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3 years ago

The following costs and useful life data are associated with two new machines being considered at Arun Tech Inc.

Business

2 answers:

Sidana [21]3 years ago

6 0

Answer:

Machine B has a higher NPV therefore should be produced

Explanation:

The machine with the higher Net Present Value (NPV) should be produced .

NPV of Machine A

PV of cash flow

PV of annual profit = A × (1- (1+r)^*(-n)/r

A- 92,000, n- 11, r- 12%

PV = 92,000 × (1- (1.12^(-11)/0.12 = 546268.32

PV of salvage value = 13,000× 1.12^(-11)= 3737.189

NPV = 546268.320 + 3737.189 -250,000 = $300,005.50

NPV of Machine B

A- 103,00, n- 19, r- 12%

PV = 103,000 × (1- (1.12^(-19)/0.12= 758675.0165

Pv of salvage value = 26000× 1.12^(-19)= 3018.776199

NPV =758675.0165 + 3018.77 -460,000 = $301,693.79

Machine B has a higher NPV , therefore should be produced.

xenn [34]3 years ago

6 0

Answer:

While Machine B has an slightly higher net present value his annual worth is much lower than machine A therefore, the company should purchase machine A which yield better annual return

Machine A

Net Present Value: 300,005.00

Anual worth $ 50,525.463

Machine B

Net Present Value: 301.693,8‬

Anual worth $ 40,958.857

Explanation:

We calculate the present value of each machine

and also, the annual worth of each one to get a fair comparison considering their useful life differ

Machine A

$C \times \frac{1-(1+r)^{-time} }{rate} = PV\\$

C 92,000.00

time 11

rate 0.12

$92000 \times \frac{1-(1+0.12)^{-11} }{0.12} = PV\\$

PV $546,268.3202

$\frac{Maturity}{(1 + rate)^{time} } = PV$

Maturity $13,000.00

time 11.00

rate 0.12000

$\frac{13000}{(1 + 0.12)^{11} } = PV$

PV 3,737.1894

Net Present Value:

$546,268.32 + $3,737.19 - $250,000 = 300.005,51‬

Annual worth:

$PV \div \frac{1-(1+r)^{-time} }{rate} = C\\$

PV 300,005.00

time 11

rate 0.12

$300005 \div \frac{1-(1+0.12)^{-11} }{0.12} = C\\$

C $ 50,525.463

Machine B

$C \times \frac{1-(1+r)^{-time} }{rate} = PV\\$

C 103,000.00

time 19

rate 0.12

$103000 \times \frac{1-(1+0.12)^{-19} }{0.12} = PV\\$

PV $758,675.0165

$\frac{Maturity}{(1 + rate)^{time} } = PV$

Maturity $26,000.00

time 19.00

rate 0.12000

$\frac{26000}{(1 + 0.12)^{19} } = PV$

PV 3,018.7762

Net present value

$758,675.02 + $3,018.78 - 460,000 = 301.693,8‬

Annual worth

$PV \div \frac{1-(1+r)^{-time} }{rate} = C\\$

PV 301,693.80

time 19

rate 0.12

$301693.8 \div \frac{1-(1+0.12)^{-19} }{0.12} = C\\$

C $ 40,958.857

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Arturiano [62]

Answer:

The total cost recovery for 2017 is $38,838.75 and The total recovery cost for 2018 is $6457.031

Explanation:

for 2017:

additional first year depreciation = $75,000*50%

= $37,500

using 7-year MACRS mid quater converntion, the depreciation % for quater 4 is 3.57%

additional MACRS cost recovery = ($75,000 - $37,500)*3.57%

= $1338.75

total cost recovery for 2017 = $37,500 + $1338.75

= $38,838.75

for 2018, additional first year depreciation is $37,500

using 7-year MACRS mid quarter convention for next year, the depreciation % fpr quarter 4 is 27.55%

the machine sold in september , so it was used for two full quarters and half third quater

the recovery is computed for 2.5 over 4 quarters of a year

additional MARSC cost recovery = $37,500*27.55%*(2.5/4)

= $6457.031

total recovery cost for 2018 is $6457.031

Therefore, The total cost recovery for 2017 is $38,838.75 and The total recovery cost for 2018 is $6457.031

7 0

3 years ago

Anthony and Michelle Constantino just got married and received $29,000 in cash gifts for their wedding. How much will they have

bearhunter [10]

Answer:

Future value will be larger with smaller compounding period; $373.4 more would be earned with shorter compounding period.

Explanation:

Given:

Amount to be invested = 29,000÷2 = $14,500

Duration if amount invested = 25 years

Rate = 4% or 0.04 compounded annually

Value of investment at the end of 25 years = $14,500\times(1+0.04)^{25}$

= $38,654.63

Future value if compounded annually is $38,654.63

Future value if semi-compounded annually:

Duration = 25×2 = 50 periods

Rate = 0.04÷2 = 0.02

Value of investment at the end of = $14,500\times(1+0.02)^{50}$

= $39,028.03

Future value if semi-compounded annually is $39,028.03

As such, future value is larger if compounding period was 6 months.

They would have earned $373.40 more that is (39,028.03 - 38,654.63), with shorter period.

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4 years ago

The comparative balance sheets for Lowery Company show these changes in noncash current asset accounts: accounts receivable decr

alukav5142 [94]

Answer:

$198,000

Explanation:

The computation of the net cash provided by operating activities by using the indirect method is presented below:

Cash flow from operating activities

Net income $186,000

Add: Decrease in account receivable $80,000

Less: Increase in prepaid expense -$28,000

Less: Increase in inventories -$40,000

Net cash provided by operating activities $198,000

3 0

3 years ago

To ________, a marketer would most likely ask target audience members whether they remember the message, how many times they saw

pentagon [3]

Answer:

The correct answer is the option B: collect feedback.

Explanation:

First of all, the term feedback refers to the amount of information that the marketer receives from the target audience in order to understand if the decisions made were good or if they were bad then understand in what they made a mistake and correct it.

Secondly, it is understandable that in order to do that the marketer needs to ask the target audience questions that might give important information such as the frecuency that they saw the message, also if they remember the message and what points of it they can remember.

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3 years ago

5) Scanlin, Inc. is considering a project that will result in initial aftertax cash savings of $2.1 million at the end of the fi

rewona [7]

Answer:

The PV of future cash flow is $22,925,764, therefore the company should take on the project

Explanation:

In order to know if the company should take on the project we have to calculate the PV of future cash flow as follows:

PV of future cash flow= D1

RE-g

To calculate this formula we requre to calculate the WACC and the discount rate as follows:

WACC=(1.00/1.80×0.11)+0+(0.80/1.80×0.046)

WACC=0.0611+0+0.02044

WACC=0.081556

WACC=8.16%

After having calculated the WACC we can calculate the project discount rate as follows:

project discount rate=WACC + Additional risk factor

=8.16%+3%

=11.16%

Therefore, PV of future cash flow= $2,100,000

0.1116-0.02

PV of future cash flow= $2,100,000

0.0916

PV of future cash flow=$22,925,764

The PV of future cash flow is $22,925,764, therefore the company should take on the project

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3 years ago