Question 181 ptsYou have seven old machines in your shoe factory. They require much maintenance to keep them in good working order. Moreover, they are costly to operate in terms of laborand fuel, and about 5% of the shoes are defective. Each machine has a ten-year remaining expected life. Newer, more efficient machines cost $150,000 each. They are highlyautomated and require far less labor and fuel to operate and do not produce defective shoes. Assume that they also have an estimated useful life of ten-years. You estimatethat replacing the old machines will result in incremental after-tax cash inflows of $25,000 per year per machine. What is the NPV of a new machine if the WACC is 10% and ifeach old machine has an after-tax salvage value of $6,000?O $9,414.18O 9.314.18O 9,514.189.714.189.614.18.DQuestion 19What is the IRR?11.5310.539.5311.0310.03.1 pts

Question 18. Net Present Value is the difference between the present value of cash flows and the…

Answered: Question 18 1 pts You have seven old…

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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Question 21 Tavis Robotics Corporation has developed a new robot-model FI-73-that has been designed to outperform a competitor's best-selling robot. The competitor's product has a useful life of 10,000 hours of service, has operating costs that average $4.85 per hour, and sells for $114,000. In contrast, model Fl-73 has a useful life of 30,000 hours of service and its operating cost is $2.85 per hour. Tavis has not yet established a selling price for model FI-73. From a value-based pricing standpoint what range of possible prices should Tavis consider when setting a price for Fl-73? O $202.000 Value-based price $288,000 O5114.000 s Value-based price $202.000 O $114,000 s Value-based price $402.000 $288.000 s Value-based price s $402.000
Page 266 MINICASE Flowton Products enjoys a steady demand for stainless steel infiltrators used in a number of chemical processes. Revenues from the infiltrator division are $50 million a year, and production costs are $47.5 million. However, the 10 high-precision Munster stamping machines that are used in the production process are coming to the end of their useful life. One possibility is simply to replace each existing machine with a new Munster. These machines would cost $800,000 each and would not involve any additional operating costs. The alternative is to buy 10 centrally controlled Skilboro stampers. Skilboros cost $1.25 million each, but compared with the Munster, they would produce a total saving in operator and material costs of $500,000 a year. Moreover, the Skilboro is sturdily built and would last 10 years, compared with an estimated seven-year life for the Munster. Analysts in the infiltrator division have produced the accompanying summary table, which shows the…
Hi please give step by step instructions to figure out the problem and give me an answer to see if I'm right... Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost $601,200 and has $352,900 of accumulated depreciation to date, with a new machine that costs $483,900. The old machine could be sold for $64,300. The annual variable production costs associated with the old machine are estimated to be $156,100 per year for eight years. The annual variable production costs for the new machine are estimated to be $101,700 per year for eight years. a. Prepare a differential analysis dated October 3, to determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. If an amount is zero, enter zero "0". Use a minus sign to indicate a loss. Differential Analysis Continue with Old Machine (Alt. 1) or Replace Old Machine (Alt. 2) October 3 Continue with Old Machine (Alternative 1) Replace Old…
QUESTION 1 A company manufactures two models of a pocket calculator: The basic model sells for N$55, has a direct material cost of N$12.50 and requires 2.5 hours of labour time to produce. The other model, the Scientist sells for N$75, has a direct material cost of N$16.30 and takes 3.75 hours to produce. Labour, which is paid at the rate of N$60 per hour, is currently very scarce, while demand for the company’s calculators is very heavy. The company is currently producing 80 000 of the basic model and 40 000 of the Scientist model per month, while fixed costs are N$240 000 per month. An overseas customer has offered the company a contract, worth N$350 000, for a number of calculators made to its requirement. The estimating department has ascertained the following facts in respect of the work: The labour time for the contract would be 12 000hrs The material cost would be N$90 000 plus the cost of a particular component not normally used in the company’s models. These components could…
Waterways Continuing Problem 20 a, b1-b2 (Part 2) Waterways has discovered that a small fitting it now manufactures at a cost of $1.00 per unit could be bought elsewhere for $0.83 per unit. Waterways has fixed costs of $0.20 per unit that cannot be eliminated by buying this unit. Waterways needs 452,000 of these units each year. If Waterways decides to buy rather than produce the small fitting, it can devote the machinery and labor to making a timing unit it now buys from another company. Waterways uses approximately 400 of these units each year. The cost of the unit is $12.56. To aid in the production of this unit, Waterways would need to purchase a new machine at a cost of $2,321, and the cost of producing the units would be $9.70 a unit. |Your answer is incorrect. Try again. Without considering the possibility of making the timing unit, evaluate whether Waterways should buy or continue to make the small fitting. The company should buy the fitting. Incremental cost / (savings) will…
