Question

A widget machine will cost $480,000. The anticipated increase in revenue will be $140,000/year for 5-years....

A widget machine will cost $480,000. The anticipated increase in revenue will be $140,000/year for 5-years. Annual expenses will be $30,000/year for 5-years. The depreciable life is estimated to be 5-years and the salvage value will equal $35,000. Additional inventory necessary to run the machine will be $26,000. Initial training expenses are $20,000. Tax rate equals 40%. A. Find the IRR.

Business   Finance   
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
Martin Company purchases a machine at the beginning of the year at a cost of $140,000....
Martin Company purchases a machine at the beginning of the year at a cost of $140,000. The machine is depreciated using the double-declining-balance method. The machine’s useful life is estimated to be 4 years with a $11,600 salvage value. The machine’s book value at the end of year 3 is: Multiple Choice a. $70,000. b. $105,000. c. $122,500. d. $17,500. e. $16,025.
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...
A company would like to purchase a machine for $200,000 with a life of 11 years....
A company would like to purchase a machine for $200,000 with a life of 11 years. They estimate the salvage value to be 6% of the initial machine cost. If other operating costs are estimated to be $30,000 per year. The interest rate the company uses to justify their investments is 5% per year compounded yearly. a. What is the capital recovery cost? b. What is the minimum amount of annual revenue ($? per year) that makes this investment an...
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...
Problem # 1 Consider the following for an 8 year special revenue generating project.   (this is...
Problem # 1 Consider the following for an 8 year special revenue generating project.   (this is the base case) Sales revenue $250,000 in the first year and will increase by 20% per year for the next 4 years. In year 6 the revenue will decrease by 15% a year through year 8. There is no expected cash flow after 8 years as this venture has a constrained timeline and no expected value after 8 years. Costs of goods sold will...
Meadville Widgets is considering the purchase of a fully automated widget finishing machine to replace an...
Meadville Widgets is considering the purchase of a fully automated widget finishing machine to replace an older but still functioning but more labor intensive model. The machine being replaced was purchased 5 years ago for a price of $45,000.00 at which time it had an expected life of 10 years. This machine is being depreciated by the straight line method with an anticiapated salvage value of $0.00 The current market value of this machine is estimated to be $27,000.00. The...
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?
Solar Innovations Corporation bought a machine at the beginning of the year at a cost of...
Solar Innovations Corporation bought a machine at the beginning of the year at a cost of $26,000. The estimated useful life was five years and the residual value was $3,000. Assume that the estimated productive life of the machine is 20,000 units. Expected annual production for year 1, 4,500 units; year 2, 5,500 units; year 3, 4,500 units; year 4, 4,500 units; and year 5, 1,000 units. 1. Complete a depreciation schedule for each of the alternative methods. (Do not...
A 2-year old injection molding machine was expected to serve out its projected life of 5...
A 2-year old injection molding machine was expected to serve out its projected life of 5 years, but a challenger promises to be more efficient and have lower operating costs. We want to perform an AW evaluation to determine if it is economically attractive to replace the defender now or keep it for 3 more years as originally planned.             The defender had a first cost of $300,000, but its market value now is only $100,000. It has chargeable expenses...
Jubail Corporation purchased a vibratory finishing machine for $20,000 in year 0. The useful life of...
Jubail Corporation purchased a vibratory finishing machine for $20,000 in year 0. The useful life of the machine is 10 years, at the end of which, the machine is estimated to have a zero salvage value. The machine generates net annual revenues of $6,000. The annual operating and maintenance expenses are estimated to be $1,000. If Jubail's MARR is 12%, how many years does it take before this machine becomes profitable? A. 4 years < n ≤ 5 years B....
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT