ABC Inc. is considering the purchase of a street paver machine for $225,000. The expected life...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
"ABC Inc. is considering the purchase of a street paver machine for $225,000. The expected life of the machine will be three years, and it will have a salvage value of $25,000. Annual maintenance costs will total $7,500. Annual savings are predicted to be $92,500. The company's required rate of return is 8%. Ignoring the TVM, calculate the net cash inflow or outflow resulting from this investment opportunity. Be sure to prepare a schedule that clearly depicts the time frame of the cash flows. Factors: Present Value of $1 (r=8%) Year 0 Year 1 Year 2 Year 3 1.0000 0.9259 0.8573 0.7938 1) Using the Present Value Factors for $1 at 8% noted above (table provided for reference), calculate the net present value of this investment (ignoring taxes) 2) Based on your answer in requirement 1: should ABC Inc purchase the street paver machine? Present Value of 1 Table 5% 6% 10% 12% 1 0.9901 0.9804 0.9709 0.9615 0.9524 0.9434 0.9259 0.9091 0.8929 2 0.9803 0.9612 0.9426 0.9246 0.9070 0.8900 0.8573 0.8265 0.7972 3 0.9706 0.9423 0.9151 0.8890 0.8638 0.8396 0.7938 0.7513 0.7118 4 0.9610 0.9239 0.8885 0.8548 0.8227 0.7921 0.7350 0.6830 0.6355 5 0.9515 0.9057 0.8626 0.8219 0.7835 0.7473 0.6806 0.6209 0.5674 6 0.9421 0.8880 0.8375 0.7903 0.7462 0.7050 0.6302 0.5645 0.5066 7 0.9327 0.8706 0.8131 0.7599 0.7107 0.6651 0.5835 0.5132 0.4524 8 0.9235 0.8535 0.7894 0.7307 0.6768 0.6274 0.5403 0.4665 0.4039 6 0.9143 0.8368 0.7664 0.7026 0.6446 0.5919 0.5003 0.4241 0.3606 10 0.9053 0.8204 0.7441 0.6756 0.6139 0.5584 0.4632 0.3855 0.3220 "ABC Inc. is considering the purchase of a street paver machine for $225,000. The expected life of the machine will be three years, and it will have a salvage value of $25,000. Annual maintenance costs will total $7,500. Annual savings are predicted to be $92,500. The company's required rate of return is 8%. Ignoring the TVM, calculate the net cash inflow or outflow resulting from this investment opportunity. Be sure to prepare a schedule that clearly depicts the time frame of the cash flows. Factors: Present Value of $1 (r=8%) Year 0 Year 1 Year 2 Year 3 1.0000 0.9259 0.8573 0.7938 1) Using the Present Value Factors for $1 at 8% noted above (table provided for reference), calculate the net present value of this investment (ignoring taxes) 2) Based on your answer in requirement 1: should ABC Inc purchase the street paver machine? Present Value of 1 Table 5% 6% 10% 12% 1 0.9901 0.9804 0.9709 0.9615 0.9524 0.9434 0.9259 0.9091 0.8929 2 0.9803 0.9612 0.9426 0.9246 0.9070 0.8900 0.8573 0.8265 0.7972 3 0.9706 0.9423 0.9151 0.8890 0.8638 0.8396 0.7938 0.7513 0.7118 4 0.9610 0.9239 0.8885 0.8548 0.8227 0.7921 0.7350 0.6830 0.6355 5 0.9515 0.9057 0.8626 0.8219 0.7835 0.7473 0.6806 0.6209 0.5674 6 0.9421 0.8880 0.8375 0.7903 0.7462 0.7050 0.6302 0.5645 0.5066 7 0.9327 0.8706 0.8131 0.7599 0.7107 0.6651 0.5835 0.5132 0.4524 8 0.9235 0.8535 0.7894 0.7307 0.6768 0.6274 0.5403 0.4665 0.4039 6 0.9143 0.8368 0.7664 0.7026 0.6446 0.5919 0.5003 0.4241 0.3606 10 0.9053 0.8204 0.7441 0.6756 0.6139 0.5584 0.4632 0.3855 0.3220
Expert Answer:
Related Book For
Posted Date:
Students also viewed these finance questions
-
The amount of caffeine in a sample of five-ounce servings of brewed coffee is shown in the histogram. Make a frequency distribution for the data. Then use the table to estimate the sample mean and...
