1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
soldier1979 [14.2K]
2 years ago
6

Faleye Consulting is deciding which of two computer systems to purchase. It can purchase state-of-the-art equipment (System A) f

or an after-tax cost of $19,000, which will generate after-tax cash flows of $6,000 at the end of each of the next 6 years. Alternatively, the company can purchase equipment with an after-tax cost of $13,000 that can be used for 3 years and will generate after-tax cash flows of $6,000 at the end of each year (System B). If the company’s WACC is 10% and both “projects” can be repeated indefinitely, which system should be chosen, and what is its EAA? Do not round intermediate calculations. Round your answer to the nearest cent.
Choose Project
-Select-
, whose EAA = $
Mathematics
1 answer:
klemol [59]2 years ago
4 0

If Faleye Consulting’s WACC is 10% and both “projects” can be repeated indefinitely, the system that should be chosen is <u>System A</u>, and its EAA is <u>$2,866.91</u>.

<h3>What is the EAA of a project?</h3>

The EAA of a project is the Equivalent Annual Annuity.  The EAA can be determined using the following formula.

EAA = r x NPV1 - (1 + r)-n

Where the EAA = Equivalent Annual Annuity

r = interest rate per period

n = project duration

NPV = Net present value of project

We can also compute the EAA by using an online finance calculator as follows:

<h3>Data and Calculations:</h3>

                                                System A        System B

After-tax cost                           $19,000         $13,000

After-tax cash flows                 $6,000           $6,000

Equipment duration                 6 years           3 years

WACC = 10%

Annuity factor                            4.355              2.487

Present value of cash flows $26,130          $14,922 ($6,000 x 2.487)

NPV                                          $7,130           $1,922 ($14,922 - $13,000)

EAA (an online calculator)    $2,866.91        $800.966

Thus, using the EAA rule, the computer system that should be chosen is System A because it has a higher EAA than System B.

Learn more about the equivalent annual annuity at brainly.com/question/20566589

You might be interested in
​Joe's annual income has been increasing each year by the same dollar amount. The first year his income was ​$17 comma 90017,900
Vedmedyk [2.9K]

Answer:

In 17th year, his income was $30,700.

Step-by-step explanation:

It is given that the income has been increasing each year by the same dollar amount. It means it is linear function.

Income in first year = $17,900

Income in 4th year = $20,300

Let y be the income at x year.

It means the line passes through the point (1,17900) and (4,20300).

If a line passes through two points (x_1,y_1) and (x_2,y_2), then the equation of line is

y-y_1=\frac{y_2-y_1}{x_2-x_1}(x-x_1)

The equation of line is

y-17900=\frac{20300-17900}{4-1}(x-1)

y-17900=\frac{2400}{3}(x-1)

y-17900=800(x-1)

y-17900=800x-800

Add 17900 on both sides.

y=800x-800+17900

y=800x+17100

The income equation is y=800x+17100.

Substitute y=30,700 in the above equation.

30700=800x+17100

Subtract 17100 from both sides.

30700-17100=800x

13600=800x

Divide both sides by 800.

\frac{13600}{800}=x

17=x

Therefore, in 17th year his income was $30,700.

5 0
3 years ago
erika estimates that she is 200 to 300 miles away from her destination. if her car travels 25 miles per gallon of gas and each g
DedPeter [7]

Answer:

32$ < x < 48$

Step-by-step explanation:

Erika estimates that her destination is between 200 and 300 miles away.

When we divide 200 with 25 miles we get 200/25 = 8 gallons

When we divide 300 with 25 miles we get 300/25 = 12 gallons

When we multiply 8 · 4 = 32$ we get amount of money for destination

200 miles  x = 32$

When we multiply 12 · 4 = 48$ we get amount of money for destination

300 miles  x = 32$

Since that the estimate destination is between 200 miles and 300 miles

then the best estimate for the amount of money is between

32$ < x < 48$

God with you!!!

7 0
3 years ago
Read 2 more answers
He buys a suit that was on sale for 25%off. He only paid $125.00. What was the original price? What was the amount of the discou
Citrus2011 [14]

Equation  1):

You want to buy something that costs $166.66, and it's on sale for 25% off. What is the item's sale price?

First, convert the 25% to a real mathematical number. For percent's, this is always done by dividing the 25% by 100%, or 25% / 100% = 0.250.

Second, find out what 25% of $166.66 is. This is the amount of the sale discount. This is always found by multiplying 0.250 by the item's cost $166.66, like this:  

0.250 x $166.66 = $41.67.

So for this sale, you'll save $41.67 on this item.

This means, the cost of the item to you is  

$166.66 - $41.67 = $125.00.

Alternatively, you can think about it this way. The item is 25% off. This means you'll pay 75.000% of the total cost (100% - 25% = 75.000%).

Now what's 75.000% of the total cost?  

0.750 x $166.66 = $125.00.

Answer =====> Just like the result above, the sale price on the item is $125.00.





Equation 2:)

You want to buy something that costs $125, and it's on sale for 25% off. What is the item's sale price?

First, convert the 25% to a real mathematical number. For percent's, this is always done by dividing the 25% by 100%, or 25% / 100% = 0.250.

Second, find out what 25% of $125 is. This is the amount of the sale discount. This is always found by multiplying 0.250 by the item's cost $125, like this:  

0.250 x $125 = $31.25.

So for this sale, you'll save $31.25 on this item.

This means, the cost of the item to you is  

$125 - $31.25 = $93.75.  

Alternatively, you can think about it this way. The item is 25% off. This means you'll pay 75.000% of the total cost (100% - 25% = 75.000%).

Now what's 75.000% of the total cost?

0.750 x $125 = $93.75.

Answer =====> Just like the result above, the sale price on the item is $93.75.




Hope that helps!!!                                                     : )


8 0
3 years ago
Ten experts rated a newly developed chocolate chip cookie on a scale of 1 to 50. Their ratings were:
Sunny_sXe [5.5K]

Answer:

Option B.

Step-by-step explanation:

The given data set is

34, 35, 41, 28, 26, 29, 32, 36, 38, 40

We need to find the mean deviation of the given data.

Number of observations, n = 10

Mean of the data is

Mean=\dfrac{\sum x}{n}

Mean=\dfrac{34+35+41+28+26+29+32+36+38+40}{10}

Mean=\dfrac{339}{10}

Mean=33.9

Formula for mean deviation is

\text{Mean deviation}=\dfrac{\sum |x-mean|}{n}

\sum |x-mean|=|34-33.9|+|35-33.9|+|41-33.9|+|28-33.9|+|26-33.9|+|29-33.9|+ |32-33.9|+|36-33.9|+|38-33.9|+|40-33.9|=41.2

\text{Mean deviation}=\dfrac{41.2}{10}

\text{Mean deviation}=4.12

The mean deviation of the ratings is 4.12.

Therefore, the correct option is B.

8 0
3 years ago
Read 2 more answers
Please help!
AfilCa [17]

Answer:

a.) P(HH|C)=2/5

Explanation:

Given following:

  • P(HH) = 7
  • P(C) = 10
  • P(HH ∩ C) = 4
  • P(HH ∪ C) = 13

Solving steps:

\sf P(HH|C) = \dfrac{P(HH \cap C) }{P(C)}

\sf P(HH|C) = \dfrac{4 }{10}

\sf P(HH|C) = \dfrac{2 }{5}

8 0
1 year ago
Other questions:
  • Can anyone please help me?
    12·1 answer
  • Answer this plz thanks
    9·2 answers
  • Can you help me pleaseeeeeew
    15·1 answer
  • The room and the hallway shown in the floor plan below have different dimension but the same area. Find value of w.
    11·1 answer
  • In the numerical sentence below, A = 8, D = 1/2 , and F = 1/4. What are the values B, C, and E if the sentence below is equivale
    9·2 answers
  • 10r-60=9r solve for r​
    15·2 answers
  • Find the reciprocal of 19/13
    9·2 answers
  • If anyone knows the anwser pls tell me
    11·1 answer
  • Andre went to a sporting goods store that was having a different sale. He bought a baseball glove and 2 packages of socks. The b
    5·2 answers
  • In the equation 5 + 3x - 7 = 10, what are the like terms?
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!