A firm has two alternatives for the improvement of its current production system. The data are as follows: Machine A First Cost - P6M Annual operating cost - P250T Service life - 4 years Salvage value - P150T Salvage value - P142107 Using the Present Value (PV) Method and with the firm's interest rate of 23% cpd. annually, what the PV o Machine B First cost-P8968578 Annual operating cost - P294445 Service life - 6 years
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- Two alternative machines will produce the same product, but one is capable of higher-quality work, which can be expected to return greater revenue. The following are relevant data. Determine which is the better alternative, assuming repeatability and using SL depreciation, an income-tax rate of 27%, and an after-tax MARR of 11%. Capital investment Life Calculate the AW value for the Machine A. Machine A $23,000 12 years $4,000 Terminal BV (and MV) Annual receipts Annual expenses Click the icon to view the interest and annuity table for discrete compounding when the MARR is 11%er year. AWA (11%) = $ (Round to the nearest dollar.) Machine B $33,000 6 years $1,500 $197,000 $176,000 $152,000 $130,000S A firm is considering three mutually exclusive alternatives as part of a production improvement program. The alternatives are as follows 28 B Installed cost S8.000 S12,000 S16.000 Uniform annual benefit 1,600 1,750 2.050 Useful life, in years 10 20 20 For each alternative, the salvage válue at the end of useful life is zero. At the end of 10 years, Alt. A could be replaced by another A with identical cost and benefits. (a) Construct a choice table for interest rates from 0 to 100 (b) The MARR is 12. If the analysis period is 20 years, which alternative should be selected?A firm is considering three mutually exclusive alternatives as part of a production improvement program . The alternatives are : Alternative A ( i = 12 % ) B ( i = 10 % ) C ( i = 15 % ) Installation Cost ( U ) 200,000 270,000 190,000 Uniform Annual 30,750 40,500 30,250 Benefit ( U ) Useful life in years 12 15 14 Which of the above should be chosen
- A firm is considering three mutually exclusive alternatives as part of a production improvement program. The alternatives are as follows: A B C Installed cost $8,000 $12,000 $16,000 Uniform annual benefit 1,600 1,750 2,050 Useful life, in years 10 20 20 For each alternative, the salvage value at the end of useful life is zero. At the end of 10 years, Alt. A could be replaced by another A with identical cost and benefits. (a)Construct a choice table for interest rates from 0% to 100%. (b)The MARR is 12%. If the analysis period is 20 years, which alternative should be selected?Two altemnative machines will produce the same product, but one is capable of higher-quality work, which can be expected to return greater revenue. The following are relevant data. Determine which is the better alternative, assuming repeatability and using SL depreciation, an income-tax rate of 25%, and an after-tax MARR of 10%. Capital investment Life Machine A $20,000 12 years $3,500 Calculate the AW value for the Machine A. AWA (10%) = $(Round to the nearest dollar.) Terminal BV (and MV) Annual receipts Annual expenses Click the icon to view the interest and annuity table for discrete compounding when the MARR is 10% per year. Machine B $34,000 9 years $2,000 $144,000 $142,000 $190,000 $163,000Calculate the profitability of the following proposal using Average rate of return (ARR) methodProposal I Automatic machine Cost OMR 420000Estimated life 6.5 yearsEstimated sales P.A OMR 175000Cost : Material OMR 60000Labour OMR 22000Variable overheads OMR 14000 a. 16.53% b. All the options are wrong c. 3.42% d. 4.62%
- Calculate the profitability of the following proposal using Average rate of return (ARR) method Proposal I Automatic machine Cost OMR 320000 Estimated life 6.5 years Estimated sales P.A160000 Cost : Material OMR 60000 Labour OMR 22000 Variable overheads OMR 14000 O a. All the options are wrong Оь. 16.53% О С.3.42% O d. 4.62%2) Using benefit-cost ratio analysis, determine which one of the three mutually exclusive alternatives should be selected. Each alternative has a six-year useful life. Assume a 10% MARR. a. Convert cost and salvage to an equivalent series. (Hint: use both to calculate EUAC) b. Determine B/C for each device C. Perform incremental B/C ratio analysis for: i. Device A- Device B ii. Device B-Device C Device A Device B Device C $ 560 $ 140 $ 40 First Cost $ 340 $ 100 $ 0 $ 120 $ 40 Uniform Annual Benefit Salvage ValueCalculate the profitability of the following proposal using Average rate return (ARR) methodProposal IAutomatic machine Cost OMR 320000Estimated life4.5 yearsEstimated sales P.A 220000Cost : Material OMR 60000 Labour OMR 22000 Variable overheads OMR14000 a.16.53% b.3.19% c.4.62% d.All the options are wrong
- Problem 4 (Target Costing, Strategy) Benchmark Industries manufactures large workbenches for industrial use. Wally Garcia, the vice president for marketing at Benchmark, has concluded from his market analysis that sales are dwindling for Benchmark's standard table because of aggressive pricing by competitors. Benchmark's table sells for P875 whereas the competition's comparable table is selling in the P80Q range. Garcia has determined that dropping price to P800 is necessary to regain the firm's annual market share of 10,000 tables. Cost data based on sales of 10,000 tables are: Budgeted Amount 400,000 sq. ft. 85,000 hrs. 30,000 hrs 320,000 hrs. Actual Amount Actual Cost 425,000 sq. ft. 100,000 hrs. 30,000 hrs. 320,000 hrs. Direct materials P2,700,000 1,000,000 300,000 4,000,000 Direct labor Machine setups Mechanical assemblyTwo production equipment purchase opportunities under consideration have positive net present values. Investment in machine A produces a net present value amount 0f $40,000 while B’s is only $30,000. Does this mean that A is the better purchase opportunity? Explain.P1: Compute payback period and describe its use.. FasTrac is considering buying a new machine: Cost.. $16,000 Useful life.. 8 years Salvage value. $ 0 Expected production.. 30,000 units Product selling price per unit.. $ 30 Calculate the payback period.