Multiple Choice Question"Roper Spring Water" is considering a new bottling line that costs $230,000, lasts 4 years, and yields cost savings of $55,000 in year 1, $65,000 in year 2, and$75,000 in years 3 and 4. If the interest rate is 7%, what is the net present value of the machine? Should Roper Spring Water buy the machine?O -$226,615; NoO $3,385, YesO $226,615; YesO -$3,385; No10

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Answered: Multiple Choice Question "Roper Spring…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 13EA: Jullo Company is considering the purchase of a new bubble packaging machine. If the machine will...

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Jullo Company is considering the purchase of a new bubble packaging machine. If the machine will provide $20,000 annual savings for 10 years and can be sold for $50,000 at the end of the period, what is the present value of the machine investment at a 9% interest rate with savings realized at year end?
Exercise 1 (Simple Rate of Return Method) The management of Ann Gee MicroBrew is considering the purchase of an automated bottling machine for P80,000. The machine would replace an old niece of equipment that costs P33,000 per year to operate. The new machine would cost P10,000 per year to operate. The old machine currently in use could be sold now for a scrap value of P5,000. The new machine would have a useful life of 10 years with no salvage value. Required: Compute the simple rate of return on the new automated bottling machine.
Economics A new machine can be purchased for $80,000. Its expected useful life is 5 years, at which time its market value will be $6,000. Annual revenues less expenses due to the new machine will be $20,000 per year over the five-year period. Assume a MAŘR of 10% to determine if this is a good investment by using a) the PW method b) the FW method c) the AW method d) The IRR method e) The ERR method
You have been asked to evaluate two alternatives, X and Y, that may increase plant capacity for manufacturing high-pressure hydraulic hoses. The parameters associated with each alternative have been estimated. Which one should be selected on the basis of a present worth comparison at an interest rate of 14% per year? Why is yours the correct choice? X $-40,000 $-12000 $1,500 5 years The present worth of alternative X is $ Alternative (Click to select) is selected by the company. Alternative First Cost Maintenance cost, per Year Salvage Value Life Y $-60,000 $-2000 $2,500 5 years and that of alternative Y is $
Simple Rate of Return Method The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $120,000. The machine would replace an old piece of equipment that costs $30,000 per year to operate. The new machine would cost $12,000 per year to operate. The old machine currently in use could be sold now for a salvage value of $40,000. The new machine would have a useful life of 10 years with no salvage value. Required: 1. What is the annual depreciation expense associated with the new bottling machine? 2. What is the annual incremental net operating income provided by the new bottling machine? 3. What is the amount of the initial investment associated with this project that should be used for calculating the simple rate of return? 4. What is the simple rate of return on the new bottling machine?
1 Abusiness is considering the option of buying a plece of equipment that has a life of 5 years. The original cost of the equipment is RMS50,000 and the interest rate is 10%, It is expected that the net cash flow is RM15,000 annually and the salvage value is RM5,000. Required a. What is the NPV? b. Recommend whether the investment is feasible. 2 Talis Construction Company is considering developing factory buildings in Seremban. This project is mutually exclusive, where only one type of housing is to be selected. The initial capital investment is as follows for the three types of factory buildings: Three-storey Five-storey link RM400 million Initial capital investment RM200 millon
Your Company is interest in buying a new project that will last for 8 years. The projects internal rate of return is 5%. The project will generate annual operating cash inflows of $20,000. What is the most the company should pay for the equipment needed for this project? It will have no salvage value. Group of answer choices $128,000 $129,260 $13,540 $135,723 $122,797
Question 1 The M&N company is considering a new manufacturing facility plan for its new venture. The plan suggests an initial investment of 5600.000 and is expected to have a salvage value of $50,000 after the end of its 6-year life period. The selling price of the product is decided fo be $70 per unit, against an estimated variable cost of $40 per unit. How many units should the company sell each year for breakaven at an interest rate of 8%?
Question 3 You are considering purchasing a dump truck. The truck will cost $75,000 and have operating and maintenance costs that start at $18,000 the first year and increases by $2,000 per year. Assume that the salvage value at the end of five years is $22,000 and interest rate is 15%. What is the annual and operating and maintenance costs of owning this vehicle?
Question 2 Umunat is considering investing $50,000 in a new machine with an expected life of 5 years. The machine will have no scrap value at the end of 5 years. It is expected that 20,000 units will be sold each year at a selling price of $3.00 per unit. Variable production costs are expected to be $10,000 per year. Umunat uses a discount rate of 12% for investment appraisal purposes and expects investment projects to recover their initial investment within 2 years. Required: ● a. b. C. Explain why risk and uncertainty should be considered in the investment appraisal process. Calculate and comment on the payback period of the project. Evaluate the sensitivity of the project's net present value to a change in the following project variables: Sales volume Sales price Variable cost UNIVE and discuss he use of sensitivity analysis as a way of evaluating project risk. d. Upon further investigation it is found that there is a significant chance that the expected sales volume of $20,000…
Choice A: Buy the machine Machine Cost: P700,000 Economic Life: 10 years Trade-in Value: P100,000 Operating Cost per day: P500 Choice B: Rent the machine Rent Payment: P1,500 per day Assuming that the rate of return is 18% and Choice A is to be chosen, how long in days should the machine be in use. Please explain step by step
Present value comparisons of single amounts In exchange for a $20,000 payment today, a well-known company will allow you to choose one of the alternatives shown in the following table. Your opportunity cost is 11%. Alternative Single amount A $28,500 at end of 3 years B $54,000 at end of 9 years C $160,000 at end of 20 years Find the Present value of each alternative. Are all the alternatives acceptable? Which alternative, if any, will you take?

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