Question
Please help with these questions 1. The management of Penfold Corporation is considering the purchase of a machine that would cost $360,000, would last for
Please help with these questions
1. The management of Penfold Corporation is considering the purchase of a machine that would cost $360,000, would last for 10 years, and would have no salvage value. The machine would reduce labor and other costs by $50,000 per year. The company requires a minimum pretax return of 9% on all investment projects.
A. $(39,100)
B. $(9,100)
C. $(89,100)
D. $(359,997)
2. Crowl Corporation is investigating automating a process by purchasing a machine for $800,100 that would have a 9 year useful life and no salvage value. By automating the process, the company would save $136,500 per year in cash operating costs. The new machine would replace some old equipment that would be sold for scrap now, yielding $21,900. The annual depreciation on the new machine would be $88,900. The simple rate of return on the investment is closest to (Ignore income taxes.):
A. 11.19%
B. 16.79%
C. 6.12%
D. 5.19%
3. Joanette, Inc., is considering the purchase of a machine that would cost $430,000 and would last for 5 years, at the end of which, the machine would have a salvage value of $43,000. The machine would reduce labor and other costs by $103,000 per year. Additional working capital of $5,000 would be needed immediately, all of which would be recovered at the end of 5 years. The company requires a minimum pretax return of 16% on all investment projects. (Ignore income taxes.) Determine the net present value of the project. (Negative amount should be indicated by a minus sign. Round your intermediate calculations and final answer to the nearest whole dollar amount.)
4. The management of Nixon Corporation is investigating purchasing equipment that would cost $542,000 and have a 7 year life with no salvage value. The equipment would allow an expansion of capacity that would increase sales revenues by $376,000 per year and cash operating expenses by $217,000 per year. (Ignore income taxes.) Required:
Determine the simple rate of return on the investment. (Round your answer to 1 decimal place.)
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