Question

HopHeart Brewery is considering 3 different bottling machines. It is expected that each machine will be...

HopHeart Brewery is considering 3 different bottling machines. It is expected that each machine will be replaceable at the same cost when their useful life ends. The details of the machines are as follows:

Machine X has a useful life of 6 years. It costs $10,000 to purchase and $2,000 per year to maintain.

Machine Y has a useful life of 12 years. It costs $15,000 to purchase, and $1,000 per year to maintain.

Machine Z has a useful life of 8 years. It costs $20,000 to purchase, and $200 per year to maintain.

The appropriate planning horizon for analyzing these choices is 24 years.

a) Using the planning horizon (24 years), analyze the present worth of the cost of each alternative if HopHeart has a MARR of 8.0%/year.
X $ ______
Y $ ______
Z $ ______

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
HopHeart Brewery is considering 3 different bottling machines. It is expected that each machine will be...
HopHeart Brewery is considering 3 different bottling machines. It is expected that each machine will be replaceable at the same cost when their useful life ends. The details of the machines are as follows: Machine X has a useful life of 6 years. It costs $10,000 to purchase and $2,000 per year to maintain. Machine Y has a useful life of 12 years. It costs $15,000 to purchase, and $1,000 per year to maintain. Machine Z has a useful life...
HopHeart Brewery is considering 3 different bottling machines. It is expected that each machine will be...
HopHeart Brewery is considering 3 different bottling machines. It is expected that each machine will be replaceable at the same cost when their useful life ends. The details of the machines are as follows: Machine X has a useful life of 6 years. It costs $10,000 to purchase and $2,000 per year to maintain. Machine Y has a useful life of 12 years. It costs $15,000 to purchase, and $1,000 per year to maintain. Machine Z has a useful life...
Larry Larson has proposed that HopHeart Brewery expand their bottling facility. His proposal will bring in...
Larry Larson has proposed that HopHeart Brewery expand their bottling facility. His proposal will bring in a lot of new revenue. If the company goes forward with his plan, they will generate funds with a mix of 50% bonds paying 8.0%/year. 25% bank loans at 8% per year, and 25% preferred stock with a $9.60 dividend each year The stock will sell for $100 per share. The company is heavily taxed, and pays 45% on all of its net income....
Larry Larson has proposed that HopHeart Brewery expand their bottling facility. His proposal will bring in...
Larry Larson has proposed that HopHeart Brewery expand their bottling facility. His proposal will bring in a lot of new revenue. If the company goes forward with his plan, they will generate funds with a mix of 50% bonds paying 9.7%/year. 25% bank loans at 8% per year, and 25% preferred stock with a $5.10 dividend each year The stock will sell for $100 per share. The company is heavily taxed, and pays 45% on all of its net income....
A company is evaluating two machines. Both machines meet the company’s quality standard. Machine A costs...
A company is evaluating two machines. Both machines meet the company’s quality standard. Machine A costs $40 000 initially and $1000 per year to maintain. Machine B costs $24 000 initially and $2000 per year to maintain. Machine A has a six-year useful life and Machine B has a three-year useful life. Both machines have zero salvage value. Assume the company will continue to replace worn-out machines with similar machines and that the discount rate is 7%. Which machine should...
The management of Ballard  is considering the purchase of an automated bottling machine for $54,000. The machine...
The management of Ballard  is considering the purchase of an automated bottling machine for $54,000. The machine would replace an old piece of equipment that costs $14,000 per year to operate. The new machine would cost $6,000 per year to operate. The old machine currently in use could be sold now for a salvage value of $20,000. The new machine would have a useful life of 10 years with no salvage value. Required: 1. What is the annual depreciation expense associated...
Swifty Corporation is considering the purchase of a new bottling machine. The machine would cost $220,266...
Swifty Corporation is considering the purchase of a new bottling machine. The machine would cost $220,266 and has an estimated useful life of 8 years with zero salvage value. Management estimates that the new bottling machine will provide net annual cash flows of $37,800. Management also believes that the new bottling machine will save the company money because it is expected to be more reliable than other machines, and thus will reduce downtime. Assume a discount rate of 9%. (a)-...
The Bigbee Bottling Company is contemplating the replacement of one of its bottling machines with a...
The Bigbee Bottling Company is contemplating the replacement of one of its bottling machines with a newer and more efficient one. The old machine has a book value of $575,000 and a remaining useful life of 5 years. The firm does not expect to realize any return from scrapping the old machine in 5 years, but it can sell it now to another firm in the industry for $235,000. The old machine is being depreciated by $115,000 per year, using...
The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $54,000....
The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $54,000. The machine would replace an old piece of equipment that costs $14,000 per year to operate. The new machine would cost $6,000 per year to operate. The old machine currently in use is fully depreciated and could be sold now for a salvage value of $20,000. The new machine would have a useful life of 10 years with no salvage value. Required: 1. What...
The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $54,000....
The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $54,000. The machine would replace an old piece of equipment that costs $14,000 per year to operate. The new machine would cost $6,000 per year to operate. The old machine currently in use could be sold now for a salvage value of $20,000. The new machine would have a useful life of 10 years with no salvage value. Required: 1. What is the annual depreciation...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT