Question
If your MARR is 6%, what is the NPV for your single investment. Will you recommend...
If your MARR is 6%, what is the NPV for your single investment. Will you recommend the purchase?
Use Excel and a table.
GIVEN
Purchase Price for the machine = $$66,000
Savings per year = $12,000 for 8 years
Sell the machine at end of year 8 for a SV of $10,000
Homework Answers
Answer #1
Not the answer you're looking for?
Similar Questions
You are evaluating the purchase and installation of a new machine for your company. The purchase...
You are evaluating the purchase and
installation of a new machine for your company. The purchase cost
is $20,000 and its installation cost is $5,000. Its maintenance
cost is estimated to be $2,000 per year starting EOY 1, increasing
by 5% per year for 14 additional years. You estimate the additional
revenue after installation to be $10,000 per year starting EOY 1
and continuing for 4 additional years. You estimate revenue to
increase to $15,000 starting EOY 6 and increasing...
Two investments (A and B, below) have been proposed to the Capital Investment committee of your...
Two investments (A and B, below) have been proposed to the
Capital Investment committee of your organization (please
show all calculations and please do not use the NPV function in
excel):
The required rate of return for your company is 6%. What is the
NPV for each investment?
What is the payback period for each investment?
Which investment would you recommend and why?
Investment A
Year 0
Year 1
Year 2
Year 3
Year 4
Year 5
Required Rate of...
PLEASE SOLVE NOT USING EXCEL OR A TABLE A machine costs $750,000 to purchase and will...
PLEASE SOLVE NOT USING EXCEL OR A TABLE
A machine costs $750,000 to purchase and will produce $250,000
per year revenue. Annual operating and maintenance cost is $70,000.
The machine will have to be upgraded in year 4 at a cost of
$150,000. The company plans to use the machine for 8 years and then
sell it for scrap for which it expects to receive $30,000. The
company MARR interest rate is 10%. Compute the net present worth to
determine...
Calculate NPV for the following: The cost of capital is 12% a. The project has an...
Calculate NPV for the following:
The cost of capital is 12%
a. The project has an initial investment of $20,000 with
expected after-tax operating cash flows of $7,000 the first year,
$8,000 the second year, $9,000 the third year, $10,000 the fourth
year, and $11,000 the fifth year. In addition, a cash payment of
$17,500 must be made at the end of Year 54 to pay for environmental
costs incurred at the termination of the project.
b. Initial investment of...
P10–6 NPV for varying costs of capital Le Pew Cosmetics is evaluating a new fragrance-mixing machine. The...
P10–6 NPV for varying costs of
capital Le Pew Cosmetics is evaluating a new
fragrance-mixing machine. The machine requires an initial
investment of $360,000 and will generate after-tax cash inflows of
$62,650 per year for 8 years. For each of the costs of capital
listed, (1) calculate the net present value (NPV), (2) indicate
whether to accept or reject the machine, and (3) explain your
decision.
The cost of capital is 6%.
The cost of capital is 8%.
The cost of...
Your firm is considering two projects with the following cash flows. WACC 6% 6% year...
Your
firm is considering two projects with the following cash
flows.
WACC
6%
6%
year
Project A
Project B
0
-55,000
-70,000
1
10,000
10,000
2
9,000
10,000
3
8,000
10,000
4
7,500
10,000
5
7,500
10,000
6
7,500
10,000
7
7,500
10,000
8
7,500
12,000
a. Calculate NPV and IRR for
both projects
NPV
IRR
b. Do the
following 2...
You recently got promoted at your job. You have since decided to buy your dream car...
You recently got promoted at your job. You have since decided to
buy your dream car and expect that it will cost you $94,000 six
years from today. After budgeting your expenses, you find you can
start with $2000 today and decide that you can save $12,000 per
year at the beginning of each year. Given a market interest rate of
6%, will you be able to purchase your car at the end of year 6?
Would you be able...
5.30 A company needs to purchase a new machine to maintain its level of production. The...
5.30 A company needs to purchase a new machine to maintain its
level of production. The company is considering three different
machines. The costs, savings and service life related to each
machine are listed in the table below.
Machine A
Machine B
Machine C
First Cost
$37,500
$31,000
$35,000
Annual Savings
$13,500
$12,000
$12,750
Annual Maintenance
$3,000 the first year
and increasing by
$600 every year
thereafter
$2,500
$2,000
Salvage Value
$5,000
$11,000
$13,000
Service Life
6 years
3 years...
Your company is looking at purchasing a front-end loader and has narrowed the choice down to...
Your company is looking at purchasing a front-end loader and has
narrowed the choice down to two loaders. The investment in the
larger loader yields the NPV of $28,372. The smaller loader would
have a useful life of five years with a salvage value of $10,000 at
the end of the fifth year. The smaller loader can be billed out at
$90.00 per hour. It costs $28 per hour to operate the smaller
front-end loader and $25 per hour for...
Given the following information and assuming straight-line depreciation to zero, what is the NPV for this...
Given the following information and assuming straight-line
depreciation to zero, what is the NPV for this project? Initial
investment in fixed assets = $800,000 initial investment in net
working capital = $200,000 life = 4 years cost savings = $400,000
per year salvage value = $10,000 tax rate = 35% discount rate =
12%
ADVERTISEMENT
Need Online Homework Help?
Get Answers For Free
Most questions answered within 1 hours.
ADVERTISEMENT
Active Questions
asked 2 minutes ago
asked 8 minutes ago
asked 25 minutes ago
asked 37 minutes ago
asked 44 minutes ago
asked 52 minutes ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago