Chapter Eleven BUS 3053 -51 1) Rhegan Murphy & Homework: Chapter Eleven Score: 0 of 2 pts 4 of 10 14 completely HW Score: 29 23%, 5.85 of 20 pts P11-5 (similar to) Question Help (Equivalent annual cost calculation) The Templeton Manufacturing and Distribution Company of Tacoma, Washington, is contemplating the purchase of a new conveyor belt system for one of its regional distribution facilities. Both ternatives wil accomplish the same task but the Eclipse Model is substantially more expensive than the Sabre Model and will not have to be replaced for 10 years, whereas the cheaper model wil need to be replaced in just 5 years. The cost of purchasing the two wystems and the costs of operating them annually over the expected lives is provided below Templeton typically evaluates investments in plan provements using a required to return of een What we the NPV for the two wystems b. Calculate the equivalent annual costs for the two systems c. Based on yowanasis of the two systems in bother NPV and EAC which ystem do you recommend the compork? Why a The NPV for Eclipse a discount rate of 8% is (Round to the newest dollar A Data Table 550.000 155,000 (55 000) 55.000 56 000) 000) 24,000) (28.000) 28,000 (28.000) (42000) (42,000) 000 142.000 (42.000) 1000 ter Eleven 4 of 10 (4 complete) Data Table Year Eclipse Sabre $(1,500,000) $(850,000) (24,000) (55,000) (28,000) (55,000) (28,000) (65,000) (28,000) (65,000) (42,000) (85,000) (42,000) (42,000) (42,000) (42,000) (42,000) (Click on the icon in order to copy its contents into a spreadsheet) DAWNO 10 Print Done amor mer CIICROMBOK ATSwer Clear All DUS JUS=5101 Rhegan Murphy Homework: Chapter Eleven Score: 0 of 2 pts P11-5 (similar to) 4 of 10 (4 complete) HW Score: 29.23%, 5.85 of 20 E Question Help (Equivalent annual cost calculation) The Templeton Manufacturing and Distribution Company of Tacoma, Washington is contemplating the purchase of a new conveyor belt system for one of its regional distribution facilities Both alternatives will accomplish the same task but the Eclipse Modelis substantially more expensive than the Sabre Model and will not have to be replaced for 10 years, whereas the cheaper model will need to be replaced in just 5 years. The cost of purchasing the two systems and the costs of operating the annually over their expected lives is provided below a. Templeton typically evaluates investments in plant improvements using a required rate of return of 8 percent. What are the NPVs for the two systems? b. Calculate the equivalent annual costs for the two systems c. Based on your analysis of the two systems using both the NPV and EAC, which system do you recommend the company pick? Why? a The NPV for Eclipse at a discount rate of 8% (Round to the nearest dolar)
