A small town is considering two potential alternatives for a garbage collection system. The following cost data has been compiled. If the interest rate is 7%, Using the conventional B/C ratio, what is the ratio and which alternative should be chosen? Salvage value is considered an offset to the original cost. System A System B Year 0, first cost 350,000 250,000 Annual savings 32,000 22,000 Salvage value 50,000 40,000 Llfe 30 30
Q: Alexander Industries is considering purchasing an insurance policy for its new officebuilding in St.…
A: Given information is: Alexander Industries is considering purchasing an insurance policy for its new…
Q: calculate the net present value for each of the dump trucka. which truck should your company…
A: When the present worth mechanism is used to compare some mutually exclusive alternatives that…
Q: A large city in the midwest needs to acquire a street-cleaning machine to keep its roads looking…
A: There are two alternatives available- one is the used system and other is the new system. Present…
Q: A grocery distribution center is considering whether to invest in RFID or bar code technology to…
A: Incremental IRR is the rate of return which is calculated to find a better alternative in the case…
Q: A restaurant owner is trying to decide between two different garbage disposals. A regular steel (RS)…
A: Regular Steel Initial Cost = 3500 N = 4 years Maintenance Cost at end of second year = 100…
Q: A public utility is considering the following 3 mutually exclusive alternatives to supplying water…
A: Incremental cost benefit ratio is one of the project evaluation techniques which is used to compare…
Q: nalysis for these two options purchase of a garbage collection vehicle that needs a two-person crew.…
A: NPV is difference between present value of benefits and cost.
Q: The oity council of Morristown is considering the purchase of one new fre tuck. The options are…
A: In order to select a mutually exclusive project, we are required to select the credibility of the…
Q: Central Laundry and Cleaners is considering replacing an existing piece of machinery with a more…
A: The question is based on the concept of replacement decision, the old machine can be replaced to get…
Q: calculate the following a. future worth of the project Choices: $ - 63,250 $ - 64,250 $ - 65,250…
A: NOTE :- since , your question consists of multiple sub parts , the first three parts has been…
Q: A manufacturing company is attempting to determine the best-sized milling machine for their…
A: Correct answer is option (c) II.
Q: What is the financial break-even level for this project in units?
A: Financial break-even point is the level of earnings before interest and taxes that will result in…
Q: BURKAY casting factory wants to buy a furnace to meet their increasing production demands. As a…
A: Future Value: The Future value is calculated using the cost of capital or interest rate prevailing…
Q: The cost of grading and spreading gravel on a short rural road is expected to be $300,000. The road…
A: Benefit cost analysis is calculated by dividing the discounted benefits by the discounted costs.…
Q: decide which truck they should purchase.
A: Present value is the value of future cash flows today, discounted at the rate of interest.
Q: A cooperative has voted to purchase a box truck to move produce to their distribution center. The…
A: Present value computes the existing value of future benefits by discounting future worth with a…
Q: KARABUK casting factory wants to buy a furnace to meet their increasing production demands. As a…
A: Future Value = Present Value * ( 1 + Capital Cost )economic life
Q: Cullumber's Auto Care is considering the purchase of a new tow truck. The garage doesn't currently…
A: Net Present Value (NPV) Net present value is a concept used in capital budgeting to determine the…
Q: An auto repair company needs a new machine that will check for defective sensors. The machine has an…
A: Net Operating Income = $120,000 - $50,000 Net Operating Income = $70,000
Q: McClain, Edwards, Shiver, and Smith (MESS) LLC is considering the purchase of new automated cleaning…
A: Calculation of Present value of Mess away: Year 0 First Cost…
Q: Option A requires the purchase of a garbage collection vehicle that needs a two-person crew. The…
A: Net present value of a project is the present value of benefits less present value of cost. Present…
Q: A local sanitation authority needs to purchase a new garbage truck. The authority has two truck…
A: Net present value (NPV) is the difference between present value(PV) of all cash inflows/benefits and…
Q: The production department of Y Company is planning to purchase a new machine to improve product…
A: Decision-making process: Decision making can be defined as the process of making choices through the…
Q: The city council of Morristown is considering the purchase of one new fire truck. The options are…
A: B-C ratio or benefits to cost ratio is a representation of the relationship between the costs and…
Q: Home work: The city council of arson, Michigan is debating whether to buy a new fire truck to…
A: Formula used for computing B/C ratio:
Q: A local sanitation authority needs to purchase a new garbage truck. The authority has two truck…
A: Time interval plays a big role in determining the inflows and outflows of an investment ,therefore…
Q: The Parkview Hospital is considering the purchase of a new autoclave. This equipment will cost…
A: Book Value: It refers the value of one share based on the total amount of common stockholders’…
Q: A city is spending $20.3 million on a new sewage system. the expected life of the system is 50…
A: We can calculate the capitalized cost by using the data provided in the question. We can see that…
Q: urchase Price $90,000 $60,000 Annual Operation and Maintenance 1 $10,000 $20,000 2 $10,000…
A: solution 1)Calculate the present values of total costs for Model A Truck and Model B Truck,…
Q: The Road agency is planning to build a new bridge and is considering two distinct configurations.…
A: solution given Life of projects 7 years Rate of return expected 9% Calculation of…
Q: You have two machines under consideration for an improved automated wrapping process for Snickers…
A: (a) Using an AW analysis, determine whichshould be selected at i = 15% per year.
