Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Company X purchased a new machine for 25000 $ by life span of 10 years, expecting to earn 7500 $ as a yearly income from
Company X purchased a new machine for 25000 $ by life span of 10 years, expecting to earn 7500 $ as a yearly income from year 4 thereafter. It is assumed that its salvage value will be 31000$. Unexpectedly, from year 7, annual income starting to decrease by 300$ , Moreover at the end of 9th year due to a big collapse in the company the machine will be going to get rid of the production line totally(useless). Determine the real rate of return (ROR). 2. The information of two rail road projects are given as follows; Project A Project B -58000 -18000 Initial cost Annual cost Resale value Life, years 7000 The incremental AW cash flow equation associated is; 0 = -15000(A/P,1,4) + 6000+ 3000(A/F,i,4) Determine a, b, c. 3. A manager of a company has 4 systems ahead to make decision about them. Company uses a 3- year planning period and MARR is 15%. As a financial engineer offer him the best solution (method: rate of return). System AOC SV Initial investment 400,000 500,000 550,000 650,000 -300,000 -250,000 -225,000 -150,000 Annual revenue 400,000 410,000 430,000 460,000 50,000 65,000 75,000 100,000 Company X purchased a new machine for 25000 $ by life span of 10 years, expecting to earn 7500 $ as a yearly income from year 4 thereafter. It is assumed that its salvage value will be 31000$. Unexpectedly, from year 7, annual income starting to decrease by 300$ , Moreover at the end of 9th year due to a big collapse in the company the machine will be going to get rid of the production line totally(useless). Determine the real rate of return (ROR). 2. The information of two rail road projects are given as follows; Project A Project B -58000 -18000 Initial cost Annual cost Resale value Life, years 7000 The incremental AW cash flow equation associated is; 0 = -15000(A/P,1,4) + 6000+ 3000(A/F,i,4) Determine a, b, c. 3. A manager of a company has 4 systems ahead to make decision about them. Company uses a 3- year planning period and MARR is 15%. As a financial engineer offer him the best solution (method: rate of return). System AOC SV Initial investment 400,000 500,000 550,000 650,000 -300,000 -250,000 -225,000 -150,000 Annual revenue 400,000 410,000 430,000 460,000 50,000 65,000 75,000 100,000
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started