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- Garnette Corp is considering the purchase of a new machine that will cost $342,000 and provide the following cash flows over the next five years: $99,000, $88,000, $92,000. $87,000, and $72,000. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return in Excel. see Appendix C.A high-precision programmable router for shaping furniture components is purchased by Henredon for $190,000. It is expected to last 12 years and have a salvage value of $5,000. It will produce $45,000 in net revenue each year during its life. Corporate income-tax rate is 25% and the after-tax MARR is 10%. Develop tables using a spreadsheet to determine the ATCF for each year and the after-tax PW, AW, IRR, and ERR if the router is kept for 12 years. Use MACRS-GDS and state the appropriate property class.A high-precision programmable router for shaping furniture components is purchased by Henredon for $190,000. It is expected to last 12 years and have a salvage value of $5,000. It will produce $45,000 in net revenue each year during its life. Corporate income-tax rate is 25% and the after-tax MARR is 10%. Develop tables using a spreadsheet to determine the ATCF for each year and the after-tax PW, AW, IRR, and ERR if the router is kept for 12 years. Use straight-line depreciation (no half-year convention).
- A high-precision programmable router for shaping furniture components is purchased by Henredon for $190,000. It is expected to last 12 years and have a salvage value of $5,000. It will produce $45,000 in net revenue each year during its life. Corporate income-tax rate is 25% and the after-tax MARR is 10%. Develop tables using a spreadsheet to determine the ATCF for each year and the after-tax PW, AW, IRR, and ERR if the router is kept for 12 years. Use double declining balance depreciation (no half-year convention, no switching).Raytronics wishes to use an automated environmental chamber in the manufacture of electronic components. The chamber is to be used for rigorous reliability testing and burn-in. It is installed for $1.4 million and will have a salvage value of $200,000 after 8 years. Its use will create an opportunity to increase sales by $650,000 per year and will have operating expenses of $250,000 per year. Corporate income-tax rate is 25%. Develop tables using a spreadsheet to determine the ATCF for each year and the after-tax PW, AW, IRR, and ERR if the chamber is kept for 8 years. After-tax MARR is 10%. Use MACRS-GDS(5) with 100% bonus depreciation.Raytronics wishes to use an automated environmental chamber in the manufacture of electronic components. The chamber is to be used for rigorous reliability testing and burn-in. It is installed for $1.4 million and will have a salvage value of $200,000 after 8 years. Its use will create an opportunity to increase sales by $650,000 per year and will have operating expenses of $250,000 per year. Corporate income-tax rate is 25%. Develop tables using a spreadsheet to determine the ATCF for each year and the after-tax PW, AW, IRR, and ERR if the chamber is kept for 8 years. After-tax MARR is 10%. Use MACRS-GDS(5) with the Section 179 expense deduction.
- Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $491,000 cost with an expected four-year life and a $10,000 salvage value. Additional annual information for this new product line follows. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Sales of new product $ 1,970,000 Expenses Materials, labor, and overhead (except depreciation) 1,502,000 Depreciation—Machinery 120,250 Selling, general, and administrative expenses 180,000 Required:1. Determine income and net cash flow for each year of this machine’s life2. Compute this machine’s payback period, assuming that cash flows occur evenly throughout each year.3. Compute net present value for this machine using a discount rate of 7%. Do do not give solution in image fromatThe organization you are employed by is investing in new machinery for their warehouse. The $1.2 million initial investment is made. In year 1, the annual maintenance expenditures are $42,000, and they rise by $3,000 annually after that. In the first year, the revenues are $118,000, and they rise by 6% annually. After the equipment's 12-year useful life, a $25,000 salvage value will be obtained.a) The rate of return company made during progressb) If the desired MARR is 5%, is this a good investment?Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $491,000 cost with an expected four-year life and a $20,000 salvage value. Additional annual information for this new product line follows. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Sales of new product $ 1,940,000 Expenses Materials, labor, and overhead (except depreciation) 1,507,000 Depreciation—Machinery 117,750 Selling, general, and administrative expenses 149,000 Required:1. Determine income and net cash flow for each year of this machine’s life.2. Compute this machine’s payback period, assuming that cash flows occur evenly throughout each year.3. Compute net present value for this machine using a discount rate of 7%
- With a $100,000 investment in a new injection mouldingmachine, A-Design Inc., a company specialized in thedesign and manufacturing of armrests for wheelchairswas able to achieve an operating income of $36,000 inits first year of production/operation. The interestexpenses on the money A-Design has borrowed were$5,000 per year. 5. Perform a sensitivity analysis on the net profit of A-DesignInc. for an income tax rate of 20% and 30%Company Alpha has been constructing a new piece of plant over the past 18 months which is due to come into use on 1 August 2015. The following information is available. $ List price of materials 10,000,000 Trade discount given on materials 5% Delivery costs 500,000 Installation costs 2,000,000 Staff training 25,000 Pre production testing 100,000 A loan was taken out to finance the plant and the interest accrued on this loan is $50,000. Management invested the loan proceeds in a deposit account before it was needed which generated interest of $10,000. The asset has a useful life of 5 years and has no residual value. Show the extracts from the statement of comprehensive income for the year ended 31 December 2015 and the statement of financial position at that date. For any items not included in calculating the cost rice of the asset an explanation should be given.We have the following data for a power plant: 1 MW CENTRAL ECONOMIC BALANCE Power: 1 Mwa Maintenance cost: 3% per year Initial cost of operation: 5% per year Regulated Rate: $0.015/kWh (20 years) Project cost = $750,000.00 Plant factor= 60% Energy: 5256000 KWh Income from regulated tariff: 78840 Annual revenue increase: 6% Initial maintenance cost/year of annual maintenance (2% installation): $ 22,500.00 Annual maintenance increase: 5% Initial cost of operation/year (1% Installation) $ 37,500.00 Annual operation increase: 3% It is assumed that in year 10, an equipment update will be carried out whose cost will be 25% of the value of the investment = $187,500.00 SOLVE: In what year will the investment be recovered?