The final tally is in: This year’s operating costs were down $100,000, a decrease directly attributable to the $520,000 investment in the automated materials handling system put in place at the beginning of the year. If this level of annual savings continues for five more years, resulting in six total years of annual savings, what compounded annual rate of return will that represent? If these annual savings continue for nine more years, what compounded annual rate of return will that represent? (You may ignore income taxes.)

Q: A company with $630,000 in operating assets is considering the purchase of a machine that costs…

A: If cash flows are uneven,then  Payback period(PBP)=Years before full recovery+ (uncovered cost at…

Q: A company is planning to invest $75,000 (before taxes) in a personnel training program. The $75,000…

A: Net Present Value= Present Value less Initial Outflow

Q: A software company that installs systems for inventory control using RFID technology spent $600,000…

A: F/A is taken from table FV of an annuity of $1.

Q: A company expects the cost of equipment maintenance to be $5,000 in year one, $5,500 in year two,…

A: Cost in year 1 = $ 5000 Cost in year 2 = $ 5500 Annual increase in cost = $ 500 Period = 10 Years…

Q: The year-end operating costs of a certain machine are estimated to be 120,000 the first year and to…

A: The question is related to equivalents uniform annual costs. Since the cost of maintainance is…

Q: A company expects the material cost of a certain manufacturing operation to be $20,000 per year. At…

A: This is the concept of time value of money. Present Worth is the present value of the future…

Q: Database Systems is considering expansion into a new product line. Assets to support expansion will…

A: Net Income: The net income of the business is determined by subtracting the total expenses from the…

Q: ractice your Present Value and Future Value skills. The final tally is in: This year’s operating…

A: The given problem can be solved using RATE function in excel. RATE function computes interest rate…

Q: A Pumpkin Pie Manufacturing Company pays on the tenth day after purchase. The average collection…

A: The question is related to Working Capital Management. The Cash Conversion cycle is calculated with…

Q: You are considering a manufacturing equipment that has a cost of $100,000. The equipment is expected…

A: Equivalent Savings per hour refers to amount of saving adjusted with time value factor is saved by…

Q: A company that manufactures a revolutionary aeration system combining coarse and fine bubble…

A: Equivalent annual cost is yearly cost of operating, maintaining and owing asset over its full life.

Q: EXCEL, an equipment costing $100,000 has a useful life of 6 years. It has a resale value of $8,000.…

A: given information equipment costing = $100,000 useful life= 6 years resale value = 8000 annual cost…

Q: A company is considering the purchase of a new machine for $67,000. Management predicts that the…

A: Financial Management: Financial management comprises of two words i.e. Finance and management.…

Q: The following problem is designed to be solved by spreadsheet. Maintenance costs for a new facility…

A: Present value is the current worth of an amount of money in future. The future amount is…

Q: A manufacturing company spent $30,000 on a new conveyor belt. If the conveyor belt resulted in cost…

A: An Annuity is a series of equal payments made at regular intervals. There are generally four types…

Q: what would have been the maximum amount that should be invested? Use interest rate of 9% compounded…

A: A stream of equal cash flows (CF) paid or received periodically is termed as annuity. Ordinary…

Q: At an interest rate of 0.06 per year, the present worth of the maintenance cost is nearest to

A: Given PV=5000 Increasing =500 n=15 r=0.06 or 6%

Q: Last year sales were $300,000, net operating income was $75,000, and averageoperating assets were…

A: Last year expenses = Sales - Net operating income = $300,000 - $75,000 = $225,000

Q: A software company that installs systems for inventory control using RFID technology spent $720,000…

A: The calculation is:

Q: Ava Company projects an increase in net income of $34,766 each year for the next five years if it…

A: Annual rate of return on the investment = Net income / Initial investment

Q: A company is considering the purchase of a new machine for $87,000. Management predicts that the…

A: Financial Management: Financial management comprises of two words i.e. Finance and management.…

