Question

Flo's Frozen Yogurt shop is evaluating new dispensing machines.

The Flownator has a first cost of $31,484 and annual expenses of $9,823 that will increase by $478 per year. It will require an overhaul at the end of year 5 at a cost of $6,563. The Flownator will save $19,410 per year in labor costs. The Flownator has a salvage value of $8,139 and a lifespan of 10 years.

The YogGoo300 has a first cost of $20,398 and annual expenses of $3,570 that will increase by 2% per year. The YogGoo300 will save Flo's $10,144 per year in labor costs. The YogGoo300 has a lifespan of 6 years.

What must the salvage value of the YogGoo30 be to make it equally desirable to the Flownator? Use a MARR of 2% to make your calculation.

Enter your answer as follows: 12345

Round your answer. Do not use a dollar sign ("$"), any commas (","), or a decimal point (".").

Answer #1

AW of flownator = -31484 * (A/P,2%,10) - 9823 - 478*(A/G,2%,10) - 6563*(P/F,2%,5)*(A/P,2%,10) + 19410 + 8139*(A/F,2%,10)

= -31484 *0.111327 - 9823 - 478*4.336736 - 6563*0.905731*0.111327 + 19410 + 8139*0.091327

= 4090.57

For YogGoo 300

Let Salvage value be S, then

Present worth of geometric sereis when i is equal to g is given by C*n/(1+i)

Present cost of annual expenses = 3570 * 10 / (1+0.02) = 35000

AW of YogGoo 300 = -20398*(A/P,2%,6) - 35000 * (A/P,2%,6) + 10144 + S *(A/F,2%,6)

= -20398*0.178526 - 35000 *0.178526 + 10144 + S *0.158526

= 254.0166 + S *0.158526

As per given condition

254.0166 + S *0.158526 = 4090.57

S = (4090.57 - 254.02) / 0.158526 = 24201.39 ~
**24201**

A hospital is considering purchasing a new medical dispensing
cabinet that will cost $200,000. It believes that this cabinet will
reduce the amount of labor required to track and administer
medications and will also result in fewer expired medicines. It
estimates the medical dispensing cabinet will result in savings of
$30,000 at the end of year one and that the savings will increase
by $5,000 per year for each of the 7 years that the machine will be
used. What...

Skinny Dippers, Inc. produces nonfat frozen yogurt. The product
is sold in ten-gallon containers, which have the following price
and variable costs.
Sales price
$
30
Direct material
11
Direct labor
4
Variable overhead
6
Budgeted fixed overhead in 20x1, the company’s first year of
operations, was $640,000. Actual production was 160,000 ten-gallon
containers, of which 152,000 were sold. Skinny Dippers, Inc.
incurred the following selling and administrative expenses.
Fixed
$
160,000
for the year
Variable
$
1
per container...

Paul Swanson has an opportunity to acquire a franchise from The
Yogurt Place, Inc., to dispense frozen yogurt products under The
Yogurt Place name. Mr. Swanson has assembled the following
information relating to the franchise:
A suitable location in a large shopping mall can be rented for
$5,200 per month.
Remodeling and necessary equipment would cost $420,000. The
equipment would have a 20-year life and a $21,000 salvage value.
Straight-line depreciation would be used, and the salvage value
would be...

In 2010, Jennifer (Jen) Liu and Larry Mestas founded Jen and
Larry’s Frozen Yogurt Company, which was based on the idea of
applying the microbrew or microbatch strategy to the production and
sale of frozen yogurt. Jen and Larry began producing small
quantities of unique flavors and blends in limited editions.
Revenues were $600,000 in 2010 and were estimated at $1.2 million
in 2011. Because Jen and Larry were selling premium frozen yogurt
containing premium ingredients, each small cup of...

A company is considering the purchase of new equipment. Data
concerning the alternative under consideration are presented
below.
First Cost: -$26,000
Annual Income: $11,000
Annual Costs: -$6,250
Overhaul at end of Year 3: -$4,830
Salvage Value: $10,500
If the equipment has a life of six years and the company’s minimum
attractive rate of return (MARR) is 16%, what is the annual worth
of the equipment?

An injection molding system has a first cost of $200,000 and an
annual operating cost of $75,000 in years 1 and 2, increasing by
$3000 per year thereafter. The salvage value of the system is 25%
of the first cost regardless of when the system is retired within
its maximum useful life of 5 years. Using a MARR of 8% per year,
determine the ESL and the respective AW value of the system.

An injection molding system has a first cost of $180,000 and an
annual operating cost of $65,000 in years 1 and 2, increasing by
$3,000 per year thereafter. The salvage value of the system is 25%
of the first cost regardless of when the system is retired within
its maximum useful life of 5 years. Using a MARR of 13% per year,
determine the ESL and the respective AW value of the system.

A pharmacy has purchased a small equipment for delivery of
prescriptions. The cost of the equipment is $50,000 with a useful
life of 6 years and salvage value of $1,500. Overhaul of the
equipment in the 5th year is required which will cost about $5,000
This new equipment should increase revenues by at least $100,000
and reduce labor cost by $20,000 per year. The cost of these
prescriptions will be about $50,000. Other annual out-of-pocket
operating costs are $15,000 per...

A machine cost $200,000 and has a salvage value of $100,000 if
kept for one year. The salvage value will decrease by $50,000 in
years 2 and 3 and remain zero after year 3. The operating costs are
$50,000 the first year and increase by $50,000 per year. So
operating costs in year two will be $100,000, and in year three
$150,000 and so on. How long should the equipment be kept so that
annual cost is minimized if the...

An injection molding system has a first cost of $180,000 and an
annual operating cost of $77,000 in years 1 and 2, increasing by
$6,000 per year thereafter. The salvage value of the system is 25%
of the first cost regardless of when the system is retired within
its maximum useful life of 5 years. Using a MARR of 10% per year,
determine the ESL and the respective AW value of the system.
The ESL is year(s) and AW value...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 6 minutes ago

asked 16 minutes ago

asked 41 minutes ago

asked 58 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

asked 1 hour ago

asked 1 hour ago