Waterways Continuing Problem 20 a, b1-b2 (Part 2) Waterways has discovered that a small fitting it now manufactures at a cost of $1.00 per unit could be bought elsewhere for $0.83 per unit. Waterways has fixed costs of $0.20 per unit that cannot be eliminated by buying this unit. Waterways needs 452,000 of these units each year. If Waterways decides to buy rather than produce the small fitting, it can devote the machinery and labor to making a timing unit it now buys from another company. Waterways uses approximately 400 of these units each year. The cost of the unit is $12.56. To aid in the production of this unit, Waterways would need to purchase a new machine at a cost of $2,321, and the cost of producing the units would be $9.70 a unit. ] Your answer is incorrect. Try again. Without considering the possibility of making the timing unit, evaluate whether Waterways should buy or continue to make the small fitting. The company should buy the fitting. Incremental cost / (savings) will…
Question 4 You are contemplating leaving your full-time employment to concentrate your ability on the marketing of a new low-energy portable heater. You have spoken to a group of manufacturers of similar product, and you have produced the following data based upon the production of 1200 heaters in the six months to December 31, 2021. R R Unit selling price 160 Less: Direct materials 50 Direct labour 30 Fixed Overheads: Admin 4.00 Rent 7.50 Rates…
Question 4 A manager wants to purchase a new piece of processing equipment and must decide on the number of spare parts to order with the new equipment. The spares cost $250 each, and any unused spares will have an expected salvage value of $75 each. The distribution of usage of parts is shown in the following table: NUMBER 0 2 3 4 5 FREQUENCY 0.2 0.2 0.2 0.15 0.15 0.1 If the part fails and a spare is not available, it will take three days to obtain a replacement and install it. The cost for idle equipment is $500 per day. a) What quantity of spares should be stocked? b) Assume the supplier of the parts offers a 20% discount (all units discount) for purchasing five units or more. Do you think the order quantity will be different? If yes, propose the new order quantity.,
pleasehelp32 Fone Zone Corporation manufactures telephones. Recently, the company produced a batch of 640 defective telephones at a cost of $9,400. Fone Zone can sell these telephones as scrap for $10 each. It can also rework the entire batch at a cost of $6,900, after which the telephones could be sold for $21 per unit. If Fone Zone reworks the defective telephones, by how much will its operating income change? Multiple Choice Increase by $7,040 Increase by $6,540 Decrease by $2,860 Decrease by $6,540
Question 5 You are contemplating leaving your full-time employment to concentrate your ability on the marketing of a new low-energy portable heater. You have spoken to a group of manufacturers of similar product, and you have produced the following data based upon the production of 1200 heaters in the six months to December 31, 2021.                                                                                     R                                 R Unit selling price                                                                                            160 Less: Direct materials                                                 50            Direct labour                                                    30 Fixed Overheads: Admin                                                                         4.00 Rent                                                                            7.50 Rates…
I need help with required 3 please Wayne Casting, Inc., produces a product made from a metal alloy. Wayne buys the alloy from two different suppliers, Chillicothe Metals and Ames Supply, in approximately equal amounts because of supply constraints at both vendors. The material from Chillicothe is less expensive to buy, but more difficult to use, resulting in greater waste. The metal alloy is highly toxic and any waste requires costly handling to avoid environmental accidents. Last year the cost of handling the waste totaled $300,000. Additional data from last year’s operations are shown as follows.   Chillicothe Metals Ames Supply Amount of material purchased (tons) 130 120 Amount of waste (tons) 12.8 2.2 Cost of purchases $ 624,000 $ 876,000 Required: a. Allocate the cost of the waste handling to the two suppliers based on: 1. Amount of material purchased. 2. Amount of waste. 3. Cost of material purchased.
Question 7 You are contemplating leaving your full-time employment to concentrate your ability on the marketing of a new low-energy portable heater. You have spoken to a group of manufacturers of similar product, and you have produced the following data based upon the production of 1200 heaters in the six months to December 31, 2021.                                                                                     R                                 R Unit selling price                                                                                            160 Less: Direct materials                                                 50            Direct labour                                                    30 Fixed Overheads: Admin                                                                         4.00 Rent                                                                            7.50 Rates…

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