Chapter 14 Homework 0 Saved Help 8.33 points eBook @ Hint 'EF Print Refe rences Save & Exit Check my work The management of Kunkel Company is considering the purchase of a $39,000 machine that would reduce operating costs by $9,000 per year. At the end of the machine's five-year useful life, it will have zero salvage value. The company's required rate of return is 11%. Submit Click here to view Exhibit 148-1 and Exhibit 148-2, to determine the appropriate discount factor(s) using table. Required: 1. Determine the net present value of the investment in the machine. 2. What is the difference between the total, undiscounted cash inflows and cash outflows over the entire life of the machine? Complete this question by entering your answers in the tabs below. _Required 1 What is the difference between the total, undiscounted cash inflows and cash outc (Any cash outflows should be indicated by a minus sign.) ( Required 1 Prev 1 of 6 EEE Next > Chapter 14 Homework 0 Saved Help Save & Exit Submit Check my work 5 Compute the annual net cost savings promised by the automated welding machine. a. Using the data from Required 1 and other data from the problem, compute the automated welding machine's net resent value. b. Would you recommend purchasing the automated welding machine? 8.33 . Assume that management can identify several intangible benefits associated with the automated welding points Iachine, including greater flexibility in shifting from one type of product to another, improved quality of output, and Ister delivery as a result of reduced throughput time. What minimum dollar value per year would management ave to attach to these intangible benefits in order to make the new welding machine an acceptable investment? eBook Pm\" Complete this question by entering your answers in the tabs below. References Req 1 Req 2A H Req 23 \" Req 3 Assume that management can identify several intangible benefits associated with the automated welding machine, including greater flexibility in shifting from one type of product to another, improved quality of output, and faster delivery as a result c reduced throughput time. What minimum dollar value per year would management have to attach to these intangible benefit in order to make the new welding machine an acceptable investment? (Round your final answer to the nearest whole dollar amount.) Show less A IIIIIIIEIIIEHHIEElIIIIII -rw ( Prev 5 of 6 EEE Next > I Chapter 14 Homework 0 Saved Help Save & Exit Submit 8.33 points eBook @ Hint 'EF Print Refe rences Check my work The management of Kunkel Company is considering the purchase of a $39,000 machine that would reduce operating costs by $9,000 per year. At the end of the machine's five-year useful life, it will have zero salvage value. The company's required rate of return is 11%. Click here to view Exhibit 148-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using table. Required: 1. Determine the net present value of the investment in the machine. 2. What is the difference between the total, undiscounted cash inflows and cash outflows over the entire life of the machine? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine the net present value of the investment in the machine. (Negative am0L Round your final answer to the nearest whole dollar amount. Use the appropriate ta Required 2 > Prev 1 of 6 555 Next > Chapter 14 Homework 0 Saved Help Save & Exit Submit 5 8.33 points Refe rences Check my work \"I'm not sure we should lay out $345,000 for that automated welding machine," said Jim Alder, president of the Superior Equipment Company. \"That's a lot of money, and it would cost us $93,000 for software and installation, and another $58,800 per yearjust to maintain the thing. In addition, the manufacturer admits it would cost $56,000 more at the end of three years to replace worn-out parts.\" "I admit it's a lot of money,\" said Franci Rogers, the controller. \"But you know the turnover problem we've had with the welding crew. This machine would replace six welders at a cost savings of $123,000 per year. And we would save another $8,400 per year in reduced material waste. When you figure that the automated welder would last for six years, I'm sure the return would be greater than our 14% required rate of return.\" \"I'm still not convinced,\" countered Mr. Alder. \"We can only get $21,500 scrap value out of our old welding equipment if we sell it now, and in six years the new machine will only be worth $39,000 for parts. But have your people work up the figures and we'll talk about them at the executive committee meeting tomorrow.\" Click here to view Exhibit 1481 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables. Required: 1. Compute the annual net cost savings promised by the automated welding machine. 2a. Using the data from Required 1 and other data from the problem, compute the automated welding machine's net present value. 2b. Would you recommend purchasing the automated welding machine? 3. Assume that management can identify several intangible benefits associated with the automated welding machine, including greater flexibility in shifting from one type of product to another, improved quality of output, and faster delivery as a result of reduced throughput time. What minimum dollar value per year would management have to attach to these intangible benefits in order to make the new welding machine an acceptable investment? Complete this question by entering your answers in the tabs below.
