You are evaluating two different silicon wafer milling machines. The Techron I costs $265,000, has a 3-year life, and has pretax operating costs of $74,000 per year. The Techron II costs $445,000, has a 5-year life, and has pretax operating costs of $47,000 per year. For both milling machines, we use straight line depreciation to zero over the project’s life and assume a salvage value of $35,000. If your tax rate is 22 percent and your discount rate is 10 percent, compute the EAC for both machines. Which machine do you prefer? Why?

Q: You are evaluating two different silicon wafer milling machines. The Techron I costs $258,000, has a…

A: Equivalent Annual cost (EAC) is the total cost incurred by the company annually for operating and…

Q: You are evaluating two different silicon wafer milling machines. The Techron I costs $225,000, has a…

A: EAC is a capital budgeting technique, so as to evaluate the cost effectiveness of projects/ assets…

Q: Your company has been approached to bid on a contract to sell 21,000 voice recognition (VR) computer…

A: As per the details provided in the question, following are the required calculation where selling…

Q: An oil refinery finds that it is necessary to treat the waste liquids from a new process before…

A: Present Worth of in-house treatment=Present worth of the uniform annuity + present worth of the…

Q: A casting company is considering the replacement analysis of a furnace. If it is bought from A…

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

Q: In a bio-based material recycling company, the operation managers are considering a twin-screw…

A: Before investing in new projects or assets, profitability is evaluated by using various methods like…

Q: You are evaluating two different silicon wafer milling machines. The Techron I costs $216,000, has a…

A: Given: Techron 1  Initial cost = $216000 Life = 3 years Pretax operating cost = $55000 Depreciation…

Q: Poly-Chem Plastics is considering two types of injection molding machines: hydraulic and electric.…

A: here to solve this question we have to calculate the IRR of incremental cash flow of both the…

Q: 1. Compute straight-line depreciation for each year of this new machine's life. 2. Determine…

A: Since you have asked a question with multiple sub parts, we will solve the first three sub parts for…

Q: PT Kolam Makara has a project costs $900,000, has a five-year life, and has a salvage value of…

A:

Q: Which project should the firm choose?

A: Net Present Value is a capital budgeting method to evaluate the better project. It is the excess of…

Q: We are evaluating a project that costs $786,000, has an eight-year life, and has no salvage value.…

A: The operating leverage is a financial metric that shows how much the company's operating income…

Q: Repairs for this machine will average 25,000 per year and operating expenses will be 30,000. if…

A: Equipment cost = P500000 Scrap value = P50000 Repair per year = P30000 Operating expenses includes…

Q: An oil refinery finds that it is necessary to treat the waste liquids from a new process before…

A: The annual worth of capital projects is the value generation every year. It determines with the help…

Q: We are evaluating a project that costs $660,000, has a life of 5 years, and has no salvage value.…

A: Cash flows are the series of payment of the income received over the period of time on the initial…

Q: You are evaluating two different silicon wafer milling machines. The Techron I costs $255,000, has a…

A: Equated annual cost The equated annual cost method is the total cost incurred by the company…

Q: It is desired to determine the present economic value of an old machine by considering of how it…

A: The present value of an equipment can be determined by by discounting the future cash flow of the…

Q: You are evaluating two different silicon wafer milling machines. The Techron I costs $213,000, has a…

A: Investment = -213,000 Depreciation amount = Acquiring Value - Salvage Value Depreciation amount =…

Q: You are evaluating two different silicon wafer milling machines. The Techron I costs $300,000, has a…

A: Calculation of EAC of Techron I and Techron II:The EAC is calculated using a excel spreadsheet. The…

Q: Crowl Corporation is investigating automating a process by purchasing a machine for $793,800 that…

A: Simple Rate of Return can be calculated with the following formula   Simple Rate of Return = Annual…

Q: You are evaluating two different silicon wafer milling machines. The Techron I costs $288,000, has a…

A:

Q: We are evaluating a project that costs $1,675,000, has a six-year life, and has no salvage value.…

A: NPV stands for Net Present Value which is defined as the difference among the cash inflows present…

Q: Lang Industrial Systems Company (LISC) is trying to decide between two different conveyor belt…

A: NPV is used to calculate the net present worth of the entire project which a company wants to start.

