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Assume Company XYZ must decide whether to purchase a piece of factory equipment for $300,000. The equipment would only last ten years, but it is
Assume Company XYZ must decide whether to purchase a piece of factory equipment for $300,000. The equipment would only last ten years, but it is expected to generate $45,000 of additional annual profit during those years. Company XYZ also thinks it can sell the equipment for scrap afterward (i.e. at the end of the tenth year) for about $10,000. Use IRR to determine if the company should purchase the equipment given the MARR on the investment is 10% (3 points) Using the concept of increment analysis, find which of the below three projects you should invest considering the MARR of 15%. Also, calculate the NPV of all the three projects. Note: projects are mutually exclusive, means you can choose only one to invest. You can use Excel to solve this question (4 points) n (year) Project 1 Project 2 Project 3 0 -1500 -5000 -2200 1 700 7500 1600 2 2500 600 3200 A company makes two different products A and B in its plant. The cost related data for the two products are in the table below. Assuming the ratio of number of units of A produced to the number of units of B produced is always 3:1, determine the quantities of A and B need to be produced at the breakeven volume. Hint: at the breakeven volume equate total revenue and total cost (3 points) A B Selling price (per unit) $60 $50 Variable manufacturing cost (per unit) $30 $25 Fixed manufacturing cost (total for producing A and B) $3,000
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