Q: You’re trying to determine whether to expand your business by building a new manufacturing plant.…

A: Capital budgeting is a financial process of evaluating investments in capital projects. This process…

Q: An advertising campaign will cost $270,000 for planning and $48,000 in each of the next six years.…

A: IRR is the internal rate of return a project will generate if we discount all the cash inflows and…

Q: The cost to manufacture a component used in intelligent interface was $22,000 the first year. The…

A: The present value of the cash flow is the current worth of a cash flow at a certain rate of interest…

Q: A company purchased a small equipment for $70000. Annual maintenance costs are expected to be $1850,…

A: Net present value (NPV) is the value of all the cash flow of the investment (positive and negative)…

Q: The overhead costs in a highly automated factory are expected to increase at an annual compound rate…

A: Given information is: The overhead costs in a highly automated factory are expected to increase at…

Q: Wildhorse Solutions, Inc., has just invested $4,869,000 in new equipment. The firm uses a payback…

A: Payback period of a project indicates the time taken by cash inflow of project to recover the…

Q: A company is considering the purchase of a new machine for $54,000. Management predicts that the…

A: Financial Management: Financial management comprises of two words i.e. Finance and management.…

Q: Suppose Francine Dunkelberg’s Sweets is considering investing in warehouse-management software that…

A: Accounting Rate of Return:  The accounting rate of return is the amount of income that is earned…

Q: A company expects the cost of equipment maintenance to be $5,000 in year one, $5,500 in year two,…

A: Answer -  Given,  Maintenance Cost = $5000 Gradient G = $500 I = 5%

Q: Suppose a business is considering the purchase of a $40,000 machine whose operation will result in…

A: Concept: The straight line depreciation is the simplest method of charging depreciation to an asset.…

Q: A Pumpkin Pie Manufacturing Company pays on the tenth day after purchase. The average collection…

A: The question is related to Working Capital Management. The Cash Conversion cycle is calculated with…

Q: By the end of this year, the total payroll expenditure of a small engineering consulting firm is…

A: Salary will be increased by 6 % p.a. Future worth will be calculated by discounting the value of…

Q: Auto Detailers is buying some new equipment at a cost of $188,900. This equipment will be…

A: Average Accounting ROR or (ARR) is used to measure profitability and ignores time factor of money…

Q: A company expects the cost of equipment maintenance to be $5,000 in year one, $5,500 in year two,…

A: Maintenance cost in year 1 = $ 5000 Maintenance cost in year 2 = $ 5500 Annual increase in cost = $…

Q: A company is considering the purchase of a new machine for $58,000. Management predicts that the…

A: Financial Management: Financial management comprises of two words i.e. Finance and management.…

Q: A company with $795,000 in operating assets is considering the purchase of a machine that costs…

A: Payback period = Machine initial cost/Annual reduction in cost

Q: You have just completed the first year of operation for your business andhave the following…

A:

Q: The cost for manufacturing a component used in intelligent interface converters was $23,000 the…

A: The question gives the following information:

Q: Walden Industries is considering investing in production - management software that costs $640,000,…

A: Formula: Accounting rate of return = ( Asset cost + Residual value ) / 2

Q: Investment in a crane is expected to produce profit from its rental of $15,000 during the first year…

A: present worth formula: present worth = future value1+rn where, r=rate n=number of years

Q: ny expects the cost of equipment maintenance to be $5,000 in year one, $5,500 in year two, and…

A: The given problem can be solved using NPV function in excel.

Q: The cost to manufacture a component used in intelligent interface was $22,000 the first year. The…

A: Present value method of calculation is used to know the value of future money at present date. The…

Q: A company expects the cost of equipment maintenance to be $5,000 in year one, $5,500 in year two,…

A: The worth of a predicted revenue stream assessed as of the date of valuation is known as present…

Q: Net revenues at an older manufacturing plant will be $2 million for this year. The net revenue will…

A: The present value of the cash flow is the current worth of a cash flow at a certain rate of interest…

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.