analysis for a new $250,000 machine. If she…

A: Payback period method is a traditional method used in capital budgeting decisions which is used to…

Q: An energy-efficient motor may be purchased for $3,000 that will last for 5 years. It will save $800…

A: Present Worth: It is the notion of "present value" that asserts that a sum of money is worth more…

Q: Annual maintenance costs for a rotary kiln is P2,000. The placement if a new refractory would reduce…

A: Annual savings for first 5 years = P 700 Annual savings for next 5  years = P 1200 Annual interest…

Q: A company plans to modernize its facilities in 8 years. They estimate saving $5,000 per month if…

A: Estimated saving Per Month = $5,000.00 Time Period(Years) = 8 Salvage Value = $29,700.00 Nominal…

Q: You spend $1,000,000 to buy a multiplex unit with 5 units for rent. Cost of maintaining and…

A: In building and apartments the units are rented on monthly rent depending on the cost of maintenance…

Q: If a garden center is considering the purchase of a new tractor with an initial investment cost of…

A: A payback period seems to be the amount of time a company anticipates it will take to recoup its…

Q: Annual maintenance cost for a particular section of highway pavement are $3,000.The placement of a…

A: Present value is the current worth of the cash flow at a certain arte of interest and period of…

Q: You are considering a luxury apartment building project that requires an investment of $12,500,000.…

A: For this we have to do NET PRESENT VALUE (NPV) analysis.

Q: If a certain machine undergoes a major overhaul now, its output can be increased by 20%, which…

A: The present value is the current value of future cash flow at a certain rate and a certain time…

Q: An investor has invested $250,000 in a new rental property. Her estimated annual costs are $6000 and…

A: Net present worth: It is the present value (PV) of the cash inflows compared to the initial value of…

Q: A machine, costing $30,000 to buy and $2.500 per year to operate, will savemainly labor expenses in…

A: Minimum required annual savings are the savings at a point where NPV is zero. This implies the point…

Q: An industrial machine costing $10,000 will produce net cash savings of $4,000per year. The machine…

A: IRR is the discount rate where present value of the cashflow is equal to initial investment. AT IRR…

Q: An industrial machine costing $10,000 will produce net cash savings of $4,000 per year. The machine…

A: Sensitivity Analysis: It is possible to identify the effect of several independent variables on a…

Q: Your firm is thinking about investing $200,000 in the overhaul of a manufacturing cell in a lean…

A: Calculation of annual equivalent worth: Investment = $200,000 Revenues = $30,000  Expenses = $10,000…

Q: A company is considering expanding their production capabilities with a new machine that costs…

A: Present value is the value of future cashflow dicounted at specified rate to today's date. formula:…

Q: The textile factory is being upgraded. The expectation is that labor costs will decrease at an…

A: The time value of money implies that the real value of money is no equal at different point of time…

Q: Your company is considering the purchase of a new piece of manufacturing equipment. The new machine…

A: In the given question we need to calculate the Net Present Value (NPV) of investment. Net present…

Q: If a garden center is considering the purchase of a new tractor with an initial investment cost of…

A: Payback period is defined as time taken to recover original investment. Hence if payback period is…

Q: What is the annual operation and maintenance costs of owning this vehicle?

A: Time value of money (TVM) is used to measure the value of money at different point of time in the…

Q: Moving to a new facility will save $400,000 annually for 20 years. The cost of building the facility…

A: IRR is a tool for making investment decisions. It measures whether an investment is profitable or…

Q: An apartment building in your neighborhood is for sale for $175,000. The building has four units,…

A: While choosing which investment project will be undertaken, different investment appraisal…

Q: A restaurant is considering the purchase of new tables and chairs for their dining room with an…

A: Payback period = Initial investment / Annual cash flow

Q: You are considering a luxury apartment building project that requires an investment of $15,000,000.…

A: Answer:-  Return on investment meaning:- The ratio of net income to investment is generally known as…

Q: A store plans on investing on a new grill oven that costs P100,000. It will generate revenues of…

A: Net present value method(NPV): NPV  considers  time value of money and is used for analyzing…

Q: The Ham and Egg Restaurant is considering an investment in a new oven with a cost of $160,000, with…

A: Net present value (NPV) Net present value is the value after deducting outflow from the inflow of…

Q: Your company will generate GH¢ 55,000 in annual revenue each year for the next eight years from a…

A: NPV is the sum of future cashflows less initial cost

Q: The manufacture of equipment costs $73,000 per year. An engineer finds that by spending $16,000 now…

A: Costs per year= 73000 Initial Cost = 16000 Updated costs per year: Year Cash Outflow 1 -58000…

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: The FernRod Motorcycle Company invested $150,000 at 4.5% compounded monthly to be used for the…

A: When amount is invested to earn compound interest for a certain period, it involves the computation…

Q: Blossom Company has identified that the cost of a new computer will be $50000, but with the use of…

A: Payback period means the time with in which we will get our investment amount back.

Q: a company must buy new safety equipment every 8 years, costing $16,000, with a salvage value of…

A:

Q: Pierre’s Hair Salon is considering opening a new location in French Lick, California. The cost of…

A: Solution: Annual net income from salon = $60,490 - $40,800 = $19,690 Average investment = (Cost +…

Q: A company that manufactures automobile headlight housings invested $750,000 in an automated assembly…

A: Using excel RATE function where PV = Amount invested  NPER = no. of years FV = Salvage Value PMT =…

Q: Park company is building a new office building, and management is trying to decide how rent payments…

A: A study that proves that the 1value of money today is higher than the future value of money is term…

Q: You are considering a luxury apartment building project that requires an investment of $12,500,000.…

A: Money’s value declines with the time. Discounting is way to find the PV of future amount by using…

Q: New manufacturing equipment costs $225,000, salvage value is $25,000, and average annual earnings of…

A: a) Average annual rate of return = Average Annual Earning per year / Investment value

Q: If a garden center is considering the purchase of a new tractor with an initial investment cost of…

A: Payback period is indicator of how much period, the project takes to return the initial investment.

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: An industrial machine costing $14,000 will produce net cash savings of $5,000 per year. The machine…

A:

Q: Consider a new electric forklift truck that would cost $18,000, have operating costs of $1,000 in…

A: Efficiency and profitability is depends upon the machine. Effective production provide high…

Q: A company plans to modernize its facilities in 8 years. They estimate saving $9,518 per month if…

A: To Find: Capital Availability

Q: You are considering building a 25-unit apartment near a Call Center. If you want a return of 25%,…

A:

Q: Some equipment is needed for a construction project. It can be leased for $150,000 annually, or it…

A: IRR is discount rate at which total of discounted inflows gets equal to discounted value of outflows…

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.