Question

A butcher is considering two freezers for his steaks: Kool Freezer and Chill Deluxe. Kool Freezer...

A butcher is considering two freezers for his steaks: Kool Freezer and Chill Deluxe. Kool Freezer costs $100,000 upfront and has maintenance costs of $10,000 each year for the next 8 years. Chill Deluxe costs $30,000 upfront and has maintenance costs of $20,000 each year for the next 4 years. If the discount rate is 4%, which freezer should be selected and what is its equivalent annual cost?

Kool Freezer; $28.26K

Kool Freezer; $24.85K

Kool Freezer; $26.74K

Chill Deluxe; $28.26K

Chill Deluxe; $24.85K

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
A butcher is considering two freezers for his steaks: Kool Freezer and Chill Deluxe. Kool Freezer...
A butcher is considering two freezers for his steaks: Kool Freezer and Chill Deluxe. Kool Freezer costs $100,000 upfront and has maintenance costs of $10,000 each year for the next 8 years. Chill Deluxe costs $30,000 upfront and has maintenance costs of $20,000 each year for the next 4 years. If the discount rate is 4%, which freezer should be selected and what is its equivalent annual cost? Chill Deluxe; $28.26K Kool Freezer; $24.85K Kool Freezer; $28.26K Chill Deluxe; $24.85K...
Taco Bell and burger king is considering a new cash register. taco bell costs $100,000 upfront...
Taco Bell and burger king is considering a new cash register. taco bell costs $100,000 upfront and has maintenance costs of $10,000 each year for the next 8 years. burger king costs $30,000 upfront and has maintenance costs of $20,000 each year for the next 4 years. If the discount rate is 4%, which register should be selected and what is its equivalent annual cost
2) Jay’s Electronics is expecting his maintenance cost for his building to be $10,000 per year...
2) Jay’s Electronics is expecting his maintenance cost for his building to be $10,000 per year starting 2 years from now, decreasing $1000 per year for the 4 years thereafter. For example, in year 3 his maintenance costs will be $9000. How much does Jay need in his bank account now to be able to pay the maintenance costs for the next five years? Assume Jay can earn an interest rate is 10% per year on his money. Show your...
7-22. A company is considering the purchase of a capital asset for $100,000. Installation charges needed...
7-22. A company is considering the purchase of a capital asset for $100,000. Installation charges needed to make the asset for serviceable will total $30,000. The asset will be depreciated over six years using the straight-line method and an estimated salvage value (SV6) of $10,000. The asset will be kept in service for six years, after which it will be sold for $20,000. During its useful life, it is estimated that the asset will produce annual revenues of $30,000. Operating...
A project your firm is considering for implementation has these estimated costs and revenues: an investment...
A project your firm is considering for implementation has these estimated costs and revenues: an investment cost of $50,000; maintenance costs that start at $5,000 at the end of year (EOY) 1 and increase by $1,000 for each of the next 4 years, and then remain constant for the following 5 years; savings of $20,000 per year (EOY 1–10); and finally a resale value of $35,000 at the EOY 10. If the project has a 10-year life and the firm’s...
P10-21 (similar to) All​ techniques, conflicting rankings   Nicholson Roofing​ Materials, Inc., is considering two mutually exclusive​...
P10-21 (similar to) All​ techniques, conflicting rankings   Nicholson Roofing​ Materials, Inc., is considering two mutually exclusive​ projects, each with an initial investment of ​$100,000. The​ company's board of directors has set a​ 4-year payback requirement and has set its cost of capital at 9​%. The cash inflows associated with the two projects are shown in the following​ table: LOADING... . a. Calculate the payback period for each project. Rank the projects by payback period. b.  Calculate the NPV of each...
A company is considering the acquisition of production equipment which will reduce both labour and material...
A company is considering the acquisition of production equipment which will reduce both labour and material costs. The cost is $100,000 and it will be depreciated on a straight-line basis to zero over a four-year period. However, the useful life of the equipment is five years, and it will be sold for $20,000 at the end of the five years. Operating costs will be reduced by $30,000 in the first year and the savings will increase by $5,000 per year...
Salt Line Co needs a specific equipment for their desalination project and it has received two...
Salt Line Co needs a specific equipment for their desalination project and it has received two quotes. Under first quote the initial manufacturing costs are $100,000, which will be followed by servicing costs of $3,000 a year at the end of each of the next three years. At the end of third year Salt Line will have to replace the equipment. Under second quote, the initial manufacturing costs are $90,000, which will be followed by servicing costs of $8,000 a...
The GAP Inc. is considering hiring a new mascot for its Old Navy subsidiary. They will...
The GAP Inc. is considering hiring a new mascot for its Old Navy subsidiary. They will shoot the commercials today and run them over the next four years. What is the discounted payback period of the investment if it requires an investment of $70,000 and provides cash flows of $20,000, $10,000, $50,000, and $30,000? Assume that the cash flows are received at the end of each year (not continuously) and that the appropriate discount rate is 10%. Round your answer,...
Capital Budgeting Exercise 1 You are considering the purchase of one of two machines used in...
Capital Budgeting Exercise 1 You are considering the purchase of one of two machines used in your manufacturing plant. Machine A has a life of two years, costs $1500 initially, and then $400 per year in maintenance costs. Machine B costs $2000 initially, has a life of three years, and requires $300 in annual maintenance costs. Either machine must be replaced at the end of its life with an equivalent machine. Which is the better machine for the firm? The...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT