Chapter 25 Homework Diamond and Turf Inc. is considering an investment in one of two machines....

Transcribed Image Text:

Chapter 25 Homework Diamond and Turf Inc. is considering an investment in one of two machines. The sewing machine will increase productivity from sewing 130 basebals per hour to seeing 234 per hour. The contribution margin per unit is $0.48 per baseball. Assume that any increased production of baseballs can be sold. The second machine is an automatic packing machine for the golf ball line. The packing machine will reduce pack The labor cost saved is equivalent to $22 per hour. The sewing machine will cost $305,200, have a 10-year fe, and will operate for 1,400 hours per year The packing machine wit cost $110,000, have a 10-year she and will operate for 1,200 hours per year. Diamond and Turf seeks a minimum rain of return of 15% on its investments Present Value of an Annuity of $1 at Compound Interest Year 8% 10% 12% 15% 20% $ 0.943 0.909 0.870 0.833 2 1.833 1.730 1.6901 1.626 1.338 3 2.673 2.487 2.402 2.201 2.106 3.465 3.170 3.027 2.855 2.589 3 4.212 3.791 3405 3.353 2.991 4.917 4.355 4.111 3.785 3.376 7 5502 4.368 6.564 4.100 3.005 6.210 5:335 4.968 3837 9 5.902 10 7.340 5.759 6.145 5.320 4.772 5.650 5.019 4.031 4.192 a. Determine the net present value for the two machines. Use the table of present values of an annuity of $1 above. Round to the nearest dola Present value of annual net cash Bows Sewing Machine Packing Machine Amount to be invested Net present value b. Determine the present value index for the two machines If required, round your answers to two decimal places Present value index Check My Work Sewing Machine Packing Machine Previous Next > Chapter 25 Homework Diamond and Turf Inc. is considering an investment in one of two machines. The sewing machine will increase productivity from sewing 130 basebals per hour to seeing 234 per hour. The contribution margin per unit is $0.48 per baseball. Assume that any increased production of baseballs can be sold. The second machine is an automatic packing machine for the golf ball line. The packing machine will reduce pack The labor cost saved is equivalent to $22 per hour. The sewing machine will cost $305,200, have a 10-year fe, and will operate for 1,400 hours per year The packing machine wit cost $110,000, have a 10-year she and will operate for 1,200 hours per year. Diamond and Turf seeks a minimum rain of return of 15% on its investments Present Value of an Annuity of $1 at Compound Interest Year 8% 10% 12% 15% 20% $ 0.943 0.909 0.870 0.833 2 1.833 1.730 1.6901 1.626 1.338 3 2.673 2.487 2.402 2.201 2.106 3.465 3.170 3.027 2.855 2.589 3 4.212 3.791 3405 3.353 2.991 4.917 4.355 4.111 3.785 3.376 7 5502 4.368 6.564 4.100 3.005 6.210 5:335 4.968 3837 9 5.902 10 7.340 5.759 6.145 5.320 4.772 5.650 5.019 4.031 4.192 a. Determine the net present value for the two machines. Use the table of present values of an annuity of $1 above. Round to the nearest dola Present value of annual net cash Bows Sewing Machine Packing Machine Amount to be invested Net present value b. Determine the present value index for the two machines If required, round your answers to two decimal places Present value index Check My Work Sewing Machine Packing Machine Previous Next >