Project Description Initial Cost Annual Revenue ($1000s) ($1000s) $44 A Replace equipment to reduce labor costs 200 Overhaul equipment to reduce material costs 150 $36 C Replace Equipment to reduce defective parts 120 $29 Change packaging to reduce shipping costs 100 $25 ACME, Inc. is evaluating four proposals to increase their earnings. The initial costs and annual revenues are shown in the table below. If they have $300,000 in capital available to invest in these projects, what would ACME's rate of return be if they pursued Project A? Assume a common study period of 10 years. Show all work.

Project Description Initial Cost Annual Revenue ($1000s) ($1000s) $44 A Replace equipment to reduce labor costs 200 Overhaul equipment to reduce material costs 150 $36 C Replace Equipment to reduce defective parts 120 $29 Change packaging to reduce shipping costs 100 $25 ACME, Inc. is evaluating four proposals to increase their earnings. The initial costs and annual revenues are shown in the table below. If they have $300,000 in capital available to invest in these projects, what would ACME's rate of return be if they pursued Project A? Assume a common study period of 10 years. Show all work.

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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Shale Remodeling uses time and materials pricing. It is setting prices for next year using the following information: Labor rate, including fringe benefits $ 93 per hour Annual labor hours 6,410 hours Annual materials purchases $ 1,237,750 Materials purchasing, handling, and storage $ 247,550 Overhead for depreciation, taxes, insurance, etc. $ 711,510 Target profit margin for both labor and materials 25 % What is the total price for a project requiring 220 direct labor hours and $210,000 of materials
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.
A general manager wants to know the economic service life of currently owned machines. The market value of the machines and the maintenance and operating costs are shown below. Use the company’s MARR of 15% per year to determine the ESL. Year Market Value Annual Cost Total Annual Worth 0 $40,000 N/A N/A 1 $30,000 $20,000 -$36,000 2 $25,000 $22,000 -$33,907 3 $12,000 $24,000 4 $2,000 $26,000 -$36,263
A piece of production equipment is to be replaced immediately because it no longer meets quality requirements for the end product. The two best alternatives are a used piece of equipment (E1) and a new automated model (E2). The economic estimates for Alt E1 Alt E2 Capital Investment PhP 14,000 PhP 65,000 Aппual Expenses 14,000 9,000 each are shown in the accompanying table. Useful Life (years) 5 20 Market Value (at the end of useful life) 8,000 13,000 The MARR is 15% per year. Which alternative is preferred, based on the (a) coterminated assumption with a five-year study period and an imputed market value for Alternative b? Use FW. ANSWER: FW (E1) = PhP Blank 1 FW (E2) = PhP Blank 2 The best alternative is EBlank 3
A firm is considering the following two mutually exclusive alternatives as a part of a production improvement program as follows: If MARR = 10%, compare the alternatives, and select the best one. %3D A B Capital investment $25,000 $32,000 AOC $230 $200 Annual Taxes $120 $130 Annual revenues $ 4000 for the first 6 years and $5800 (from year 7 thereafter) $6500 Salvage value $2500 Useful Life 30 Infinity
Three alternatives have the following cost data associated with them: Data Alt. 1 Alt. 2 Alt. 3 Useful Life, Years 10 10 10 First Cost $1,125,000 $1,980,000 $1,650,000 Annual Benefit 265,000 589,000 435,000 Annual M&O Costs 95,000 97,000 91,000 Salvage Value 145,000 205,000 178,000 Determine whích machine is better to purchase, if i = 10%. 1. Use a B/C 2. Use a Payback Period
In order to carry a new investment project, company A has to purchase a machine for OMR 400,000. Company A staff have enough capacity to carry out the production, no one new will need to be hired, they are currently paid OMR 20,000. Calculate the relevant cost? a. OMR 20,000 Ob. OMR 380,000 O c. OMR 400,000 d. OMR 420,000
3. Company O has a new product that has the following cost per unit: direct materials - $10, direct labor - $7, and overhead - $3. If the sales manager wants to achieve a gross margin of 25% of cost for the particular product. What would be the selling price per unit?4. Company H acquired an equipment on June 1, 2020 amounting to $35,000 with an estimated useful life of 5 years. What would be the reported carrying value of the equipment on December 31, 2021 if the residual value at the end of 5 years is $5,000?5. On March 1, 2019, Company B issued $1,000,000, 10 years, 12% bonds at 103 excluding accrued interest. The bonds are dated January 1, 2019 and will mature on January 1, 2029. The interest is payable semi-annually on January 1 and July 1 of each year. Company B paid transaction costs amounting to $50,000. How much would be the net cash receipts of Company B as a result of the bond issuance?
Please help me find fixed costs. Oak Island Amusements Center provides the following data on the costs of maintenance and the number of visitors for the last three years. Number of Visitors per Year (thousands) Maintenance Costs($000) 1,825 $ 2,925 2,007 3,225 2,375 3,750 Required: a. Use the high-low method to estimate the fixed cost of maintenance annually and the variable cost of maintenance per visitor
Two alternative means of providing engineering drafting services are under consideration. Handy-Cam R-tistry $200,000 $120/hr $250/hr $20,000 $250,000 $115/hr Purchase Price Operating Cost $250/hr $15,000 Revenue Market value (end of useful life) Useful life 6 years б уears It is anticipated that the chosen alternative wilI be used to generate revenue 8 hrs/day, 250 days per year. The company uses a MARR = 12% for all investments. 12% Interest Table ,
ality is working on following two mutually exclusive proposals for increasing and optimizing the traffic lighting. Find the best option by using the Benefit/Cost ratio analysis given that the MARR 10%. Project-I Project-II Initial cost ($) 900,000 1,700,000 Annual operating cost ($/ per year) 120,000 60.000 Annual benefit ($ / per year) 730,000 650,000 Annual disbenefit ($ / per year) 300,000 195,000 Life (years) 10 25
(Related to Checkpoint 13.4) (Break-even analysis) Accounting Break-Even Point (in units) 6,230 740 1,980 1,980 Project A Price per Unit Variable Cost per Unit $54 $1,030 $20 $20 B C D (Click on the iconin order to copy its contents into a spreadsheet.) Fixed Costs $102,000 $495,000 $4,700 $14 $8 Depreciation $27,000 $98,000 $16,000

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