A company is considoring purchasing equipment costing $155,000. Tho equipment is axpected to roduce costs from year 1 to 2 by $2,000, year 3 to 6 by $70,000, and in year 7 by $2,000. In year 7, the equipment can be sold at a 9 salvage value of $22,000,. Calculate the internal rate of return (IRR) tor this proposal.
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- A mini-mart needs a new freezer and the initial Investment will cost $300,000. Incremental revenues, including cost savings, are $200,000, and incremental expenses, including depreciation, are $125,000. There is no salvage value. What is the accounting rate of return (ARR)?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)?A company is considering purchasing equipment costing $92,000. The equipment is expected to reduce costs from year 1 to 3 by $22,000, year 4 to 9 by $9,000, and in year 10 by $2,000. In year 10, the equipment can be sold at a salvage value of $15,000. Calculate the internal rate of return (IRR) for this proposal.
- You are given opportunity to purchase product for $42, 000. The product will have annual operating expenses of $4,000, and a salvage value of $20,000 at the end of its useful life of 6 years. Assuming a discount rate of 9.0%, what is the minimum acceptable revenue to justify taking this project? A 1.01% B $333 C $2704 D $767 E $10704A Company is considering two alternatives with regards to an equipment which it needs. The alternatives are as follows: Alternative A; Purchase Cost of equipment Salvage value Daily operating cost Economic life, years P700,000 100,000 500 10 Alternative B: Rental at P1,500 per day At 18% interest, how many days per year must the equipment be in use if Alternative A is to be chosen.Colaw Company is considering buying equipment for $240,000 with a useful life of five years and an estimated salvage value of $12,000. If annual expected income is $21,000, the denominator in computing the annual rate of return is Group of answer choices $120,000. $252,000. $240,000. $126,000.
- Company C is seeking for help to decide this option to choose to upgrade their current bottleneck equipment. There are two vendors and one rental option. The cost details are shown in the table below. Vender R 75000 28000 Option Initial Cost Annual Operation Cost Salvage Value 0 Estimated Life in Year 2 MARR = 10% per year compounded monthly. Vender T 125000 12000 30000 3 Rental 0 52000 0 Maximum 3 years 1. Select from the two sales vendors using the LCM and PW analysis. 2. Determine which of the three options is cheaper over a 3 year study period.Baird Rentals can purchase a van that costs $110,000; it has an expected useful life of five years and no salvage value. Baird uses straight-line depreciation. Expected revenue is $40,425 per year. Assume that depreciation is the only expense associated with this Investment. Required a. Determine the payback period. Note: Round your answer to 1 decimal place. b. Determine the unadjusted rate of return based on the average cost of the investment. Note: Round your answer to 1 decimal place. (l.e., .234 should be entered as 23.4). a. Payback period b. Unadjusted rate of return years %RLC Manufacturing is planning to purchase a cutting equipment. Information are as follows: Equipment 1 Equipment 2 First Cost P 12,000 P 18,000 Salvage Value P 600 P 2,000 Annual Operation P 3,200 P 2,500 Annual Maintenance P 1,200 P 1,000 Taxes & Insurance 3% 3% Life, years 10 15 Money is worth at least 16%. Which equipment should be selected? Use: a. Rate of Return Method Rate of Return Method Annual Cost Method NOTE: Show cashflow diagram.
- Coronado, Inc. is considering purchasing equipment costing $39000 with a 7-year useful life. The equipment will provide cost savings of $9000 and will be depreciated straight-line over its useful life with no salvage value. Coronado Inc. requires a 11% rate of return. What is the approximate net present value of this investment? Period 7 O $30000 O $4812 O $3408 O $2076 9% 5.033 Present Value of an Annuity of 1 10% 4.868 11% 4.712 12% 4.564 13% 4.423 16% 4.039Alternative R has a first cost of $76,000, annual M&O costs of $56,000, and a $20,000 salvage value after 5 years. Alternative S has a first cost of $175,000 and a $52,000 salvage value after 5 years, but its annual M&O costs are not known. Determine the M&O costs for alternative S that would yield a required incremental rate of return of 26%. The M&O cost for alternative S is $Coronado, Inc. is considering purchasing equipment costing $39000 with a 7-year useful life. The equipment will provide cost savings of $8700 and will be depreciated straight-line over its useful life with no salvage value. Coronado Inc. requires a 9% rate of return. What is the approximate internal rate of return for this investment? Period 7 10% O 11% 000 9% 8% 7% 5.389 8% Present Value of an Annuity of 1 5.206 9% 5.033 10% 4.868 11% 4.712 14% 4.288