Question
Question 1 (of 2)Question 2 (of 2)Save & ExitSubmit These are the questions. Attached are the pics for the problem 1. value: 10.00 points The
Question 1 (of 2)Question 2 (of 2)Save & ExitSubmit
These are the questions. Attached are the pics for the problem
1. value:
10.00 points
The management of Kunkel Company is considering the purchase of a $32,000 machine that would reduce operating costs by $8,000 per year. At the end of the machine?s five-year useful life, it will have zero scrap value. The company?s required rate of return is 13%. |
Click here to viewExhibit 11B-1andExhibit 11B-2, to determine the appropriate discount factor(s) using tables. |
Required: | |
1. | Determine the net present value of the investment in the machine.(Any cash outflows should be indicated by a minus sign. Use the appropriate table to determine the discount factor(s).) |
2. | What is the difference between the total, undiscounted cash inflows and cash outflows over the entire life of the machine?(Any cash outflows should be indicated by a minus sign.) |
2. value:
10.00 points
The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $50,000. The machine would replace an old piece of equipment that costs $13,000 per year to operate. The new machine would cost $6,000 per year to operate. The old machine currently in use could be sold now for a scrap value of $21,000. The new machine would have a useful life of 10 years with no salvage value. |
Required: |
Compute the simple rate of return on the new automated bottling machine. |
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