Principles of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
12th Edition
ISBN: 9781259144387
Author: Richard A Brealey, Stewart C Myers, Franklin Allen
Publisher: McGraw-Hill Education
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Chapter 6, Problem 22PS
Project
Raw materials for each car are
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1. The company Cintas Adhesivas del Norte, S.A. wants to expand its production capacity in response to an increase in demand. For this purpose, it has initiated the respective investigations and has found that the available alternatives are: (a) Acquire a cutting machine in the US, at a cost of $1,000,000. This type of machine can cut at a rate of 1,000 m2/hour and requires a person whose hourly wage is $50 to operate it; and (b) Purchase 2 cutting machines in Germany at a cost of $350,000 each. This type of machine has a cutting rate of 500 m2/hour and requires one person (per machine) whose salary is $30/hour to operate it. Consider that the equipment has a life of technological use of 10 years, at the end of which the salvage value is estimated to be equal to 15% of the original purchase value of the equipment.
Slicer EE. UU.
Slicer Alemania
INSURANCE COST/YEAR
$80,000
$50,000
FIXED COST OF OPERATION/YEAR
$10,000
$7,000
VARIABLE COST OF OPERATION/HOUR…
6. A lamp socket die-cutting company has two alternatives to purchase a new die-cutting machine, where the initial investment (in US dollars) and the projected net income stream for each alternative is shown in the following tables; the number of periods corresponds to the number of years of service life.
If the company's purchasing committee considers a capital cost of 12.50% for internal financing, which machine should be purchased?
5. Columbia Sheetmetal is thinking about purchasing a new machine that will have an expected life of
8
years. The machine will cost
$ 33,000
and save
$ 4,400
annually in cash operation costs. Of the
$ 33,000
initial cost,
$ 22,000
is equipment and
$ 11,000
is invested working capital.
What would be the internal rate of return for the new machine?
Chapter 6 Solutions
Principles of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
Ch. 6 - Cash flows Which of the following should be...Ch. 6 - Real and nominal flows Mr. Art Deco will be paid...Ch. 6 - Cash flows True or false? a. A projects...Ch. 6 - Depreciation How does the PV of depreciation tax...Ch. 6 - Working capital The following table tracks the...Ch. 6 - Prob. 6PSCh. 6 - Prob. 7PSCh. 6 - Mutually exclusive investments and project lives...Ch. 6 - Replacement decisions Machine C was purchased five...Ch. 6 - Prob. 10PS
Ch. 6 - Prob. 12PSCh. 6 - Working capital Each of the following statements...Ch. 6 - Depreciation Ms. T. Potts, the treasurer of Ideal...Ch. 6 - Project NPV and IRR A project requires an initial...Ch. 6 - Project NPV A widget manufacturer currently...Ch. 6 - Project NPV Marsha Jones has bought a used...Ch. 6 - Project NPV United Pigpen is considering a...Ch. 6 - Project NPV Hindustan Motors has been producing...Ch. 6 - Equivalent annual cash flows As a result of...Ch. 6 - Prob. 25PSCh. 6 - Replacement decisions Hayden Inc. has a number of...Ch. 6 - Prob. 27PSCh. 6 - Prob. 28PSCh. 6 - Prob. 29PSCh. 6 - Prob. 30PSCh. 6 - The cost of excess capacity The presidents...Ch. 6 - Effective tax rates One measure of the effective...Ch. 6 - Equivalent annual costs We warned that equivalent...
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