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install cost of the new machinery is $400,000 and is expected to last for 5 years. The salvage value is expected to be $30,000 in today’s dollars.
Revenue is expected to increase by $40,000 while operating costs are expected to increase $2500 (both actual).
Determine the present worth of the project, assuming an (actual) MARR of 10%, a CCA rate of 10% and a corporate tax rate of 15%.
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- Kappa Holdings is looking at a new system with an installed cost of $740,000. This cost will be depreciated straight-line to zero over the project's 7-year life, at the end of which the system can be salvaged for $102,000. The system will save the firm $217,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $69,000, which will be returned at the end of the project. If the tax rate is 22 percent and the discount rate is 9 percent, what is the NPV of this project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPVVML Industries has need of specialized yarn manufacturing equipment for operations over the next 3 years. The firm could buy the machinery for $95,000 and depreciate it using MACRS (this is a 7-year property). Annual maintenance would be $7500, and it would have a salvage value of $25,000 after 3 years. Another alternative would be to lease the same machine for $45,000 per year on an "all costs" inclusive lease (maintenance costs included in lease payment). These lease payments are due at the beginning of each year. VML Industries uses an after-tax MARR of 18% and a combined tax rate of 48%. Do an after-tax present worth analysis to determine which option is preferred.A vehicle include annual labor cost of $60,000 and annual revenue of $150,000. Using a service life of 10 years, determine the BTCF and ATCF at 21% federal and 6.5% state tax rate. Would you invest in your vehicle? (Establish and use your own MARR for PW, AW and ROR analysis)
- The purchase of a motor for P6000 and a generator for P4000 will allow a company to produce its own energy. The configuration can be assembled for P500. The service will operate for 1600 hrs per year for 10yrs. The maintenance cost is P300 per year and the cost to operate is P0.85/hour for fuel and related costs. Using straight line depreciation, what is the annual cost(P) for the operation? There is P400 in salvage value for the system at the end of 10yrs.A specialty concrete mixer used in construction was purchased for $300,000 7 years ago. Its annual O&M costs are $105,000. At the end of the 8-year planning horizon, the mixer will have a salvage value of $5,000. If the mixer is replaced, a new mixer will require an initial investment of $375,000 and at the end of the 8-year planning horizon, the new mixer will have a salvage value of $45,000. Its annual O&M cost will be only $40,000 due to newer technology. Use an EUAC measure and a MARR of 15% to see if the concrete mixer should be replaced if the old mixer is sold for its market value of $65,000. Solve, a. Use the cash flow approach (insider’s viewpoint approach). b. Use the opportunity cost approach (outsider’s view point approach).1. Equipment costing 2, 000, 000.00 with a 200, 000.00 annual operation and maintenance cost. Determine the capitalized cost if money is worth 20% per year 2. An asset has its original value of P 120, 000.00 has a salvage value of 3% of its original value in 12 years. What is the asset’s value after 8 years of use? Use the straight-line depreciation method.
- BigCo is considering leasing the new equipment that it requires, for $153,000 a year, payable in advance. The cost of the equipment is $900,000, has a CCA rate of 30% and will last for 6 years. The expected scrap value is $162,000. Assume that the first CCA tax deduction would be taken at the end of the first year. BigCo has lots of other equipment in this asset pool. The tax rate is 30% and the cost of debt is 9%. a. Should BigCo lease or buy the equipment? Big Co should (Click to select) lease buy the equipment. b. What is the maximum lease payment that would make BigCo indifferent between leasing or buying? (Round your answer to 4 decimal places.) The maximum lease payment $Eads Industrial Systems Company (EISC) is trying to decide between two different conveyor belt systems. System A costs $427,000, has a 6-year life, and requires $115,000 in pretax annual operating costs. System B costs $502,000, has an 8-year life, and requires $79,000 in pretax annual operating costs. Both systems are to be depreciated straight-line to zero over their lives and will have a zero salvage value. Whichever system is chosen, it will not be replaced when it wears out. The tax rate is 33 percent and the discount rate is 24 percent. Which system should the firm choose and why? a.No option is correct b.System A because its net present value is -$588,792 c.System B because its net present value is -$612,240 d.System A because its net present value is $211,516A specialty concrete mixer used in construction was purchased for $300,000 7 years ago. Its annual O&M costs are $105,000. At the end of the 8-year planning horizon, the mixer will have a salvage value of $5,000. If the mixer is replaced, a new mixer will require an initial investment of $375,000. At the end of the 8-year planning horizon, it will have a salvage value of $45,000. Its annual O&M cost will be only $40,000 due to newer technology. Analyze this using an EUAC measure and a MARR of 15 percent to see if the concrete mixer should be replaced if the old mixer is sold for its market value of $65,000. a. Use the cash flow approach (insider’s viewpoint approach) b. use the opportunity cost approach (outsiders viewpoint approach) Include formulas in excel screen shots.
- The First cost of a passenger bus is ₽800,000. Its estimated life is 4 years with no salvage value. The operating cost per year of 300 days of operation are as follows: Tires, ₽24,000; gasoline, 60 liters per day at ₽15 per liter; Oil,₽80 per day; maintenance and repair, ₽40,000; labor ₽800 per day; miscellaneous expense, ₽18,000; depreciation, sinking fund at 10%. If the average passenger fare is ₽3.50 for each passenger one way and expected profit or return is 15% determine the minimum average number of passengers that should be transported each day. Use the AW method and Future worth method.VML Industries has need of specialized yarn manufacturing equipment for operations over the next 3 years. The firm could buy the machinery for $95,000 and depreciate it using MACRS. Annual maintenance would be $7500, and it would have a salvage value of $25,000 after 3 years. Another alternative would be to lease the same machine for $45,000 per year on an “all costs” inclusive lease (maintenance costs included in lease payment). These lease payments are due at the beginning of each year. VML Industries uses an after-tax MARR of 18% and a combined tax rate of 28%. Do an after-tax present worth analysis to determine which option is preferred.A 10-year-old backup power system is being considered for early replacement. Its current market value is $16,000. Estimated future market values (MV) and annual operating costs (AOC) for the next 5 years are given in the following table. What is the economic service life of this defender if the interest rate is Z% per year using AW analysis? Year MV AOC 1 10000 -5000 8000 -6500 6000 -8000 4 2000 -9500 -12500 [Hint: the value of Z = |last digit of your unique id+2nd digit of your unique id], Example: if your id is 201-021-651 then Z = |1+2| = 3.00%, so, interest rate will be 3.00%) 3.