An investment of P20,000 will be required at the end of the year. The project would terminate at the end of the 5th year and the assets are estimated to have a salvage value of P26,000 at that time. What is the rate of interest for this project to break-even? 5.74% 8.78% 6.78% O 9.75% O 779% O 472
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- You are considering investing RM64000 in new equipment. You estimate that the net cash flows will be RM14000 during the first year, but will increase by RM2500 per year the next year and each year thereafter. The equipment is estimated to have a 7-year service life and a net salvage value of RM5300 at that time. Assume MARR of 9%. a.Calculate the annual capital cost CR (ownership cost) for the equipment. Format : 87348 b.Determine the equivalent annual savings. Format: 60952 c.Is this a wise investment? Y/N. Format: AHajia Timber Ltd (GTL) produces and exports lumber and planks. It owns a plant whichhas value of GHC 1,800,000 as at 1 January 2010. The government of Ghana,passes alegislation that restricts the exportation of lumber. Consequently GTL has to reduceproduction by 40%. Cash flow forecast for the next five years included in the budgetsubmitted for management approval in January 2010 shows the following:Year Cash flows (GHC)2010 552,0002011 506,0002012 376,0002013 250,0002014 560,000The cashflow forecast for 2014 includes expected proceeds from disposal of the plant. Thecash flow projections also ignore the effects general upwards movement in prices.It is estimated that if the plant is sold in January 2010, it would realize the net proceeds ofGHC 1,320,000. The costs of capital for GBL is 15% (ignoring inflationary effect)RequiredCalculate the recoverable amount of the plant and impairment loss (if any).AN INVESTMENT OF P270,000.00 ON COMPUTER SHOP WILL HAVE THE FOLLOWING DATA: UNIFORM ANNUAL REVENUE-P185,000.00 FOR 5 YEARS OPERATION AND MAINTENANCE-P85,000.00/YEAR TAXES/INSURANCE-5% OF THE FIRST COST SALVAGE VALUE OF THE COMPUTERS AFTER 5 YEARS-10% OF INVESTMENT EXPECTED EARNINGS ON CAPITAL- 25% PROVE THAT THIS INVESTMENT IS JUSTIFIABLE OR NOT BY USING PRESENT WORTH METHOD PLEASE GIVE FULL AND DETAILED SOLUTION
- AN INVESTMENT OF P270,000.00 ON COMPUTER SHOP WILL HAVE THE FOLLOWING DATA: UNIFORM ANNUAL REVENUE-P185,000.00 FOR 5 YEARS OPERATION AND MAINTENANCE-P85,000.00/YEAR TAXES/INSURANCE-5% OF THE FIRST COST SALVAGE VALUE OF THE COMPUTERS AFTER 5 YEARS-10% OF INVESTMENT EXPECTED EARNINGS ON CAPITAL- 25% PROVE THAT THIS INVESTMENT IS JUSTIFIABLE OR NOT BY USING ROR METHOD PLEASE GIVE FULL AND DETAILED SOLUTIONEngineering economy - ENGR 3322 A new municipal refuse-collection truck can be purchased for $84,000. Its expected useful life is six years, at which time its market value will be zero. Annual receipts less expenses will be approximately $18,000 per year over the six-year study period. At MARR of 19%, calculate the return on investment of the project -35% -36% -37% None of the choicesA proposed project will require the immediate investment of $50,000 and is estimated to have year-end revenues and costs as follows: Year Revenue Costs 1 2 3 4 5 $ 75,000 90,000 100,000 95,000 60,000 $ 60,000 77,500 75,000 80,000 47,500 An additional investment of $20,000 will be required at the end of the second year. The project would terminate at the end of the 5th year, and the assets are estimated to have a salvage value of $25,000 at the time. Solve for the IRR of the project by PW using 15% and 16% rates. A. 15.68% B. 15.28% C. 15.88% D. 15.48%
- AN INVESTMENT OF P270,000.00 ON COMPUTER SHOP WILL HAVE THE FOLLOWING DATA: UNIFORM ANNUAL REVENUE-P185,000.00 FOR 5 YEARS OPERATION AND MAINTENANCE-P85,000.00/YEAR TAXES/INSURANCE-5% OF THE FIRST COST SALVAGE VALUE OF THE COMPUTERS AFTER 5 YEARS-10% OF INVESTMENT EXPECTED EARNINGS ON CAPITAL- 25% PROVE THAT THIS INVESTMENT IS JUSTIFIABLE OR NOT BY USING ANNUAL WORTH METHOD PLEASE GIVE FULL AND DETAILED SOLUTIONA manufacturing company is evaluating an investment plan to produce a new product based on the following estimated data: • Equipment Cost: $150,000 • Overhead Cost: $30,000/year • Sales price: $12/unit Operation cost: $20/operating hour • Production time: O.1 hour/unit • Planning horizon: 4 years • MARR: 15% Salvage value after 4 years: 0 By using break-even analysis, the break-even sales value for the product should be: Select one: a. 6755 units X b. 8255 units C. 9755 units d. 11,255 units The correct answer is: 8255 unitsQuestion 2 口 The second, Product B, is a higher quality project, requiring an initial investment of $18,000 in Year 0. It would be produced for 9 years, with project annual revenues of $7,000 and annual expenses of $1,500. At the end of Year 9, the equipment could be sold for a salvage value of $900. Using the repeatability assumptions and a MARR of 12%, what is the Annual Worth of Product B? Typed numeric answer will be automatically saved.
- Unequal Lives The Perez Company has the opportunity to invest in one of two mutually exclusive machines that will produce a product it will need for the foreseeable future. Machine A costs $9 million but realizes after-tax inflows of $3.5 million per year for 4 years. After 4 years, the machine must be replaced. Machine B costs $14 million and realizes after-tax inflows of $3 million per year for 8 years, after which it must be replaced. Assume that machine prices are not expected to rise because inflation will be offset by cheaper components used in the machines. The cost of capital is 8%. Using the replacement chain approach to project analysis, by how much would the value of the company increase if it accepted the better machine? Do not round intermediate calculations. Enter your answer in millions. For example, an answer of $1.23 million should be entered as 1.23, not 1,230,000. Round your answer to two decimal places. million What is the equivalent annual annuity for each machine?…Kolby's Korndogs is looking at a new sausage system with an installed cost of $670,000. The asset qualifies for 100 percent bonus depreciation and can be scrapped for $88,000 at the end of the project's 5-year life. The sausage system will save the firm $213,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $41,000. If the tax rate is 23 percent and the discount rate is 11 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.) NPVEngineering economy - ENGR 3322 The International Parcel Service has installed a new radio frequency identification system to help reduce the number of packages that are incorrectly delivered. The capital investment in the system is $65,000, and the projected annual savings are tabled below. The system’s market value at the EOY five is negligible, and the MARR is 18% per year. Calculate the return on investment of the project a. 35% b. 36% c. 37% d. None of the choices