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
leva [86]
3 years ago
14

A manufacturer of printed circuit boards is considering purchasing a new surface mount technology component placement system. Tw

o machines are under consideration and the following information is prepared for the economic evaluation. If the company's after-tax MARR of 12% per year and MACRS with a 7-year recovery period is used, determine which alternative is preferred on the basis of their after-tax annual worth. Assume an effective tax of 35% per year. Machine Q R First costs $380,000 $395,000 Net annual revenue $150,000 in year 1, increasing by $500 per year thereafter $152,500 Market value at the end of the useful life $4000 0 Life, years 8 10
Business
1 answer:
Darina [25.2K]3 years ago
6 0

Answer:

R is a better alternative because it has a higher NPV than Q.

Explanation:

Machines                            Q                                  R

First costs                   $380,000                  $395,000

Net annual revenue $150,000 in year 1,      $152,500

                                  increasing by $500

                                   per year thereafter  

Salvage value               $4,000                             0

Life, years                           8                                 10

MACRS 7 year recovery:

year                    %                         Q                           R

1                      14.29%               54,302                  56,445.50

2                    24.49%               93,062                  96,735.50    

3                     17.49%               66,462                  69,085.50

4                     12.49%               47,462                  49,335.50

5                      8.93%               33,934                   35,273.50

6                      8.92%               33,896                  35,234.00

7                      8.93%               33,934                   35,273.50

8                      4.46%                16,948                    17,617.00

net cash flow

year                                    Q                           R

1                                     116,505.70                   118,880.93

2                                    130,396.70                  132,982.43    

3                                    121,411.70                     123,304.93

4                                    115,086.70                   116,392.43

5                                    110,676.90                    111,470.73

6                                    110,930.10                    111,456.90

7                                    111,326.90                     111,470.73

8                                    108,306.80                 105,290.95

9                                                                            99,125

10                                                                           99,125

Using a financial calculator, I calculated the NPV using a 12% discount rate:

  • Q's NPV = $200,636.15
  • R's NPV = $259,221.01

You might be interested in
Many in the advertising industry are calling for a new way to measure a commercial’s effectiveness, _____________, an accountabi
Vsevolod [243]

ROI is the answer to this question. ROI or Return of Investment is when the capital is now gained back and the business computes the amount of profit during the time the investment was returned. Return of investment is computed by dividing the benefit of investment over the cost of investment. 

6 0
3 years ago
Perfect competition is characterized by all of the following except A. homogeneous products. B. sellers are price takers. C. hea
Likurg_2 [28]

Answer:

c they don't have enough money

3 0
3 years ago
) You are a manager for a large company that sells products and sources materials internationally. A new competitor has entered
bixtya [17]

Explanation:

Companies are entities that can cause potential damage to the environment, by using scarce natural resources and by the way of production, which can release pollutants into the atmosphere, etc.

Organizational sustainability, therefore, means joining the organization's efforts to reduce its negative environmental impacts and protect the location in which the company operates.

A good option for companies that want to implement sustainability in their processes is to look for environmental certifications that provide specific requirements and policies for companies to reduce their impacts and generate continuous improvement, such as the implementation of an Environmental Management System.

Corporate sustainability can mean long - term strategic and competitive advantages such as reducing waste, increasing the company 's value and reliability, attracting investors, satisfying stakeholders, etc.  

3 0
2 years ago
Cheap Money Bank offers your firm a discount interest loan at 8.25% for up to $25 million and, in addition, requires you to main
Leona [35]

Answer:

10.75%

Explanation:

The computation of the effective annual interest rate is shown below:

= Interest  ÷ total net amount available

where,

Total net amount available would be

= Loan amount - Loan amount × interest rate - loan amount × compensating percentage

= $25,000,000 - $25,000,000 × 8.25% - $25,000,000 × 15%

= $25,000,000 - $2062,500 - $3,750,000

= $19,187,500

And, the interest would be $2,062,500

Now put these values to the above formula  

So, the rate would equal to

= $2,062,500 ÷ $19,187,500

= 10.75%

4 0
3 years ago
Kaitlyn demonstrates how her company's new professional stain remover works. this demonstration is part of the ____ step of the
Andrei [34K]
This demonstration is part of the <span> making the presentation 
The purpose of this type of demonstration is to increase the product's appeal towards the target market. Through this, the company could increase the awareness on what their product can do and attract potential sales from the customers.</span>
5 0
3 years ago
Other questions:
  • Which non-verbal facial expression is not recognized worldwide?
    12·2 answers
  • Haver Company currently produces component RX5 for its sole product. The current cost per unit to manufacture the required 50,00
    7·1 answer
  • Professionals in the Broadcasting and Journalism pathway are responsible for which of the following?
    11·2 answers
  • Omar and Penn want to discharge their contract by executing a new agreement with performance different from what they originally
    8·1 answer
  • What have modern entrepreneurs done to ensure longer terms of management?
    10·1 answer
  • "______ involves division of an organization's work and applies motivational theories to jobs to increase satisfaction and perfo
    8·1 answer
  • When a company sponsors motor sports and other​ action-oriented events, it is utilizing the​ ________ mode of communication from
    6·1 answer
  • Need help fast please!!
    12·1 answer
  • [The following information applies to the questions displayed below.]
    9·1 answer
  • An organization looking for general agreement on ethical practices might take what step?
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!