The manager in a canned food processing plant is trying to decide between two labeling machines. Machine A Machine B First cost $15,000 $25,000 Maintenance and 1,600 400 operating costs Annual benefit Salvage value Useful life, in years 8,000 13,000 3,000 6,000 6. 10 Assume an interest rate of 6%. Use annual cash low analysis to determine which machine should be
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- REPLACEMENT CHAIN The Lesseig Company has an opportunity to invest in one of two mutually exclusive machines that will produce a product the company will need for the next 8 years. Machine A costs 8.9 million but will provide after-tax inflows of 4.5 million per year for 4 years. If Machine A were replaced, its cost would be 9.8 million due to inflation and its cash inflows would increase to 4.7 million due to production efficiencies. Machine B costs 13.9 million and will provide after-tax inflows of 4.3 million per year for 8 years. If the WACC is 9%, which machine should be acquired? Explain.8-18 QZY, Inc. is evaluating new widget machines offered by three companies. The chosen machine will be used for 3 years. Company Company Company A B C First cost $15,000 $25,000 $20,000 Maintenance and operating 1,600 400 900 Annual benefit 8,000 13,000 9,000 Salvage value 3,000 6,000 4,500 (a) Construct a choice table for interest rates from 0% to 100%. (b) MARR = 15%. From which company, if any, should you buy the widget machine? Use rate of return analysis. Only use Excel pleaseSteel drums manufacturer incurs a yearly operating cost of P 200,000. Each drum manufactured cost P 160 and sells for P 300. A machine use for the production has a first cost of P 20,000 and a salvage value of P 2,000 after producing 1,000 units. What is the break even number of units per year? Choices: a. 1,452 b. 1,510c. 1,386d. 1,640 Show solution. Do not use excel. Ans: d
- Given the two machines’ data Machine A Machine B First Cost P8,000.00 P14,000.00 Salvage value 0 2,000.00 Annual operation 3,000.00 2,400.00 Annual maintenance 1,200.00 1,000.00 Taxes and insurance 3% 3% Life, years 10 15 Money is worth at least 16% Using equivalent uniform annual cost method, determine the value of alternative A and alternative B:The LJB Company must replace a freezer and is trying to decide betweenthe following two alternatives:Item Freezer A Freezer BInvestment required ($29,000) ($25,000)Annual electrical bill (3,000) (4,000)Salvage value 6,000 5,000Project life in years 11 11The LJB Company’s cost of capital is 8 percent.Which investment provides LJB with the lowest total cost?A 600-ton press used to produce compositematerial fuel cell components for automobiles using proton exchange membrane (PEM) technologycan reduce the weight of enclosure parts up to 75%. At MARR = 12% per year, calculate (a) capital recovery and (b) annual revenue required. (c) Solve using a spreadsheet.Installed cost = $-3.8 million n = 12 years Salvage value = $250,000Annual operating costs = $-350,000 in year 1, increasing by $25,000 per year
- The top management required you to compute the accumulated amount of the machine that will improve the production efficiency based on your recommendation. The money is to be loaned to BPI @ 10% interest rate compounded mounthy. A) Purchase Price = P200,000. B) Period of Payment = 5 years.24. The following are annual cost of Peter Corp. relating to Material A which required 40,000 units per year: Unit Cost Insurance cost Storage cost Freight in Order cost P20 32 36 10 Interest that could have been earned on alternative investment of funds P320,000 What is the annual carrying cost per unit?10. Batangas State University is purchasing a new queuing system for its service improvement in Registrar’s office. The table that follows list the relevant cost itemsfor this purchase. The operating cost for the new system is expected to be five (5years). The salvage value for depreciation purposes is equal to 25% of the hardwarecost. Cost item CostHardware $160,000Training $15,000Installation $15,000 a. What is the book value of the device at the end of three years if the straight linemethod (SLM) is used?b. Supposed that after depreciating the device for two (2) years with the SLM,the firm decides to switch to the double-declining balance depreciationmethod for the remainder of the device’s useful life. What is the device’s bookvalue at the end of four years?
- A company is going to buy a new equipment for manufacturing itsproduct. Four different equipment’s are available; costs, operating and otherexpenses are as follows:Equipment A B C DFirst Cost Php 24,000 Php 30,000 Php 49,600 Php 52,000Power per year Php 1300 Php 1360 Php 2400 Php 2520Labor per year Php 10,600 Php 9320 Php 4200 Php 2700Maintenance/year Php 2800 Php 1900 Php1300 Php 700Taxes & Insurance 2% 2% 2% 2%Life; years 5 5 5 5 Money is worth 10% before taxes to the company. Which equipment shouldbe purchased ? Choose which method is applicable.VC purchased a machine for use in operations at a quoted price of $35,120. Full payment was cash of $8,000, plus a two-year non-interest-bearing note for $27,121. The market rate of interest for this note is 8 percent. VC should record the cost of the machine as (rounded to the nearest dollar): a. $32,950 b. $31,250 c. $23,250 d. $35,000 Please answer explaining in detail step by step without table and graph thankyouA solid-waste recycling plant is considering two types of storage bins using an MARR of 10% per year. (a) Use ROR evaluation to determine which should be selected. (b) Confirm the selection using the regular AW method at MARR = 10% per year. Storage Bin P Q First cost, $ −18,000 −35,000 AOC, $ per year −4000 −3600 Salvage value, $ 1000 2700 Life, years 3 6