Question

Chicago Co. is interested in purchasing a machine that would improve its operational efficiency. The cost...

Chicago Co. is interested in purchasing a machine that would improve its operational efficiency. The cost is $200,000 with an estimated residual value of $20,000 and a useful life of eight years. Cash inflows are expected to increase by $40,000 a year. The company's minimum rate of return is 10 percent. The present value of a single sum is 0.467, and the present value for a stream of payments that are the same amount each year is 5.335. What is the net present value of the project?

  • A. 120,100
  • B. 93,400
  • C. 74,520
  • D. 22,740
Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
10. Sankey Corporation is considering purchasing a machine. The cost of the machine is $100,000. Its...
10. Sankey Corporation is considering purchasing a machine. The cost of the machine is $100,000. Its useful life is estimated to be 5 years and will have no residual values at the end of its useful life. The machine would produce a product annually with the following financial results: Revenue 200,000 COGS 80,000 Gross Profit 120,000 Depreciation 20,000 Other Expenses 40,000 Net Income 60,000 Additional question: How to find annual net cash inflow for the cash payback period?
Carlson Machine Shop is considering a four-year project to improve its production efficiency by purchasing a...
Carlson Machine Shop is considering a four-year project to improve its production efficiency by purchasing a new machine press for $480,000 that will result in $160,000 in annual pre-tax cost savings. The press will be depreciated using the 5-year MACRS depreciation schedule and management expects to be able to sell it for $70,000 at the end of four years. The new press will require an initial inventory of $20,000 with an additional $3,000 in spare parts inventory required each year...
Cost-Cutting Proposals Geary Machine Shop is considering a four-yearproject to improve its production efficiency. Buying a...
Cost-Cutting Proposals Geary Machine Shop is considering a four-yearproject to improve its production efficiency. Buying a new machine press for$480,000 is estimated to result in $180,000 in annual pretax cost savings. The pressfalls in the MACRS five-year class, and it will have a salvage value at the end of theproject of $70,000. The press also requires an initial investment in spare partsinventory of $20,000. along with an additional $3,000 in inventory for eachsucceeding year of the project. If the shop’s...
Wickersham Corp. is contemplating the purchase of a machine that would improve the overall efficiency of...
Wickersham Corp. is contemplating the purchase of a machine that would improve the overall efficiency of the production process. Horton, the General Manager, believes that the new machine will:  Increase practical capacity by 10%, enabling Wickersham to produce 100 more units each month (for which demand is available). The product sells for $10 per unit.  Create $40,000 per year in variable operating expense savings, primarily through reduced electricity consumption and hazardous waste generation.  Require an annual inspection...
Please answer the following Case analysis questions 1-How is New Balance performing compared to its primary...
Please answer the following Case analysis questions 1-How is New Balance performing compared to its primary rivals? How will the acquisition of Reebok by Adidas impact the structure of the athletic shoe industry? Is this likely to be favorable or unfavorable for New Balance? 2- What issues does New Balance management need to address? 3-What recommendations would you make to New Balance Management? What does New Balance need to do to continue to be successful? Should management continue to invest...
Delta airlines case study Global strategy. Describe the current global strategy and provide evidence about how...
Delta airlines case study Global strategy. Describe the current global strategy and provide evidence about how the firms resources incompetencies support the given pressures regarding costs and local responsiveness. Describe entry modes have they usually used, and whether they are appropriate for the given strategy. Any key issues in their global strategy? casestudy: Atlanta, June 17, 2014. Sea of Delta employees and their families swarmed between food trucks, amusement park booths, and entertainment venues that were scattered throughout what would...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT