Spartan Scooters is contemplating roling out a new model of motor scootec which will sel for $2000 each, it has estimated thal annual Depreciation will be $200.000, annual Operating Cash Flow will be $440.000, and the varlable cost per scooter will be $1200. What is the financial break even quantity? Muple Choce O 00 tso0 1940
Q: QRW Corp, needs to replace an old machine with a new, more efficient model. The new machine being…
A: Net present value (NPV) is used to determine the present value of all future cash flows. Net present…
Q: Maya Industries is considering a new product that will sell for P100 and has a variable cost of P60.…
A: Initial cost = 1500000 Annual cash inflows = (C * Q - F)(1-t) + Dt Where C = contribution per unit…
Q: uicy Candy Company is considering expanding by buying a new (additional) machine that costs…
A: Net present value or NPV is the excess of present value of inflows over outflows.
Q: Win Corporation is considering to replace its old equipment with a new one. The old equipment had a…
A: The net amount of investment is equal to original amount of investment minus cash inflow at the time…
Q: Envoy Textiles Limited is considering purchasing a new machine that costs $37500. The machine is…
A: Capital budgeting indicates the evaluation of the profitability of possible investments and projects…
Q: A new machine costing $100,000 is expected to save the McKaig Brick Company $15,000 per year for 12…
A: Annual net cash flows is calculated as the difference between the annual cash flows and cash…
Q: Wendy ice cream factory is considering the purchase of a new machine. The machine would cost…
A: The question is related to Capital Budgeting. The Net Present Value is calculated with the help of…
Q: Art & Science specializes in making advanced camping tents. The company is expanding its operation…
A: solution given Cost of new plant 600,000 Expected rate of return 15% Payback period…
Q: Quantum Corp. is considering purchasing a new milling machine with a useful life of 6 years. The…
A: Payback period is the number of years the project takes to recover its initial investment. formula:…
Q: factory is considering partially automating one of its production processes, details can be found in…
A: Investment = $1,500,000 Project life = 5 years Salvage value = $500,000 CCA rate = 30% Annual…
Q: Venice Co. is considering a new product that will sell for P100 and has a variable cost of P60.…
A: New equipment cost (C) = P 1,500,000 Salvage value (S) = 0 Selling cost = P 100 Variable cost = P 60…
Q: WT paper corporation is considering adding another machine for the manufacture of corrugated…
A: Capital budgeting helps the business firm to determine the major capital expenditures and the…
Q: Consider a machine which costs $115,000 now and which has a useful life of seven years. This machine…
A: The following the information in the question: 1. Machine which costs $115,000 2. Useful life of…
Q: NUBD Co. is considering a new product that will sell for P100 and has a variable cost of P60.…
A: To get an assured 12% return, we should compute the no of units at which PV of outflow is equal to…
Q: A company is considering expanding their production capabilities with a new machine that costs…
A: The buying decision of the company is depend upon the future revenue and the cost with the adoption…
Q: Gumamela Company is considering replacing a machine with one that will save P50,000 per year in cash…
A: ‘’Since you have asked multiple question, we will solve the first question for you. If you want any…
Q: A company is considering a machine with one that will save P 50,000 per year for five years in cash…
A: NPV means PV of net benefits which will arise in the future from the project. It is computed by…
Q: Finance help
A: The purchase cost of new equipment is $328,000 and installation cost is $109,000. So, the total cost…
Q: Quorum Corp. wants to replace a 5-year-old machine with a new machine that is more efficient. The…
A: Solution:- Calculation of the cash flow impact from the sale of the old machine on the initial…
Q: QRW Corp, needs to replace an old machine with a new, more efficient model. The new machine being…
A: The initial outlay is the initial cost associated with a new project. It is the cash outflow that…
Q: A firm is considering purchasing equipment that will reduce costs by P40,000. The equipment costs…
A: GIVEN . A firm is considering purchasing equipment that will reduce costs by P40,000. The…
Q: A company is considering the purchase of a new printer. It can purchase the printer for $900 and…
A: Depreciation = Cost of the printer / Useful life Depreciation = $900 / 6 Depreciation = $150 Tax…
Q: Your company wants to bid on the sale of 10 customized machines per year for five years. The initial…
A: Here we need to find sales level for bid by using this equation OCF =[Sales -variable cost-fixed…
Q: How many units per year the firm must sell for the investment to earn 12% internal rate of return?
A: Internal Rate of Return is the rate at which present value of cash inflow is equal to present value…
Q: Beta Company plans to replace its company car with a new one. The new car costs P120,000 and its…
A: Cost of new car = 120,000 N = 5 years Proceeds from old car = 12,000 Initial Outflow = Cost of new…
Q: Bailey, Inc., is considering buying a new gang punch that would allow them to produce circuit boards…
A: MARR is the minimum rate that a company is willing to earn from a project. It is also known as the…
Q: Kabalikat Company has the opportunity to introduce a new product. Kabalikat expects the product to…
A: Capital Budgeting Techniques are used to choose the most profitable investment alternative. Based on…
Q: Schultz company is considering purchasing a machine that would cost $478,800 and have a useful life…
A: Return on average investment is a measure that is used to determine the profitability of an…
Q: w machine costing $150,000 is expected to save the McKaig Brick Company $11,000 per year for 5 years…
A: The cash flow from the project are the after tax benefits of equipment and the benefit of…
Q: mpany plans to replace its company car with a new one. The new car costs P120,000 and its estimated…
A: Payback period is the no. of years required to recover the initial amount invested. Payback period =…
Q: Van Nuys Company is considering the purchase of a new machine which will cost $7,370. The machine…
A: Given, Purchase cost = $ 7370 Annual cash flows: Revenue = $ 4000 Cost = $ 2000 Net Cash flows…
Q: Hurvey specializes in making advanced camping tents. The company is expanding its operation and…
A: First cost (C) = P 600000 CF1 = P 120000 CF2 = P 150000 CF3 = P 160000 CF4 = P 170000 CF5 = P 100000…
Q: Wells Printing is considering the purchase of a new printing press. The total installed cost of the…
A: Tax Rate = 40% Cost of capital = 10.8% Cost of the press = $2.14 million Selling price of old press…
Q: A company is considering expanding their production capabilities with a new machine that costs…
A: Here, Cost of Machine is $83,000 Additional Income per year is $9,000 Projet Lifespan is 10 years…
Q: The Lumber Yard is considering adding a new product line that is expected to increase annual sales…
A: Depreciation Tax shield = Tax rate x Depreciation Expense Depreciation Expense = Cost - Salvage…
Q: NUBD Co. plans to replace one of its machines with a new efficient one. The old machine has a net…
A: Replacement decisions are the part of capital budgeting process where we evaluate the profitability…
Q: lue of P50,000 and a life of 7 years. The annual maintenance cost is P6,000. While not in use by the…
A: Given information : Proposal 1 Cost reduction 400000 Cost of equipment 300000 Salvage…
Q: Your company is analyzing purchase of a machine costing $5,900 today. The investment promises to add…
A: Incremental Rate of Return (IRR) is a capital budgeting method which shows the return generated…
Q: Beta Company plans to replace its company car with a new one. The new car costs P120,000 and its…
A: Net investment is the entire amount spent by a firm on capital assets less the cost of obsolescence.…
Q: a) A financial analyst for a manufacturer of BMV spare part is considering using its new engine. The…
A: We need to compute financial break even point in worst case i.e Pessimistic scenario
Q: NUBD Co. is considering a new product that will sell for P100 and has a variable cost of P60.…
A: Here, we should compute the PV of outflows. This PV of inflows should be such that both PV are…
Q: Tasty Bakery Co. is considering a new product line. In order to manufacture the new product, the…
A: If the present value of cash flows is more than the amount of current investment, then the project…
Q: Beta Company plans to replace its company car with a new one. The new car costs P120,000 and its…
A: Capital budgeting Capital budgeting is referred to as the process of evaluating potential major…
Q: Van Nuys Company is considering the purchase of a new machine which will cost $7,370. The machine…
A: Net present value: It is the difference between the present value of cash inflow and the present…
Q: XYZ Enterprise is considering an investment in a new packaging, which could reduce labour costs by…
A: Particulars Amount Purchase cost of the…
Q: Colors and More is considering replacing the equipment it uses to produce crayons. The equipment…
A: Annual operating cash flows are the cash flows that are expected by an investor on making investment…
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 2 images
- A logistics firm is planning to acquire a winching machine which costs $85000 having life span of 6 years. It is estimated that this winching machine will save around $20000 annually in labor costs After the useful life span of the machine it can be sold for $10000 as a scrap MARR for the firm is 10% Find the payback period of the investment?O3O6O5O2Barker Production Company is considering the purchase of a flexible manufacturing system. The annual cash benefits/savDecreased waste$ 75,000Increased quality100.000Decrease in operating costs62,500Increase in on-time deliveries12.500The system will cost S750,000 and will last ten years. The company's cost of capital is 10%.What is the payback period for the flexible manufacturing system?What is the NPV for the flexible manufacturing system?Swifty Corporation is contemplating the production and sale of a new widget. Projected sales are $360000 (or 75000 units) and desired profit is $45000. What is the target cost per unit? $4.20 $4.80 $5.40 $6.00
- 15 UPS is considering the purchase of a electric truck that would cost $150,000 and would last for 5 years. At the end of 5 years, the truck would have a salvage value of $20,000. By reducing labor and other operating costs, the machine would provide annual cost savings of $45,000. The company requires a minimum return of 19% on all investment projects. The net present value of the proposed project is closest to (Ignore income taxes.): PV factor of $1 annuity for 5 years at 19% is 3.058 and PV of $1 over 5 years is 0.419 A. $85,000 B. -$12,390 C. -$4,010 D. $145,990Bramble Corp. is contemplating the production and sale of a new widget. Projected sales are $416000 (or 80000 units) and desired profit is $40000. What is the target cost per unit? $4.70 $5.00 $5.20 $5.70New-Project Analysis The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer’s base price is $1,080,000, and it would cost another $22,500 to install it. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $605,000. The MACRS rates for the first 3 years are 0.3333, 0.4445, and 0.1481. The machine would require an increase in net working capital (inventory) of $15,500. The sprayer would not change revenues, but it is expected to save the firm $380,000 per year in before-tax operating costs, mainly labor. Campbell’s marginal tax rate is 35%. What is the Year-0 cash flow? What are the net operating cash flows in Years 1, 2, and 3? What is the additional Year-3 cash flow (i.e., the after-tax salvage and the return of working capital)? If the project’s cost of capital is 12%, should the machine be purchased?
- Austins cell phone manufacturer wants to upgrade their product mix to encompass an exciting new feature on their cell phone. This would require a new high-tech machine. You are excited about his new project and are recommending the purchase to your board of directors. Here is the information you have compiled in order to complete this recommendation: According to the information, the project will last 10 years and require an initial investment of $800,000, depreciated with straight-line over the life of the project until the final value is zero. The firms tax rate is 30% and the required rate of return is 12%. You believe that the variable cost and sales volume may be as much as 10% higher or lower than the initial estimate. Your boss understands the risks but asks you to explain the alternatives in a brief memo to the board, Write a memo to the Board of Directors objectively weighing out the pros and cons of this project and make your recommendation(s).Flanders Manufacturing is considering purchasing a new machine that will reduce variable costs per part produced by $0.15. The machine will increase fixed costs by $18,250 per year. The information they will use to consider these changes is shown here.Gina Ripley, president of Dearing Company, is considering the purchase of a computer-aided manufacturing system. The annual net cash benefits and savings associated with the system are described as follows: The system will cost 9,000,000 and last 10 years. The companys cost of capital is 12 percent. Required: 1. Calculate the payback period for the system. Assume that the company has a policy of only accepting projects with a payback of five years or less. Would the system be acquired? 2. Calculate the NPV and IRR for the project. Should the system be purchasedeven if it does not meet the payback criterion? 3. The project manager reviewed the projected cash flows and pointed out that two items had been missed. First, the system would have a salvage value, net of any tax effects, of 1,000,000 at the end of 10 years. Second, the increased quality and delivery performance would allow the company to increase its market share by 20 percent. This would produce an additional annual net benefit of 300,000. Recalculate the payback period, NPV, and IRR given this new information. (For the IRR computation, initially ignore salvage value.) Does the decision change? Suppose that the salvage value is only half what is projected. Does this make a difference in the outcome? Does salvage value have any real bearing on the companys decision?
- hat is the new NPV? 14. Project Evaluation Kolby's Korndogs is looking at a new sausage system with an installed cost of $655,000. This cost will be depreciated straight- line to zero over the project's five-year life, at the end of which the sausage system can be scrapped for $85,000. The sausage system will save the firm $183,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $35,000. If the tax rate is 22 percent and the discount rate is 8 percent, what is the NPV of this project? LO 2 qunnore the fixedTrulovia Manufacturing is looking to purchase a machine that will increase its efficiency in their manufacturing process. Trulovie wants to use Scenario Manager to evaluate the following four scenarios based on possible purchase prices and interest rates for a 10-year loan. What is the monthly payment for Scenario 2? Scenario Equipment Cost Loan Tern 1 9 years 2 10 years 11 years 9 years 3 $ 145,000 $ 147,500 $ 150,000 $ 155,000 Multiple Choice $116174 $1.260.41 $1,385.72 $1,448.26 Interest Rate 78 58 48 28HT Bowling, Inc is considering the purchase of VOIP phone system. It will require an initial investment of $29,500 and $9,000 per year in annual operating costs over the equipment's estimated useful life of 4 years. The company will use a discount rate of 11%. What is the equivalent annual cost? $3,460 O $12,623 O $26,810 O $18,509