Q: Use Annual Worth method to calculate the benefit/cost ratio at i = 6% for a new library. The first…
A: Annual worth: It is the annual value of those cash flows that are expected to happen in the future.
Q: 1. A local restaurant is considering one of two pizza delivery truck (Truck A and Truck B) to…
A: i=interest rate n= number of years
Q: A small company that manufactures vibration isolation platforms is trying to decide whether it…
A: The question is based on the concept of replacement analysis to determine Existing system D can be…
Q: A large city in the midwest needs to acquire a street-cleanıng machine to keep its roads looking…
A: Breakeven point (BEP) is the term that is used in the different business areas of the finance as…
Q: A certain factory building has an old lightingsystem. Lighting the building currently costs, on…
A: 1) Given: Present value = $50,000 Interest rate = 0.12 Number of terms = 20 Savings realized =…
Q: A small utility company is considering the purchase of a powerdriven post hole digger. The equipment…
A: A break-even point is that level of production volume at which the business earns zero profit. It is…
Q: A large city in the mid-West needs to acquire a street-cleaning machine to keep its roads looking…
A: There are two alternatives available First the used system and another is the new system Present…
Q: You are considering developing 2 buildings (32 units each) on a 4-Acre lot (2-Acre waterfront,…
A:
Q: A large city in the mid-West needs to acquire a street-cleaning machine to keep its roads looking…
A: There are two alternatives available First the used system and other is the new system Present…
Q: The LJB Company must replace a freezer and is trying to decide betweenthe following two…
A: Here, To Find: Lowest total cost =?
Q: ent power failure of Ceramics Plant, a disbursement a day would be $3,500. To avoid future power…
A: NPV= Present value of cash inflows - Present value of cashoutflows, if results are positive then it…
Q: Kingsville plans to buy a street-cleaning machine. A used cleaning vehicle will cost $80,000 and…
A: The Break-even point: The break-even point gives the sales value or the quantum of units that need…
Q: A consulting engineer is considering two methods for lining landfill for municipal solid waste…
A: Breakeven is point where cost of two methods will be equal. Various factors are consider like time…
Q: A client is considering replacing his heating system in an office building. Two systems are being…
A: As per cost in use study method find economical option by using discount rate so we can calculate…
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
- An auto repair company needs a new machine that will check for defective sensors. The machine has an Initial investment of $224,000. Incremental revenues, including cost savings, are $120,000, and Incremental expenses, including depreciation, are $50,000. There is no salvage value. What is the accounting rate of return (ARR)?A firm is trying to decide which of two machines to purchase as described in in the table below. Using the interest rate 9% or 0.09, use present worth analysis to determine which machine, if either, should be purchased. Show all your work. Machine: A - B First Cost: $800 - $600 Annual Net Benefit: $130 - $230 Salvage Value: $40 - $20 Usefil Life (years): 9 - 31. The manager in a canned food processing plant is trying to decide between two labeling machines. Assume an interest rate of 6%. Use annual cash flow analysis to determine which machine should be chosen. First cost Maintenance and operating costs Annual benefit Salvage value Useful life, in years Machine A $15,000 1,600 8,000 3,000 6 Machine B $25,000 400 13,000 6,000 10
- 4. Use AW method to calculate the benefit/cost ratio at i = 6% for a new library. The first cost is $500K, and O&M costs are $100K per year. There is no salvage value after 30 years. Community benefits are estimated to be $130K per year. Is the library economically justified? Write a brief interpretation of your answer.A local waste management company needs to purchase a new garbage truck. The company has two truck models under consideration. The purchase price for Model A is $90, 000. The maintenance and operation costs are $10,000/year. Model B is less expensive to acquire ($60,000 at purchase), but costs more on operation and maintenance. Details of the costs are shown in the table below. Interest rate is 4%. Please help this company to decide which truck they should purchase. Year Model A Truck Model B Truck Purchase Price (beginning of year) $90,000 $60,000 Annual Operation and Maintenance (end of year) 1 $10,000 $20,000 2 $10,000 $20,000 3 $10,000 $20,000 4 $10,000 $20,000 Calculate the present values of total costs for Model A Truck and Model B Truck, respectively. (Interest rate: 4%) *Results round to the nearest 2 decimal places. (Note: you may consider using an Excel…Oriole 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 here. Original cost Estimated life Salvage value Estimated annual cash inflows Estimated annual cash outflows Click here to view PV table. Net present value Profitability index Machine A Which machine should be purchased? Machine A $76,700 8 years $20,100 $4,910 Machine A 0 Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round answer for present value to O decimal places, e.g. 125 and profitability index to 2 decimal places, e.g. 10.50. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) 0 should be purchased. 6478 Machine B 1.08 $188,000 8 years 0…
