Calculate the EAC for each machine

Assignment Help Financial Management
Reference no: EM13872450

Vandelay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $3,084,000 and will last for six years. Variable costs are 40 percent of sales, and fixed costs are $225,000 per year. Machine B costs $5,283,000 and will last for nine years. Variable costs for this machine are 35 percent of sales and fixed costs are $160,000 per year. The sales for each machine will be $10.7 million per year. The required return is 11 percent, and the tax rate is 30 percent. Both machines will be depreciated on a straight-line basis. The company plans to replace the machine when it wears out on a perpetual basis.

Calculate the EAC for each machine. (Enter your answer in dollars, not millions of dollars, e.g. 1,234,567. Negative amounts should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

Reference no: EM13872450

Questions Cloud

Normal force from the plane : A mass m slides down a frictionless plane that is inclined at angle θ. Show, using the method in Section 5.3, that the normal force from the plane is the familiar mg cos θ.
Prepare the journal entry to correct the balances : For each item, (a) and (d), prepare the journal entry to correct the balances presently reported. If a journal entry is not required, indicate so.
What amount of property tax revenues should be recognized : What amount of property tax revenues should be recognized for calendar year 2013 What amount of property taxes receivable should be reported at December 31, 2013? a. $ 0 b. $ 10,000
Record each acquisition of the bussell company : The Bussell Company exchanged the following assets during 2010:
Calculate the EAC for each machine : Vandelay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $3,084,000 and will last for six years. Variable costs are 40 percent of sales, and fixed costs are $225,000 per year. Calculate the EAC for..
Discuss the different types of unemployment : Discuss the different types of unemployment
Calculate the best-case and worst-case NPV figures : We are evaluating a project that costs $744,000, has a six-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 45,000 units per year. Calculate the best-case and ..
What is the expected return and standard deviation of return : You manage an equity fund with an expected risk premium of 11.8% and a standard deviation of 32%. The rate on Treasury bills is 3.2%. Your client chooses to invest $70,000 of her portfolio in your equity fund and $130,000 in a T-bill money market fun..
Lesson plan-common core state standards initiative : most states are using the "Common Core State Standards Initiative" or "Early Learning Standards" to guide their teaching. Starting on page 5 of Chapter 3 of the text, the author clearly outlines considerations that need to be made when planning cu..

Reviews

Write a Review

 

Financial Management Questions & Answers

  Calculate the beta of a portfolio

What is the beta of an asset with an expected return of 16%, if the risk-free rate of interest is 6% and the expected market portfolio risk premium is 6%? Accurate to two decimal places.

  What is your profit at the current exchange rate

Suppose your company imports computer motherboards from Singapore. The exchange rate is S$1.2348/US$. You have just placed an order for 34,000 motherboards at a cost to you of 142.9 Singapore dollars each. You will pay for the shipment when it arrive..

  What is the amount of the firms net working capital

Scare Train, Inc. has the following balance sheet statement items; current liabilities of $875,962; net fixed and other assets of $1,921,620; total assets of $3,463,330; and long-term debt of $602,676. What is the amount of the firm’s net working cap..

  The elasticity of demand-inverse of price to quantity demand

The elasticity of demand: equals the inverse of price to quantity demanded. measures how far the demand curve shifts from a change in price.

  Playing the stock market is like gambling

Critically evaluate the following statement: Playing the stock market is like gambling. Such speculative investing has no social value, other than the pleasure people get from this form of gambling.

  Bank account opening

You have been accepted into college. The college guarantees that your tuition will not increase for the four years you attend college. The first 11,900 tuition payment is due in six months. After that, the same payment is due every six months until y..

  Calculating the weighted average cost of capital

When calculating the weighted average cost of capital, weights are based on

  What is the present value of the futures contract in dollar

Treasury bond futures contract settles at 105'8. What is the present value of the futures contract in dollars? Calculate the implied annual interest rate on the futures contract? Calculate the new value of the futures contract if interest rates incre..

  After tax cash flow from the sale of this asset

Consider an asset that costs $369,600 and is depreciated straight-line to zero over its 7-year tax life. The asset is to be used in a 4-year project; at the end of the project, the asset can be sold for $46,200. If the relevant tax rate is 32 percent..

  Calculate the value of backwoods debt and equity

The debt has a one-year maturity and a promised interest payment of 11%. Thus, the promised payment to Backwoods’s creditors is $1,132.2. The market value of the assets is $1,220 and the standard deviation of asset value is 47% per year. The risk-fre..

  Find the firms debt ratio

Given the following information for the Duke Tire Company, find the firm's debt ratio (i.e., total liabilities / total assets): ROE (N/E) = 0.24 (expressed as a decimal)

  Mortgage-backed securities and other securities

Savings institutions are exposed to credit risk as a result of their heavy concentration in mortgages, mortgage-backed securities, and other securities.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd