Consider the following two machines a company can purchase. The following table provides the costs of the machines and the annual cash flows obtained from the machines over their lifetimes. Machine A Machine B Initial Cost $19,000 $9,000 Cash Inflows per year Years of Service $6,000 6 $10,000 5 The discount rate is 7%. What is the net present value for each machine? Machine A Number Machine B= Number
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- Your company is planning to purchase a new log splitter for is lawn and garden business. The new splitter has an initial investment of $180,000. It is expected to generate $25,000 of annual cash flows, provide incremental cash revenues of $150,000, and incur incremental cash expenses of $100,000 annually. What is the payback period and accounting rate of return (ARR)?Garnette Corp is considering the purchase of a new machine that will cost $342,000 and provide the following cash flows over the next five years: $99,000, $88,000, $92,000. $87,000, and $72,000. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return in Excel. see Appendix C.1. A company is planning to purchase a new machine to expand its production. The machine is costing $ 10800. The following cash inflows are expected to come for the machines. Calculate Net Present Value for Machine A using NPV given the rate of discounting to be 6.08%Years. Machine1. 21002. 22003. 25004. 3600 Select one: a. 7906.21 b. (-1928.09)c. None of the options d. 5350 e. (-1000.51)
- The cash flow after taxes for two machineries A and B are given in the table below.Year wise Cash flow A B1 22000 70002 25000 50003 28000 45004 5000 280005 4500 250006 7000 22000The estimated useful life of the machines is 6 years and the discount rate is 11%. The cost of each machine is Rs60000 1. Discuss the steps of application of the concept of NPV to the given situation. Determine the NPV of Machine A . 2. Determine the NPV of the Machine B. Discuss, which machinery should be acquired and why?Consider the decision to purchase one of the two machines X or Y, which cost M100 000 and M150 000, respectively, The net cash inflows expected from these two machines are shown in Table 6.1 below Year Machine X Machine Y 10 000 50 000 15 000 50 000 20 000 50 000 4 25 000 50 000 30 000 50 000 40 000 50 000 7 45 000 40 000 Your Task; i) Calculate the PayBack Period (PBP) of machines X and Y ii) Calculate the Return on Investment (ROI) of each machine i) Which machine would you recommend on the basis of the PBP and the ROI and why? 2. 3. 6.Octavia Bakery is planning to purchase one of two ovens. The expected cash flows for each oven are shown below. MARR is 8% / year. Initial Investment Estimated Life End of Life Salvage Annual Income Annual Expense Part a Model 127B $50,000 Part b 10 $10,000 $19.400 $10,000 Your answer is correct. Model 334A $80,000 5 Your answer is partially correct. $0 What is the discounted payback period for Model 127B? $26,000 $6,000 Round entry to two decimal places. The tolerance is ±0.02. eTextbook and Media What is the discounted payback period for Model 334A? Is the DPBP greater than the planning horizon? No V Round entry to two decimal places. The tolerance is ±0.02. 7.18 years 5.10 years Attempts: 1 of 3 used
- A company is planning to expand its business is costing OMR 19252. The following cash inflows are expected. Calculate Profitability index given the rate of discounting to be 3.008% Years Machine A 12396 13300 12500 4 14500 2. 3.Dogwood Company is considering a capital investment in machinery: (Click the icon to view the data.) 8. Calculate the payback. 9. Calculate the ARR. Round the percentage to two decimal places. 10. Based on your answers to the above questions, should Dogwood invest in the machinery? 8. Calculate the payback. Amount invested Expected annual net cash inflow Payback 1,500,000 24 500,000 3 years 9. Calculate the ARR. Round the percentage to two decimal places. Average annual operating income Average amount invested ARR Data Table Initial investment $ 1,500,000 Residual value 350,000 Expected annual net cash inflows 500,000 Expected useful life 4 years Required rate of return 15%Motor City Productions sells original automotive art on a prepaid basis as each piece is uniquely designed to the customer's specifications. For one project, the cash flows are estimated as follows. Based on the internal rate of return (IRR), should this project be accepted if the required return is 9 percent? Year Cash flow 0 $5500 1 -$5900 (Hint: You may or may not be able to use the simple default IRR rule) (a) IRR is 7.27%. Accept the project. (b) IRR is 7.27%. Reject the project. (c) IRR is 9%. Accept the project. (d) IRR is 9%. Reject the project.
- A business is considering purchasing a piece of new equipment for $200,000. The equipment will generate the following revenues: Year 1: $50,000Year 2: $50,000Year 3: $50,000Year 4: $60,000The machine can be sold at the end of the year four for $25,000. Assume a discount of 8%. 1. What is the net present value(NPV)?A company is planning to purchase a new machine to expand its production. The machine is costing OMR 6681. The following cash inflows are expected to come for the machines. Calculate Net Present Value for Machine A using NPV given the rate of discounting to be 6.08% Machine A Years 3901 1 2200 2 2500 3 3600 4 اخترأحد الخيارات a. None of the options O b. 211.29 O c. 3888.70 O d. 2112.29 O e. 17250.70 OWhat is the profitability index of a project that costs $10,000 and provides cash flows of $3,200 in years 1 and 2 and $5,200 in years 3 and 4? The discount rate is 8%. Note: Do not round intermediate calculations. Round your answer to 4 decimal places. Answer is complete but not entirely correct. Profitability index 1.3657 x