Your options for shippings10.000 of machine parts from Hamilton to Malaysia, are:use a ship that will take 30 days at a cost oftruck the parts to Vancouver and then ship at a total cost of1)S3.00 or2)The second option will take only 20 days. You are paid via a letter of credit the day the parts arrive.Your holding cost is estimated at$4,50010% of the value per year.a. Calculate the daily holding cost. Round to two decimal places. (if your answer is S90 then put 90.00)b. Calculate the difference in cost per day between shipping options. Round to two decimal places.(Round to 2 decimal points S82.19 put 82.19 or $100 put 100.00)Daly holding costDifference in costiday in shipping options =

Daily holding cost = 28 Difference in cost per day shipping cost = 98

vour options for shipping Sa00.000 of machine parts from Hamilton to Malaysia, are use a ship that wil take 30 days at a cost of truck the parts to vVancouver and then ship at a total cost of SL00 or 2) S4.500 The second option will take only 20 days You are paid via a letter of credit the day the parts arrive. Your holding cost isestimated at 10% of the value per year. a Calculate the daly holding cost. Round to two decimal places. (if your answer is S0 then put 90.00 b. Calculate the difference in cost per day between shipping options. Round to two decimal places. (Round to 2 decimal points S2.19 put 219 or S100 put 100.00) Dally holding cost Difference in cost/day in shipping options =

vour options for shipping Sa00.000 of machine parts from Hamilton to Malaysia, are use a ship that wil take 30 days at a cost of truck the parts to vVancouver and then ship at a total cost of SL00 or 2) S4.500 The second option will take only 20 days You are paid via a letter of credit the day the parts arrive. Your holding cost isestimated at 10% of the value per year. a Calculate the daly holding cost. Round to two decimal places. (if your answer is S0 then put 90.00 b. Calculate the difference in cost per day between shipping options. Round to two decimal places. (Round to 2 decimal points S2.19 put 219 or S100 put 100.00) Dally holding cost Difference in cost/day in shipping options =

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 5PA: Falkland, Inc., is considering the purchase of a patent that has a cost of $50,000 and an estimated...

See similar textbooks

Similar questions

Caduceus Company is considering the purchase of a new piece of factory equipment that will cost $565,000 and will generate $135,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return In Excel, see Appendix C.
Shonda & Shonda is a company that does land surveys and engineering consulting. They have an opportunity to purchase new computer equipment that will allow them to render their drawings and surveys much more quickly. The new equipment will cost them an additional $1.200 per month, but they will be able to increase their sales by 10% per year. Their current annual cost and break-even figures are as follows: A. What will be the impact on the break-even point if Shonda & Shonda purchases the new computer? B. What will be the impact on net operating income if Shonda & Shonda purchases the new computer? C. What would be your recommendation to Shonda & Shonda regarding this purchase?
Falkland, Inc., is considering the purchase of a patent that has a cost of $50,000 and an estimated revenue producing life of 4 years. Falkland has a cost of capital of 8%. The patent is expected to generate the following amounts of annual income and cash flows: A. What is the NPV of the investment? B. What happens if the required rate of return increases?
A grocery store is considering the purchase of a new refrigeration unit with an Initial Investment of $412,000, and the store expects a return of $100,000 in year one, $72000 in years two and three, $65,000 in years four and five, and $38,000 in year six and beyond, what is the payback period?
Gina Ripley, president of Dearing Company, is considering the purchase of a computer-aided manufacturing system. The annual net cash benefits and savings associated with the system are described as follows: The system will cost 9,000,000 and last 10 years. The companys cost of capital is 12 percent. Required: 1. Calculate the payback period for the system. Assume that the company has a policy of only accepting projects with a payback of five years or less. Would the system be acquired? 2. Calculate the NPV and IRR for the project. Should the system be purchasedeven if it does not meet the payback criterion? 3. The project manager reviewed the projected cash flows and pointed out that two items had been missed. First, the system would have a salvage value, net of any tax effects, of 1,000,000 at the end of 10 years. Second, the increased quality and delivery performance would allow the company to increase its market share by 20 percent. This would produce an additional annual net benefit of 300,000. Recalculate the payback period, NPV, and IRR given this new information. (For the IRR computation, initially ignore salvage value.) Does the decision change? Suppose that the salvage value is only half what is projected. Does this make a difference in the outcome? Does salvage value have any real bearing on the companys decision?
Your factory has been offered a contract to produce a part for a new printer. The contract would last for 3 years and your cash flows from the contract would be $5.14 million per year. Your upfront setup costs to be ready to produce the part would be $8.11 million. Your discount rate for this contract is 7.8%. The NPV of the project is $_______ Million (Round to two decimal places).
Your company is looking at purchasing a front-end loader at a cost of $120,000. The loader can be billed out at $107.00 per hour. It costs $30.00 per hour to operate the front-end loader and $37.00 per hour for the operator. The useful life of the equipment is five years. Using 1,200 billable hours per year and a MARR of 10%, determine the payback period with interest for the front-end loader. 2.89 4.15 4.52 3.74 3.02 Please write to text formet but don't copy paste
Your factory has been offered a contract to produce a part for a new printer. The contract would last for three years, and your cash flows from the contract would be $4.91million per year. Your upfront setup costs to be ready to produce the part would be $7.93 million. Your discount rate for this contract is 7.6%. What is the IRR?____________________% (Round to 2 decimal places) The NPV is $4.82 million, which is positive so the NPV rule says to accept the project. Does the IRR rule agree with the NPV rule? _______________________
Packaging equipment for Xi Cling Wrap costs $60,000 and is expected to result in end-of-year net savings of $23,000 per year for 3 years. The equipment will have a market value of $10,000 after 3 years. The equipment can be leased for $21,000 per year, payable at the beginning of each year. Xi Cling’s MARR is 10%/yr. Based on an internal rate of return analysis, determine if the packaging equipment should be purchased or leased.
Dell is evaluating the proposal of a new factory in an overseas country (Germany). The currency in the overseas country is Euro. Dell will be renting a premise of 50,000 Square feet for this facility. Annually the factory expects to sell 20,000 units of Keyboard at 3 euro per keyboard. Total capital cost is 20,000 euro and is depreciated using the straight-line method over five years to a zero-salvage value. The monthly salary expense will be 3000 euro, whereas annual utility and other expense will be 2,000 euro. The annual total rent is 5,000 euro. Variable costs are 10 per cent of annual sales revenue. Assume; initially, Dell will require 4,000 euro in working capital for this project. However, after the project, Dell will not receive anything from the working capital. Besides, there are no additional cash inflows and outflows from this project. The project does not have any tax implication. Calculate cash flows from the asset (CFFA) for this project.
Your storage firm has been offered $95,400 in one year to store some goods for one year. Assume your costs are $96,700, payable immediately, and the cost of capital is 8.4%. Should you take the contract? The NPV Will Be $______ (Round to the nearest cent)
camber crporation has to decide if they can finance purchasing 10 new machines for all their manufacturering site.the machine cost 1.73 million each ,and the supplier agreed to the following payment terms ,40%upfront and the remainder to be paid over 4 years at an annual rate of 12% Executives review their budgets and discover that they can pay supplier 40% now but their budgets only allow them to pay 4 million per year for the next four years ,will that be enough to make the purchase and critically discuss the effect of the increasing amount paid upfront when corporation make capital purchase focusing on the benefits and drawbacks , should show each step in calculations