Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A firm is considering replacing the existing industrial air conditioning unit. They will pick one of two units. The first, the AC 360, costs $26,961.00

image text in transcribed
A firm is considering replacing the existing industrial air conditioning unit. They will pick one of two units. The first, the AC 360, costs $26,961.00 to install, 55,010.00 to operate per year for 7 years at which time it will be sold for $6,884.00. The second, RayCool 8, costs $41,099.00 to install, $2,071.00 to operate per year for 5 years at which time it will be sold for $8.947.00. The firm's cost of capital is 5.53%. What is the equivalent annual cost of the AC360? Assume that there are no taxes Submit Answer format: Currency: Round to: 2 decimal places A firm is considering replacing the existing industrial air conditioning unit. They will pick one of two units. The first, the AC360, costs $26,660.00 to install, $5,009.00 to operate per year for 7 years at which time it will be sold for 56,952.00. The second, RayCool 8, costs 541,661.00 to install, $2,062.00 to operate per year for 5 years at which time it will be sold for $9,060.00. The firm's cost of capital is 6.12%. What is the equivalent annual cost of the RayCool8? Assume that there are no taxes. Submit Answer format: Currency: Round to: 2 decimal places. A firm is must choose to buy the GSU-3300 or the UGA-3000. Both machines make the firm's production process more efficient which in turn increases incremental cash flows. The GSU-3300 produces incremental cash flows of $26,000.00 per year for 8 years and costs $98,521.00. The UGA-3000 produces incremental cash flows of $28,823.00 per year for 9 years and cost $125,236.00. The firm's WACC is 8.41%. What is the equivalent annual annuity of the GSU-33002 Assume that there are no taxes. Submit Answer format: Currency: Round to: 2 decimal places A firm is must choose to buy the GSU-3300 or the UGA-3000. Both machines make the firm's production process more efficient which in turn increases incremental cash flows. The GSU-3300 produces incremental cash flows of $24. 114.00 per year for 8 years and costs $100,519.00. The UGA-3000 produces incremental cash flows of $28,423.00 per year for 9 years and cost $126,280.00. The firm's WACC is 7.42%. What is the equivalent annual annuity of the UGA-3000? Assume that there are no taxes. Submit Answer format: Currency: Round to: 2 decimal places

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Public Finance

Authors: John E. Anderson

2nd edition

978-0538478441, 538478446, 978-1133708360, 1133708366, 978-1111526986

More Books

Students also viewed these Finance questions

Question

Name some industries in which job order costing is common.

Answered: 1 week ago