Please provide a clear and complete solution. Answer fast for I have 30 minutes left. Thank you very much. An expenditure of Php 1,000,000 is made to modify a material-handling system ina small job shop. This modification will result in first-year savings of Php 100,000,a second-year savings of Php 200,000, and a savings of Php 250,000 per yearthereafter. How many years must the system last if an 18% return on investmentis required? The system is tailor made for this job shop and has no market (salvage)value at any time.

The present value of futures saving must be equal to the initial investment made depending on the…

An expenditure of Php is made to modify a material a small job shop. This modification will result in first-year sav a second-year savings of Php 200,000, and a savings of Ph thereafter. How many years must the system last if an 18% r irod? The cu in tail for this ich hon hac

An expenditure of Php is made to modify a material a small job shop. This modification will result in first-year sav a second-year savings of Php 200,000, and a savings of Ph thereafter. How many years must the system last if an 18% r irod? The cu in tail for this ich hon hac

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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ABC company is evaluating two alternatives: the purchase of an automatic feed machine and a manual feed machine for a finishing process. The auto-feed machine has an initial cost of Php23,000, an estimated salvage value of Php4,000, and a predicted life of 10 years. One person will operate the machine at a rate of Php24 per hour. The expected output is 8 tons per hour. Annual maintenance and operating cost is expected to be Php3,500. The alternative manual feed machine has a first cost of Php8,000, no expected salvage value, a 5-year life, and an output of 6 tons per hour. However, three workers will be required at Php12 per hour each. The machine will have an annual maintenance and operation cost of Php1,500. All projects are expected to generate a return of 10% per year. How many tons per year must be finished in order to justify the higher purchase cost of the auto-feed machine?Please write legibly with complete & detailed solution
A remotely located air sampling station can be powered by solar cells or by running an above ground electric line to the site and using conventional power. Solar cells will cost RM 15,000 to install and will have a useful life of 5 years with no salvage value. Annual costs for inspection, cleaning, maintenance and part replacement are expected to be RM 4,000. A new power line will cost RM 40,000 to install, with power costs expected to be RM 1,000 per year. Since the air sampling project will end in 10 years,the salvage value of the line is considered to be zero. At an interest rate of 6% per year compounded monthly,(i) Calculate the effective interest rate per year(ii) Determine which alternative should be selected on the basis of an present worth analysis(iii) Determine the initial cost of the above ground line to make the two alternatives equally attractive economically
A logistic company is considering using automated guided vehicles (AGVS) system to speed up the process and cut some costs. To implement the system, the company need to anticipates the purchasing price of the AGVS system. The system will save $1,500,000 per year in labor and operational cost. However, it will incur a maintenance cost of $400,000 per year. The system is expected to have a 15-year service life and a salvage value of about $100,000. If the company's MARR is 10%, determine the maximum price that the company should pay to purchase the AGVS system so that project is profitable.
A high-tech material handling system was offered by a supplier to a large automobile manufacturer. The installation cost of the system is worth Php 1,000,300,000. This system will save Php 214,000,000 per year in manual labor, and it will incur Php 93,000,000 in annual operating and maintenance expenditures. The salvage value at the end of the system’s 10-year life is negligible. If the company’s hurdle rate (MARR) is 10% per year, should the system be recommended for implementation? Evaluate the system using spreadsheet solution of the Internal Rate of Return method.
Kingsville plans to buy a street-cleaning machine. A used cleaning vehicle will cost $80,000 and have a $10,000 salvage value at the end of its five year life. A new system with advanced features will cost $160,000 and have a $45,000 salvage value at the end of its five year life. The new system is expected to reduce labor hours compared with the used system. Current street cleaning activity requires the used system to operate 8 hours per day for 20 days per month. Labor costs $50 per hour and MARR is 12% per year. Find the breakeven labor hours for the new system. USE SOLVER FUNCTION IN EXCEL
An auto repair company needs a new machine that will check for defective sensors. The machine has an initial investment of $224,000. Incremental revenues, including cost savings, are $120,000, and incremental expenses, including depreciation, are $50,000. There is no salvage value. What is the accounting rate of return (ARR)?
You work for a logistics company, which considers to invest in a computerized system to improve efficiency. The initial cost of implementation for the system is $90,000. Furthermore, it will cost $25,000 per year to maintain the system. Due to the fast nature of the business, your company can use the system for five years and there will be no salvage value at the end of the service period. Thanks to the new system, you estimate that the company will save $65,000 in operating costs each year. In addition, the increase in the effciency would bring $35,000 per year in additional revenues during the service life of the system. Given that your company's MARR is 15%, find the present worth of this investment. A) -$73,239 B) $161,412 C) $251,412 D) Answers A, B and C are not correct
It is desired to determine the present economic value of an old machine byconsidering of how it compares with the best modern machine that could replace it. The old machine is expected to require out-of-pocket costs of ₱85,000 each year for 4 years and then be scrapped for ₱5,000 residual value. The new machine requires an investment of ₱40,000 and would have out-of-pocket costs of ₱79,000 a year for 8 years and then zero salvage value. Invested capital should earn a minimum return of 15% before taxes. Determine the present value of the old machine.Ans: ₱11,200
An assembly operation at a software company currently requires $100,000 per year in labor costs. A robot can be purchased and installed to automate this operation, and the robot will cost $200,000 with no MV at the end of its 10-year life. The robot, if acquired, will be depreciated using SL depreciation to a terminal BV of zero after 10 years. Maintenance and operation expenses of the robot are estimated to be $64,000 per year. Thecompany has an effective income tax rate of 40%. Invested capital must earn at least 8% after income taxes are taken into account. Solve, a. Use the IRR method to determine if the robot is a justifiable investment. b.If MACRS (seven-year recovery period) had been used in Part (a), would the after-tax IRR be lower or higher than your answer to Part (a)?
A small utility company is considering the purchase of a powerdriven post hole digger. The equipment will cost $8,000 and have an estimated life of 8 years and a salvage value of $1,000 at that time. Annual maintenance costs for the digger are estimated to be 15% of the first cost regardless of its level of usage. Operations costs are $40 per day with an output rate of 25 holes per day. At present, holes are manually dug at a rate of 1.5 per day by a laborer whose marginal cost is $11.20 per day. Determine the break-even value in holes per year. MARR is 8%.
You are running a small machine shop where you need to replace a worn-out sanding machine. Two different models have been proposed:• Model A is semiautomated, requires an initial investment of $150,000, and has an annual operating cost of $55,000 for each of three years, at which time it will have to be replaced. The expected salvage value of the machine is just $15,000.• Model B is an automated machine with a five-year life and requires an initial investment of $230,000 with an estimated salvage value of $35,000. Expected annual operating and maintenance cost of the B machine is $30,000. Suppose that the current mode of operation is expected to continue for an indefinite period. You also think that these two models will be available in the future without significant changes in price and operating costs. At MARR = 15%, which model should you select? Apply the annual-equivalence approach to select the most economical machine.
You have been asked to evaluate a pollution device. The device costs $500 to set up and $100 per year to operate. It must be completely replaced every 4 years, and it has no salvage value. Assume the pollution control equipment is replaced as it wears out. and the cost of capital is 12%. What is the EAC of the wet scrub device? A$257.74 B) $264.62 $286.04 D) $296.93 $331.21

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