Question
Please assist me with the problem below and include the excel file. Randall UPS is a supplier of a variety of services for small businesses.
Please assist me with the problem below and include the excel file.
Randall UPS is a supplier of a variety of services for small businesses. Commercial printer, scanning, and copier equipment is being considered to replace a five-year-old machine. After the initial screening of a variety of systems, two integrated systems remain as potential replacements - a new model from Konica Minolta and an updated and enhanced reconstructed model from Ricoh. The relevant information on the two machines are as follows:
Konica Minolta
Ricoh
Installed Price
$24,500
$25,500
Estimated costs
$4,300 plus $0.015/copy
$7,050
Estimated salvage value
$10,500
$12,500
Estimated useful life
5 years
5 years
Randall expects to charge customers $0.06 per copy and sell 250,000 copies annually; however, they are uncertain about their service volume estimate. The $0.06 per copy they expect to charge customers and the maintenance & usage fees are not expected to change over the next five years. Randall requires a minimum pre-tax rate of return of 15% on its equipment investments.
REQUIREMENTS
- Using the NPV function in Excel determine the Net Present Value (NPV) for the Konica Minolta system for estimated volumes starting from 200,000 copies/year to 300,000 copies/year, in increments of 5,000 copies.
- Using the NPV function in Excel determine the (NPV) for the Ricoh system for estimated volumes starting from 200,000 copies/year to 300,000 copies/year, in increments of 5,000 copies.
- From your answers to the above, determine which copier you would recommend to Speedy at an annual volume of 2100,000, 240,000, & 280,000 copies
- Explain why the decision is different at different volumes.
Note:
This is a computer assignment that can be easily done using a standard spreadsheet software such as Excel. Estimated information for capital budgeting purposes is flexible and fluid and may change as managers have access to additional information. If the above capital budgeting problem was computed manually, and a change was made in a key number, the entire problem would have to be recomputed. This would be a redundant and time-consuming exercise. Instead, if a spreadsheet template, employing simple formulas, was constructed, a change could be made in a matter of seconds and the answers would be recomputed automatically.
This assignment will have two parts, the first comprising of the data-entry section, where you will enter the above data. The second part will be the capital budgeting template, which will ONLY contain formulas that are linked to the data-entry section. I recommend you test your template upon completion, i.e. change a key number in the data-entry section and see if the numbers in the template recompute correctly.
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