34. When General Electric Company first introduced the Lucalox ceramic, screw-in light bulb, the bulb cost three and one-half times as much as an ordinary bulb but lasted five times as long. An ordinary bulb cost $1.00 and lasted about eight months. If a firm has a discount rate of 12% compounded three times a year, how much would it save in present value dol- lars by using one Lucalox bulb?

34. When General Electric Company first introduced the Lucalox ceramic, screw-in light bulb, the bulb cost three and one-half times as much as an ordinary bulb but lasted five times as long. An ordinary bulb cost $1.00 and lasted about eight months. If a firm has a discount rate of 12% compounded three times a year, how much would it save in present value dol- lars by using one Lucalox bulb?

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

ChapterA: Appendix - Time Value Of Cash Flows: Compound Interest Concepts And Applications

Section: Chapter Questions

Problem 30P

See similar textbooks

Similar questions

Sensotech, Inc., a maker of microelectromechanical systems, believes it can reduce product recalls by 10% if it purchases new software for detectingfaulty parts at a cost of $225,000. The minimum attractive rate of return is 15% per year.a. How much does the company have to save each year for 4 years to recover its investment?b. What was the cost of recalls per year before the software was purchased if the company exactly recovered its investment in 4 years from the 10% reduction?
KMW Incorporated sells finance textbooks for $166 each. The variable cost per book is $46 and the fixed cost per year is $31, 600. The process of creating a textbook costs $166,000 and the average book has a life span of three years. What is the economic or NPV break-even number of books that must be sold each year given a discount rate of 12 percent? Multiple Choice 260 225 839 304
A company that manufactures a revolutionary aeration system combining coarse and fine bubble aeration components had costs this year (year 1) of $9,000 for check valve components. Based on completion of a new contract with a distributor in China and volume discounts, the company expects this cost to decrease. If the cost in year 2 and each year thereafter decreases by $560, what is the equivalent annual cost for a five-year period at an interest rate of 10% per year?
4. If the price of the material is RO 15 per unit and the annual consumption is 4000 units, the interest and store keeping charges are 20% of the value and the cost of placing of an order and receiving the goods is RO 60, how much material should be ordered at one time? 5. Alexander pump LLC uses about 75000 valves per year and the usage is fairly constant at 6250 units per month. The valve cost of RO 1.50 per unit when bought in large quantities, and the carrying cost is estimated to be 20% of average inventory investment on an annual basis. The cost to place an order and process the delivery is RO18. It takes 45 days to receive delivery from the date of an order and a safety stock of 3250 vales is desired. You are required to determine. a. The most economical order quantity and frequency of orders. b. The most economical order quantity if the valves cost is RO 4.50 each instead of RO 1.50 each
Machine A costs $500,000 to purchase, result in electricity bills of $100,000 per year, and last for 12 years. Machine B costs $600,000 to purchase, result in electricity bills of $85,000 per year, and last for 15 years. The discount rate is 9%. What are the equivalent annual costs for two models? Which model is more cost-effective?
Sensotech, Inc., a maker of microelectromechanical systems, believes it can reduce product recalls by 10% if it purchases new software for detecting faulty parts. The cost of the new software is $225,000. Identify the symbols involved and the values for the symbols that are given in determining how much the company would have to save each year to recover its investment in 4 years at a minimum attractive rate of return of 15% per year.
A set of four “100-year,” sixty (60) watt light bulbs costs $24.95. If H equals the annual number of hours the bulb is used, each bulb provides 100Hhours of light, and the efficiency of each bulb is 80%. A set of four, sixty (60) watt standard bulbs costs $2.60. Each standard bulb provides H hours of light and the efficiency of each bulb is 95%. If the cost of electricity is $0.0574/kWh, how many hours of operation each year will make the costs of the two types of bulb breakeven? Your personalMARR is 5% per year. Assume repeatability. State other realistic assumptions you must make.
Blossom Corp. management is investigating two computer systems. The Alpha 8300 costs $2,821,325 and will generate cost savings of $1,280,625 in each of the next five years. The Beta 2100 system costs $4,610,500 and will produce cost savings of $954,750 in the first three years and then $2 million for the next two years. The company’s discount rate for similar projects is 14 percent.What is the NPV of each system? (Enter negative amounts using negative sign, e.g. -45.25. Do not round discount factors. Round other intermediate calculations and final answer to 0 decimal places, e.g. 1,525.) Should Blossom Choose the Alpha or Beta system?
Rubbermaid Plastic Corp. invested ₱10,000,000 in manufacturing equipment for producing small wastebaskets. If the company uses an interest rate of 5% compounded monthly, how much money should it have to earn each year to recover the investment in 7 years? (a) ₱2,003,600.87 (b) ₱2,530,800.36 (c) ₱1,735,721.38 (d) Over ₱3,000,000
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
Solar Hydro manufactures a revolutionary aeration system that combines coarse and fine bubble aeration components. This year (year 1) the cost for check valve components is $9,000. Based on closure of a new contract with a distributor in China and volume discounts, the company expects this cost to decrease. If the cost in year 2 and each year thereafter decreases by $560, what is the equivalent annual cost for a 5-year period at an interest rate of 10% per year?
Network Systems is introducing a new network card. Suppose Network Systems knows its fixed costs are $600,000, its variable costs are $500 per card, and it must sell 15,000 cards to break even the first year. What is the minimum price per unit it should charge