Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Present Value of Costs The Aubey Coffee Company is evaluating the within-plant distribution system for its new roasting, grinding, and packing plant. The two alternatives
Present Value of Costs The Aubey Coffee Company is evaluating the within-plant distribution system for its new roasting, grinding, and packing plant. The two alternatives are: (1) a conveyor system with a high initial cost, but low annual operating costs, and (2) several forklift trucks, which cost less but have considerably higher operating costs. The decision to construct the plant has already been made, and the choice here will have no effect on the overall revenues of the project. The cost of capital for the plant is 8%, and the projects' expected net costs are listed in the following table: EXPECTED NET COST Year Conveyor Forklift 0 -$500,000 -$200,000 1 - 120,000 -160,000 2 -120,000 -160,000 3 -120,000 -160,000 4 -120,000 -160,000 5 -20.000 -160,000 a. What is the IRR of each alternative? Method -Select- undstined Method 10 b. What is the present value of the costs of each alternative? Round your answers to the nearest dollar, if necessary. Enter your answers as a whole numbers. For example, do not enter 1,000,000 as 1 million. Enter negative answers with minus sign. Method 1 $ Method 2 $ Which method should be chosen? -Select- The Aubey Coffee Company is evaluating the within-plant distribution system for its new roasting, grinding, and packing plant. The two alternatives are: (1) a conveyor system with a high initial cost, but low annual operating costs, and (2) several forklift trucks, which cost less but have considerably higher operating costs. The decision to construct the plant has already been made, and the choice here will have no effect on the overall revenues of the project. The cost of capital for the plant is 8%, and the projects' expected net costs are listed in the following table: EXPECTED NET COST Year Conveyor Forklift 0 -5500,000 -$200,000 1 -120,000 -160,000 2 -120,000 - 160,000 3 - 120,000 -160,000 4 - 120,000 - 160,000 5 -20,000 - 160,000 a. What is the IRR of each alternative? Method 1 -Select- Method -Select- undefined b. What is 10 ue of the costs of each alternative? Round your answers to the nearest dollar, if necessary. Enter your answers as a whole numbers. For example, do not enter 1,000,000 as 1 million. Enter negative answers with minus sign. Method 1 $ Method 2 $ Which method should be chosen? -Select- The Aubey Coffee Company is evaluating the within-plant distribution system for its new roasting, grinding, and packing plant. The two alternatives are: (1) a conveyor system with a high initial cost, but low annual operating costs, and (2) several forklift trucks, which cost less but have considerably higher operating costs. The decision to construct the plant has already been made, and the choice here will have no effect on the overall revenues of the project. The cost of capital for the plant is 8%, and the projects' expected net costs are listed in the following table: EXPECTED NET COST Year Conveyor Forklift 0 -$500,000 -$200.000 1 -120,000 -160,000 2 -120,000 -160,000 3 -120,000 -160,000 4 -120,000 -160,000 5 -20,000 -160,000 a. What is the IRR of each alternative? Method 1 -Select- Method 2 -Select- b. What is the present value of the costs of each alternative? Round your answers to the nearest dollar, if necessary. Enter your answers as a whole numbers. For example, do not enter 1,000,000 as 1 million. Enter negative answers with minus sign. Method 1 $ Method 2$ Which method should be chosen? -Select- Method 1 Method 2 Both The Aubey Coffee Company is evaluating the within-plant distribution system for its new roasting, grinding, and packing plant. The two alternatives are: (1) a conveyor system with a high initial cost, but low annual operating costs, and (2) several forklift trucks, which cost less but have considerably higher operating costs. The decision to construct the plant has already been made, and the choice here will have no effect on the overall revenues of the project. The cost of capital for the plant is 8%, and the projects' expected net costs are listed in the following table: EXPECTED NET COST Year Conveyor Forklift 0 -$500,000 -$200,000 1 -120,000 -160,000 2 -120,000 -160,000 3 -120,000 -160,000 4 -120,000 -160,000 5 -20,000 -160,000 a. What is the IRR of each alternative? Method 1 -Select- Method 2 -Select- b. What is the present value of the costs of each alternative? Round your answers to the nearest dollar, if necessary. Enter your answers as a whole numbers. For example, do not enter 1,000,000 as 1 million. Enter negative answers with minus sign. Method 1 $ Method 2$ Which method should be chosen? -Select- v
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