Question
Can I have help on this problem, I keep getting negative numbers and I feel like it shouldn't be negative. (2) The firm has purchased
Can I have help on this problem, I keep getting negative numbers and I feel like it shouldn't be negative.
(2)The firm has purchased a new piece of equipment at an initial cost of $ 14,000 and it has no salvage value. The repair costs are covered by the warranty in the first year. In the second year, maintenance costs will $ 600 and increase on an arithmetic gradient in subsequent years. Operating expenses will be $ 350 the first year and increase on $ 450 arithmetic gradient in the followingyears..The firm's discount rate is 12%. Determine the minimum equivalent uniform annual cost for this machine and its economic life (i.e., when it should be replaced by a new machine).
The only other information I have is the previous asked question which is
(1)The firm has had high retained earnings over the last 5 years. The firm is trying to decide how to invest those retained earnings to generate the highest return on the investment. Assume each investment has afive yearreturn period and that the discount rate used by the firm is 10%. The three possible investments that the firm is considering have the following initial cost and returns:
(a) investment A - an initial cost of $ 40,000 and a net return (gross return minus cost) of $ 9,500 per year for each year.
(b) investment B- aninitial cost of $ 100,000 and a net return (gross return minus cost) of $18,400 per year for each year.
(c) investment C - an initial cost of $ 10,000 and the following gross returns and costs:
Gross ReturnsCosts
Year 1$ 6,000$ 4,500
Year 2$ 7,000$ 5,000
Year 3$ 7,000$ 5,500
Year 4$ 8,000$ 4,500
Year 5$ 7,500$ 4,500
Which of the investment opportunities should the firm undertake? Why?
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