NPV: PI; payback: IRR) Pauls Paving provides custom paving of sidewalks and driveways. One of the most
Question:
NPV: PI; payback: IRR) Paul’s Paving provides custom paving of sidewalks and driveways. One of the most labor-intensive aspects of the paving opera¬ tion is preparing and mixing materials. Learned Hand, corporate engineer, has found new computerized equipment to mix (and monitor the mixing of) materials. According to information received by Hand, the equipment’s cost is $290,000 and has an expected life of eight years. If purchased, the new equipment would replace manually operated equipment. Data relating to the old and new mixing equipment follow:
a. Assume that the company’s cost of capital is 12 percent, which is to be used in discounted cash flow analysis. Compute the net present value and profitability index of investing in the new equipment. Should Paul’s Paving purchase the machine? Why or why not? (Ignore taxes.)
b. Compute the payback period for the investment in the new machine, (Ignore taxes.) C. Rounding to the nearest whole percentage, compute the internal rate of return for the equipment investment. LO.1
Transcribed Image Text:
Original cost Present book value Annual cash operating costs Current market value Market value in 8 years Remaining useful life Old Equipment $28,000 $16,000 $75,000 $6,000 $0 Cost Annual cash operating costs Market value in 8 years Useful life 8 years New Equipment $290,000 $15,000 $0 8 years
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 100% (QA)
Answered By
Ashington Waweru
I am a lecturer, research writer and also a qualified financial analyst and accountant. I am qualified and articulate in many disciplines including English, Accounting, Finance, Quantitative spreadsheet analysis, Economics, and Statistics. I am an expert with sixteen years of experience in online industry-related work. I have a master's in business administration and a bachelor’s degree in education, accounting, and economics options.
I am a writer and proofreading expert with sixteen years of experience in online writing, proofreading, and text editing. I have vast knowledge and experience in writing techniques and styles such as APA, ASA, MLA, Chicago, Turabian, IEEE, and many others.
I am also an online blogger and research writer with sixteen years of writing and proofreading articles and reports. I have written many scripts and articles for blogs, and I also specialize in search engine
I have sixteen years of experience in Excel data entry, Excel data analysis, R-studio quantitative analysis, SPSS quantitative analysis, research writing, and proofreading articles and reports. I will deliver the highest quality online and offline Excel, R, SPSS, and other spreadsheet solutions within your operational deadlines. I have also compiled many original Excel quantitative and text spreadsheets which solve client’s problems in my research writing career.
I have extensive enterprise resource planning accounting, financial modeling, financial reporting, and company analysis: customer relationship management, enterprise resource planning, financial accounting projects, and corporate finance.
I am articulate in psychology, engineering, nursing, counseling, project management, accounting, finance, quantitative spreadsheet analysis, statistical and economic analysis, among many other industry fields and academic disciplines. I work to solve problems and provide accurate and credible solutions and research reports in all industries in the global economy.
I have taught and conducted masters and Ph.D. thesis research for specialists in Quantitative finance, Financial Accounting, Actuarial science, Macroeconomics, Microeconomics, Risk Management, Managerial Economics, Engineering Economics, Financial economics, Taxation and many other disciplines including water engineering, psychology, e-commerce, mechanical engineering, leadership and many others.
I have developed many courses on online websites like Teachable and Thinkific. I also developed an accounting reporting automation software project for Utafiti sacco located at ILRI Uthiru Kenya when I was working there in year 2001.
I am a mature, self-motivated worker who delivers high-quality, on-time reports which solve client’s problems accurately.
I have written many academic and professional industry research papers and tutored many clients from college to university undergraduate, master's and Ph.D. students, and corporate professionals. I anticipate your hiring me.
I know I will deliver the highest quality work you will find anywhere to award me your project work. Please note that I am looking for a long-term work relationship with you. I look forward to you delivering the best service to you.
