4. An industrial firm can purchase a special machine for $70,000. A down payment of $5,000 is required, and the unpaid balance can be paid off in five equal year-endinstallments at 9% interest. As an alternative, the machine can be purchased for $66,000 in cash. If the firm's MARR is 10%, use the annual equivalent method todetermine which alternative should be accepted.66 Click the icon to view the interest factors for discrete compounding when i= 9% per year.7 Click the icon to view the interest factors for discrete compounding when MARR = 10% per year.The annual equivalent worth of the first option is $(Round to the nearest dollar.)The annual equivalent worth of the second option is $(Round to the nearest dollar.)Select the correct choice from the drop-down menu below.(1).is a better choice.6: More InfoSingle PaymentEqual Payment SeriesCompoundPresentCompoundSinkingPresentCapitalAmountWorthAmountFundWorthRecoveryFactorFactorFactorFactorFactorFactor(F/P, i, N)(P/F, i, N)(F/A, i, N)(A/F, i, N)(PIA, I, N)(A/P, i, N)11.09000.91741.00001.00000.91741.09001.18810.84172.09000.47851.75910.568531.29500.77223.27810.30512.53130.395141.41160.70844.57310.21873.23970.30871.53860.64995.98470.16713.88970.25711.67710.59637.52330.13294.48590.222971.82800.54709,20040.10875.03300.198781.99260,501911,02850,09075.53480,18072.17190.460413.02100,07685.99520.1668102.36740.422415.19290.06586.41770.1558

Cost of Machine = $70,000 Down payment = $5,000 number of installments =…

An industrial firm can purchase a special machine for $70,000. A down payment of $5,000 is required, and the unpaid balance can be paid off in five equal year-end installments at 9% interest. As an alternative, the machine can be purchased for $66,000 in cash. If the firm's MARR is 10%, use the annual equivalent method to determine which alternative should be accepted. 6 Click the icon to view the interest factors for discrete compounding when i= 9% per year. 7 Click the icon to view the interest factors for discrete compounding when MARR = 10% per year. The annual equivalent worth of the first option is S (Round to the nearest dollar.) The annual equivalent worth of the second option is S -(Round to the nearest dollar.) Select the correct choice from the drop-down menu below. (1). - is a better choice.

An industrial firm can purchase a special machine for $70,000. A down payment of $5,000 is required, and the unpaid balance can be paid off in five equal year-end installments at 9% interest. As an alternative, the machine can be purchased for $66,000 in cash. If the firm's MARR is 10%, use the annual equivalent method to determine which alternative should be accepted. 6 Click the icon to view the interest factors for discrete compounding when i= 9% per year. 7 Click the icon to view the interest factors for discrete compounding when MARR = 10% per year. The annual equivalent worth of the first option is S (Round to the nearest dollar.) The annual equivalent worth of the second option is S -(Round to the nearest dollar.) Select the correct choice from the drop-down menu below. (1). - is a better choice.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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An industrial firm can purchase a certain machine for $40.000. A down payment of S-1.000 is required. and the balance can be paid in five eq ual year-end installments at 7% interest on the unpaid balance. As an alternative. the machine can be purchased for $36,000 in cash. If the firm 's MARR is 10%, determine which alternative should be accepted using the annual- equivalence method.
es A firm can lease a truck for 4 years at a cost of $36,000 annually. It can instead buy a truck at a cost of $86,000, with annual maintenance expenses of $16,000. The truck will be sold at the end of 4 years for $26,000. a. What is the equivalent annual cost of buying and maintaining the truck if the discount rate is 10%? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Equivalent annual cost b. Which is the better option? O Buy ● Lease
Your factory has been offered a contract to produce a part for a new printer. The contract would last for three years, and your cash flows from the contract would be $4.91million per year. Your upfront setup costs to be ready to produce the part would be $7.93 million. Your discount rate for this contract is 7.6%. What is the IRR?____________________% (Round to 2 decimal places) The NPV is $4.82 million, which is positive so the NPV rule says to accept the project. Does the IRR rule agree with the NPV rule? _______________________
Your factory has been offered a contract to produce a part for a new printer. The contract would last for three years, and your cash flows from the contract would be $4.94 million per year. Your upfront setup costs to be ready to produce the part would be $7.97 million. Your discount rate for this contract is 8.1%. What is the IRR? The IRR is ____% (Round to two decimal places)
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We purchase a machine with a price of $400,000. We pay 20% up front, and will finance the rest over a 2 year period. When the purchase occurs: A. We will have a note payable of $320,000. B. No, we will not have a note payable of $320,000.

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