- As an engineer, you have been asked to recommend a new cooling system for a large warehouse. You have narrowed it down to three different systems with the associated costs shown below If the minimum attractive rate of return in 10%, which system would you recommend. Cooling system A В C $250,000 $75,000 $300,000 $60,000 $36,000 $375,000 $80,000 $45,000 9 years Installation costs Annual operating costs Salvage value Lifespan None 5 years 7 yearsPlease write the CBA analysis for these two options Option A requires the purchase of a garbage collection vehicle that needs a two-person crew. The vehicle will cost $60,000 and each worker will be paid $20,000 a year. The city would pick up 400 tons of garbage annually, and for each ton of garbage collected, it would charge a $400 fee. The city would have annual revenue of $160,000 (400 × $400) from this operation. +Please fill in the correct answer in each blank provided below. Project A. NPV Present value of Benefits Present value of CostsA local sanitation authority needs to purchase a new garbage truck. The authority has two truck models under consideration. The purchase price for Model A is $90, 000. The maintenance and operation costs are $10,000/year. Model B is less expensive to acquire ($60,000 at purchase), but costs more on operation and maintenance. Details of the costs are shown in the table below. Interest rate is 3%. Please help this authority to decide which truck they should purchase. Year Model A Truck Model B Truck Purchase Price $90,000 $60,000 Annual Operation and Maintenance 1 $10,000 $20,000 2 $10,000 $20,000 3 $10,000 $20,000 4 $10,000 $20,000 Calculate the present values of total costs for Model A Truck and Model B Truck, respectively. (Interest rate: 3%) (1’) *Results round to the nearest 2 decimal places. (Note: you may consider using an Excel worksheet to do the calculation). Present value of Model A Truck…
- Use the following alternatives to develop an incremental analysis choice table and answer the following questions. Alternative A Initial Cost - $15,000 Annual Revenue (Year 1-15) - $2500 Salvage Benefit (Year 15) - $2000 Alternative B Initial Cost - $25,000 Annual Revenue (Year 1-15) - $3500 Salvage Benefit (Year 15) - $5000 1. Determine the incremental rate of return IRRHigh-Low. Provide your answer as a percentage and round to the nearest hundredth. 2. Determine the internal rate of return for the higher cost alternative IRRHigh. Provide your answer as a percentage and round to the nearest hundredth. 3. Determine the internal rate of return for the lower cost alternative IRRLow. Provide your answer as a percentage and round to the nearest hundredth. Please answer all 3.A local sanitation authority needs to purchase a new garbage truck. The authority has two truck models under consideration. The purchase price for Model A is $90, 000. The maintenance and operation costs are $10,000/year. Model B is less expensive to acquire ($60,000 at purchase), but costs more on operation and maintenance. Details of the costs are shown in the table below. Interest rate is 4%. Please help this authority to decide which truck they should purchase. Year Model A Truck Model B Truck Purchase Price (beginning of year) $90,000 $60,000 Annual Operation and Maintenance (end of year) 1 $10,000 $20,000 2 $10,000 $20,000 3 $10,000 $20,000 4 $10,000 $20,000 Calculate the present values of total costs for Model A Truck and Model B Truck, respectively. (Interest rate: 4%) (2’) Present value of Model A Truck total costs: Present value of Model B Truck total costs: Which truck model should this authority choose? Why? (1’)A local sanitation authority needs to purchase a new garbage truck. The authority has two truck models under consideration. The purchase price for Model A is $90, 000. The maintenance and operation costs are $10,000/year. Model B is less expensive to acquire ($60,000 at purchase), but costs more on operation and maintenance. Details of the costs are shown in the table below. Interest rate is 4%. Please help this authority to decide which truck they should purchase. Year Model A Truck Model B Truck Purchase Price (beginning of year) $90,000 $60,000 Annual Operation and Maintenance (end of year) 1 $10,000 $20,000 2 $10,000 $20,000 3 $10,000 $20,000 4 $10,000 $20,000 The authority charges garbage collection fees from local residents. The estimated fee collection is $38,000 per year. Compare the present value of total costs of the truck model you choose and the present value of total revenues. Calculate the present value of total…