Q: Use the following base case information to evaluate the project: PT Kolam Makara has a project…

A: Initial Investment = $900,000 Salvage Value = $130,000 Required rate = 14% Tax rate = 34% Sales…

Q: Matta Manufacturing is trying to decide between two different conveyor belt systems. System A costs…

A: EAC or equivalent annual cost is the annual cost of owning and maintaining the asset over its entire…

Q: A motor with a 200-horsepower output is needed in the factory for intermittent use. A Graybar motor…

A: Information Provided: Graybar motor costs = $7000 Electrical efficiency = 90% Blueball motor costs =…

Q: You are evaluating two different silicon wafer milling machines. The Techron I costs $285,000, has a…

A: Given: Techron 1 cost is $285,000 Techron 1 pre tax operating cost is $46,000 Techron 11 cost is…

Q: Logan Hunting has a proposed project that will generate sales of 2,200 units annually at a selling…

A: Operating cash flow refers to the cash flow generated from the core operations of the business. It…

Q: If your tax rate is 35 percent and your discount rate is 14 percent, compute the EAC for both…

A: The yearly cost of owning and running an asset over its estimated life is called equivalent annual…

Q: One of two methods will produce solar panels for electric power generation. Method 1 will have an…

A: The capital budgeting is a technique that helps to evaluate the profitability of the project.

Q: n oil refinery finds that it is necessary to treat the waste liquids from a new process before…

A: a) The AW of the in-house treatment  Firstly compute the PW i.e. Present Worth , PW of the in-house…

Q: An oil refinery finds that it is necessary to treat the waste liquids from a new process before…

A: Solution- Time =15 years r=12% PW (present worth ) of the in house treatment = present worth of the…

Q: The equivalent annual worth of the process currently used in manufacturing motion controllers is AW…

A: For evaluating the alternatives for the selection of one alternative, we can use the net present…

Q: Two processes can be used for producing a new engine. Process A will have a first cost of P750,000,…

A: Future worth analysis is a method in which it is required to calculate the equivalent cost of the…

Q: A construction company is evaluating the purchase of a new concrete mixer with hydraulic hopper and…

A: In the given question we are provided with the information of a construction company that is…

Q: Use the following base case information to evaluate the project: PT Kolam Makara has a project…

A: Sensitivity analysis can be performed by changing the variable costs and keeping all other factors…

Q: An assembly operation at a software company currently requires $100,000 per year in labor costs. A…

A: IRR method provides a benchmark return for equating future worth and present worth.

Q: You are evaluating two different silicon wafer milling machines. The Techron I costs $265,000, has a…

A: The data and working calculations are given in the following table  Techron 1         year 0…

Q: Frank’s Franks is looking at a new sausage system with an installed cost of $397,800. This cost will…

A: Cash outflow at time 0 = Cost + Working capital Cash outflow at time 0 = - (397800+28560) = -426360…

Q: In a bio-based material recycling company, the operation mangers are considering a twin-screw…

A: Before investing in new projects or assets, profitability is evaluated by using various methods like…

Q: North City must choose between two new snow-removal machines. The SuperBlower has a $70,000 first…

A: Operating costs are those costs which are used to operate a machine. These costs are an important…

Q: It is desired to determine the present economic value of an old machine by considering of how it…

A: The present value of an equipment can be determined by discounting the future cash flow of the…

Q: You are evaluating two different silicon wafer milling machines. The Techron I costs $249,000, has a…

A: The question is based on the concept of Financial Management.

Q: Assume that United Technologies is evaluating a proposal to change the company's manual design…

A: Calculation of depreciation and net book value As given in the question depreciation method is…

Q: An engineer is working on the layout of a new research and experimentation facility.  Two plant…

A: MARR: The minimum acceptable rate of return, regularly contracted MARR, or obstacle rate is the base…

Q: compute the EAC for both machines

A: EAC stands for Equivalent Annual Cost. It is the annual cost which is incurred for a project. To…

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.