Average rate of return - cost savings Maui Fabricators Inc. is considering an investment in equipment that will replace direct labor. The equipment has a cost of $125,000 with a $15,000 residual value and an eight year life. The equipment will replace one employee who has an average wage of $28,000 per year. In addition, the equipment will have operating and energy costs of $5,150 per year. Determine the average rate of return on the equipment, giving effect to straight line depreciation on the investment.

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A: Computation of annual depreciation:

Q: Midwest Fabricators Inc. is considering an investment in equipment that will replace direct labor.…

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Q: Average Rate of Return—Cost Savings Midwest Fabricators Inc. is considering an investment in…

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Q: Average Rate of Return-Cost Savings Maui Fabricators Inc. is considering an investment in equipment…

A: calculation of average rte of return are as follows

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A: MARR = 20% Cash Flows: Year Cash Flow 1 -25000.00 2 8000.00 3 8000.00 4 8000.00 5…

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A: In the given question we need to calculate the Net Present Value (NPV) of investment. Net present…

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A: a) The point at which NPV is zero gives annual savings. Computation:

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A: As you have asked a multiple subpart question, we will answer the first three subparts for you. To…

Q: Average Rate of Return-Cost Savings Maui Fabricators Inc. is considering an investment in equipment…

A: Average rate of return on the project means how much net income a business is earning annually on…

Q: Average Rate of Return-Cost Savings Maui Fabricators Inc. is considering an investment in equipment…

A:

Q: Average Rate of Return-Cost Savings Midwest Fabricators Inc. is considering an investment in…

A: Hence, $9,100 is the amount of annual depreciation on equipment. It is obtained by the division of…

Q: Average Rate of Return-Cost Savings Maui Fabricators Inc. is considering an investment in equipment…

A: The calculation of Average rate of return on the equipment is shown hereunder : Cost of equipment $…

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A: IRR is given by,  PV of cash inflows = initial cost PV = E(1-(1+r)-p)/r  Where, E = annual cashflow…

Q: ear after extra operating costs

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Q: Midwest Fabricators Inc. is considering an investment in equipment that will replace direct labor.…

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Q: Average Rate of Return—Cost Savings Maui Fabricators Inc. is considering an investment in…

A: The question is based on the concept of Financial Management.

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A: Given that: Cost of Equipment = $91000 Residual value = $8000 Life = 10 years

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A: Lets understand the basics. When more than one alternatives is available, management choose…

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A: Formula: Net income = Revenues - expenses.