Jewel Pix currently uses a six-year-old molding machine to manufacture silver picture frames. The company paid $109,000 for the machine, which was state of the art at the time of purchase. Although the machine will likely last another ten years, it will need a $12,000 overhaul in four years. More important, it does not provide enough capacity to meet customer demand. The company currently produces and sells 15,000 frames per year, generating a total contribution margin of $106,500.<\/p>
<\/p>
Martson Molders currently sells a molding machine that will allow Jewel Pix to increase production and sales to 20,000 frames per year. The machine, which has a ten-year life, sells for $144,000 and would cost $16,000 per year to operate. Jewel Pix's current machine costs only $8,000 per year to operate. If Jewel Pix purchases the new machine, the old machine could be sold at its book value of $5,000. The new machine is expected to have a salvage value of $20,000 at the end of its ten-year life. Jewel Pix uses straight-line depreciation.<\/p>
1. Calculate the new machine's net present value assuming a 16% discount rate.<\/p>
2. Calculate the new machine's internal rate of return.<\/p>
3. Calculate the new machine's payback period.<\/p>", "transcribed_text": "", "related_book": { "title": "Principles Of Finance", "isbn": "979-8439388899", "edition": "1st Edition", "authors": "Julie Dahlquist, Rainford Knight", "cover_image": "https:\/\/dsd5zvtm8ll6.cloudfront.net\/si.question.images\/book_images\/6290aa2348f9a_11251.jpg", "uri": "\/textbooks\/principles-of-finance-1st-edition-9798439388899", "see_more_uri": "" }, "free_related_book": { "isbn": "?B0B7DYQVXF", "uri": "\/textbooks\/tamoskiny-kojic-acid-soap-turmeric-soap-for-face-and-body-b0b7dyqvxf", "name": "Tamoskiny Kojic Acid Soap Turmeric Soap For Face And Body", "edition": "" }, "question_posted": "2024-06-29 02:27:08", "see_more_questions_link": "\/study-help\/questions\/business-corporate-finance-2020-July-01", "step_by_step_answer": "The Answer is in the image, click to view ...", "students_also_viewed": [ { "url": "\/acetylene-gas-and-x-times-theoretical-air-at-room-temper", "description": "Acetylene gas and x times theoretical air (x \uf03e\uf0201) at room temperature and 500 kPa are burned at constant pressure in an adiabatic SSSF process. 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