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diamong [38]
3 years ago
15

BAK Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the company to

bid on jobs that it currently isn’t equipped to do. Estimates regarding each machine are provided below.
Machine A Machine B
Original cost $76,700 $183,000
Estimated life 8 years 8 years
Salvage value 0 0
Estimated annual cash inflows $20,200 $40,500
Estimated annual cash outflows $5,040 $9,870
a. Calculate the net present value and the profitability index of each machine. Assume a 9% discount rate. (Round net present value to 0 decimal places )
b. Which machine should be purchased?
Business
1 answer:
suter [353]3 years ago
8 0

Answer:

a) For MACHINE A  

Net Present Value (NPV) 7208

Internal Rate of Return (IRR) 11,48%

For MACHINE B      

Net Present Value (NPV) -13468

Internal Rate of Return (IRR) 6,99%

b)BAK Corp should buy MACHINE A

Explanation:

We use excel or a spreadsheet to calculate net present value and the profitability index of each machine. See document attached.

We use a cash flow to solve this problem.

At moment 0 we have the investment cost , in this case Original cost $76,700 $183,000 for Machine A and Machine B . From period 1 to period 8, we have inflows and outflow. (Estimated annual cash inflows $20,200 $40,500  

Estimated annual cash outflows $5,040 $9,870).

Then, we calculate the Net cash flow that is the difference between benefits and cost.

We use all the result (positive and negative) in Net cash flow to get the profitability index, IRR.  

Download xlsx
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Taxes on the purchase of specific items such as gasoline, cigarettes, or alcoholic beverages are called _____ taxes.
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2 years ago
Usually, price elasticities of supply areA) positive, because higher prices yield larger quantities supplied.B) considered short
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A) Positive, because higher prices yield larger quantities supplied.

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The correct answer to the question is A) Positive, because higher prices yield larger quantities supplied. The price elasticity of supply determines the change in price as a response to the change in supply of the good or service supplied. This is usually calculated in a figure that determines that if price increases what will be the impact on its supply, which usually is a positive figure.

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Zoom In, Inc. is engaged in the business of coding, with an emphasis on Internet marketing, business apps, and intra-corporate n
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8 0
3 years ago
north company budgets overhead costs for the next year of $5,240,000 for indirect labor and $550,000 for factory utilities. the
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The company's plantwide overhead rate is calculated to be $38.60 per machine hour.

The company's plantwide overhead rate can be calculated by dividing the sum of overhead costs of indirect labor and factory utilities by the total machine hours planned for the next year. As the overhead cost of indirect labor is $5,240,000 and the overhead cost of factory utilities is $550,000; the plantwide overhead rate can be calculated as follows;

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Therefore, the plantwide overhead rate is calculated to be $38.60 per machine hour.

To learn more about overhead rate, click here:

brainly.com/question/24130597

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8 0
1 year ago
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