Reference no: EM131356336
A long-standing principle of computer innovations is that computers double in power for the same price, or, equivalently, halve in cost for the same power, even- 18 months.
Auckland Data Services (ADS) owns a single computer that is at the end of its third year of service. ADS will continue to buy computers of the same power as its current one. Its current computer would cost S80 000 to buy today, excluding installation. Given that a new model is released every 18 months, what replacement policy should ADS adopt for computers over the next three years? Other facts to be considered are:
1. Installation cost is 15% of purchase price.
2. Salvage values are computed at a declining-balance depreciation rate of 50%.
3. Annual maintenance cost is estimated as 10% of accumulated depreciation or as 15% of accumulated depreciation per 18-month period.
4. AD S uses a MARR of 12 %. 7.24 A water pump to be used by the city's maintenance department costs $10 000 new. A running-in period, costing $1000 immediately, is required for a new pump. Operating and maintenance costs average $500 the first year, increasing by $300 per year thereafter. The salvage value of the pump at any time can be estimated by the declining-balance rate of 20%. Interest is at 10%. Using a spreadsheet, calculate the EAC for replacing the pump after one year, two years, etc. How often should the pump be replaced?
|
Target capital structure-common equity
: Palencia Paints Corporation has a target capital structure of 35% debt and 65% common equity, with no preferred stock. Its before-tax cost of debt is 10% and its marginal tax rate is 40%. The current stock price is P0 = $25.50. The last dividend was ..
|
|
Identify some possible questions for the research study
: Many sources exist that are triggers for theory development through the study of concepts and their related propositions. One such trigger is the research process, which, while it answers many questions, generates others based on research outcomes..
|
|
What is the bank maturity gap
: A bank has duration of assets of 3.96, total assets of $181 million, duration of liabilities of 4.8, total equity equal to 9.5% of total assets, rate-sensitive assets of $76.75 million, and rate-sensitive liabilities of $50.8 million. What is the ban..
|
|
For the purpose of estimating var
: For the purpose of estimating VaR, you computed the critical adverse change in a 5-year interest rate (delta r-star in the VaR formula) to be 0.5849% at the 99% confidence level. What is the standard deviation of the rate changes, in basis points, if..
|
|
How often should the pump be replaced
: A long-standing principle of computer innovations is that computers double in power for the same price, or, equivalently, halve in cost for the same power, even- 18 months.
|
|
Intermediary guarantees an option writer performance
: What intermediary guarantees an option writer’s performance? Suppose you hold a call option. The stock price has recently been increasing-making your call option more valuable. Through what process might you take advantage of the liquid nature of the..
|
|
Provide a two to three sentence description of control plan
: provide a two- to three-sentence description of the control plan that you believe would best address that deficiency.
|
|
Company uses cumulative voting procedures
: The shareholders of Motive Power Corp. need to elect three new directors to the board. There are 14,400,000 shares of common stock outstanding, and the current share price is $10.85. If the company uses cumulative voting procedures, how much will it ..
|
|
Should chatham automotive replace the forklifts now
: Chatham Automotive purchased new electric forklifts to move steel automobile parts two years ago. These cost $75 000 each, including the charging stand. In practice, it was found that they did not hold a charge as long as claimed by the manufactur..
|