A manufacturer of off-road vehicles is considering the purchase of dual axis inclinometers for installation in a new line of tractors. The distributor of the inclinometers is temporary overstocked and is offering them at a 40% discount from the regular cost of Php 3 400. If the purchase gets them now instead of 2 years from now, which is when they will be needed, what is the present worth of the savings per unit? The company would pay the regular price, if the purchased in 2 years. Assume the interest rate is 10% per year. a. Php 940 b. Php 770 c. Php 880 d. Php 820
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A manufacturer of off-road vehicles is considering the purchase of dual axis inclinometers for installation in a new line of tractors. The distributor of the inclinometers is temporary overstocked and is offering them at a 40% discount from the regular cost of Php 3 400. If the purchase gets them now instead of 2 years from now, which is when they will be needed, what is the present worth of the savings per unit? The company would pay the regular price, if the purchased in 2 years. Assume the interest rate is 10% per year.
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- The Fine Clothing Factory wants to replace an old machine with a new one. The old machine can be sold to a small factory for R10 000. The new machine would increase annual revenue by R150 000 and annual operating expenses by R60 000. The new machine would cost R360 000. The estimated useful life of the machine is 12 years with zero salvage value. Using Average rate of return (ARR), Should Fine Clothing Factory purchase the machine if management desired rate of return of 15% on all capital investments? Show all the calculations and motivate your answer.Fatima Fertilizer is thinking of replacing its existing machinery and two options are available. The German model is available but only on lease basis. The lease payments of this model are expected to be Rs. 80,000/- per year for 5 years and due at the beginning of each year. The model is expected to result in a before tax saving of Rs. 29,000/- per year due to electricity savings. The alternate model, which is more energy efficient will cost Rs. 365,000/- and will result in a before tax saving of Rs. 32,000/- per year. The purchased machine is depreciated at straight line method, and If purchased, the machine will be financed through HBL at 10%. The tax bracket for Fatima Fertilizer is 34%. The salvage value of both the machines will be 0 after five years. Should Fatima Fertilizer lease the German model or purchase the energy efficient machinery?A company is trying to decide whether to buy a new delivery truck to replace their old one. The old truck originally cost $32,000. The new truck will cost $45,000. If they buy the new truck, they will sell the old truck to a used truck dealer for $4,000. Based on the information given, what is the immediate total incremental cost or benefit of buying the new truck? (Indicate a net benefit as a positive number and a net cost as a negative number.)
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