-
Education inequality answer the following Does education help remove the inequities of disadvantaged children as they grow up? What is the evidence? 2. How does quality early education pay extremely...
-
Use the table below to answer questions a - e regarding passengers on Titanic. Titanic: Fate by Class Count Fate Total Died Survived Class 1st 123 200 323 2nd 158 119 277 3rd 528 181 709 Total 809...
-
The following data has been extracted from last quarter's budget of Elise Ltd, which manufactures and sells a single product. January February March Production units 6200 6200 5800 Sales units 5900...
-
Using the information from 2-16, create a cash flow statement for 2013. In 2-16 Bristle Brush-Off Corporation: Income Statements for Years Ended December 31 ($000s) 2013 2012 $7,950 5,100 350 750...
-
For the mortgage listed second in Table 3.1 what are the total fees? TABLE 3.1 MORTGAGE BROKER ADVERTISEMENT Rate Pts Term Max amt APRI 7.625 1.00 30 yr $203,150 7.883 7.875 .50 30 yr $203,150 8.083...
-
Humans collectively exhale approximately \(6.4235 \times 10^{12}\) pounds of carbon dioxide per year. There are approximately \(7.647 \times 10^{9}\) humans currently living on Earth. How many pounds...
-
Springsteen Co. had the following activity in its most recent year of operations. (a) Pension expense exceeds amount funded. (b) Redemption of bonds payable. (c) Sale of building at book value. (d)...
-
Miller Toy Company manufactures a plastic swimming pool at itsWestwood Plant. The plant has been experiencing problems as shownby its June contribution format income statement below:Flexible Bu 2...
-
Lucas custom blinds, a manufacturer of custom window treatments, has a contract to make, deliver, and install window coverings for three commercial buildings, which will occur over a period of six...
-
D Question 15 Bandy Corporation owns a machine that manufactures lawn games. Production time for the croquet set is 3 hour and for the volley ball game is 5 hours per unit. The machine's capacity is...
-
Art-labeling Activity: Levels of Organization Arrange the items from the lowest to the highest level of organization. 1- Chemical or molecular level, 2- organ level, 3-cellular evel, 4- tissue level,...
-
12. P Company regularly sells merchandise to its 80%-owned subsidiary, S Corporation. In 2024, P sold merchandise that cost $240,000 to S for $300,000. Half of this merchandise remained in S's...
-
Haminder has just been hired at a new job and is planning to pay off his credit card debt of $20,000. He plans to make equal monthly payments for 48 months, starting next month. His bank has quoted...
-
Chevelle, Inc., has sales of , costs of , depreciation expense of , and interest expense of . If the tax rate is 21 percent, what is the operating cash flow, or OCF? Sales 39,500 Costs 18,400...
-
Syntec Company uses a job-order costing system and applies overhead based on direct labor dollars. Job M45 was started in March and incurred $1,950 in direct material cost, $1,780 in direct labor...
-
The recommended dosage for Albuterol is 0.3 mg/kg/day to be given P.O (by mouth) to a child weighing 47 lbs. Available: 2mg/5ml. How much of the solution is needed for the whole day?
-
Find the volume of the described solid S. A frustum of a right circular cone with height h, lower base radius R, and top radius r -r- --R
-
On November 15, 2016, a U.S. company takes delivery of merchandise costing C\($1,000,000\) from a Canadian supplier and records an account payable. On the same date, the company enters a forward...
-
On April 10, 2016, when the spot rate is \($1.30/,\) a U.S. company sells merchandise to a customer in Italy. The spot rate is \($1.31/\) on June 30, the companys year-end. Payment of 100,000 is...
-
Use the information from question 3. What is the net exchange gain or loss for 2017? Use the following forward and spot prices for Canadian dollars (C\($)\) to answer this question. The prices are in...
Study smarter with the SolutionInn App