Should you purchase the loader

Assignment Help Financial Management
Reference no: EM131327554

Your company is looking to purchase a loader at a cost of $120,000. The loader would have a useful life of 5 years with a salvage value of $12,000 at the end of year five. (The salvage value is what you can sell the equipment for in year 5 and would represents a cash inflow.) The loader can be billed out at $95.00 per hour. It costs $55.00 per hour to operate.

Using 1200 billable hours per year determine the net present value for the purchase of the loader using a cost of capital (discount rate) (r) of 20 percent. Should you purchase the loader? (Ignore depreciation)

Hint: Draw your timeline, how much profit (revenue less costs which in this case will be the cash flow you will need for your time line.) will your firm realize from the loader?

Reference no: EM131327554

Questions Cloud

Create a human resources department for the organization : Identify at least three (3) factors that need to be considered in the formulation of this department.Include at least four (4) different disciplines that are in the structure of a Human Resources Department and a brief description of each.Explain h..
Why has the state type system expanded to encompass most : Why has the state type system expanded to encompass most of the globe today? Explain how band, tribe, and chiefdom organizations might persist within a world order based primarily on states.
Where is the point of equilibrium and what does it determine : As part of a marketing research committee for your organization, you have been assigned the task of preparing a 700-word research paper about current microeconomic thought and theory.
What is mirr for this project using the discounting method : A mining company plans to mine a beach for rutile. To do so will cost $10 million up front and then produce cash flows of $3 million per year for five years. At the end of the sixth year the company will incur shut-down and clean-up costs of $2 milli..
Should you purchase the loader : Using 1200 billable hours per year determine the net present value for the purchase of the loader using a cost of capital (discount rate) (r) of 20 percent. Should you purchase the loader?
Relationship between psychology and christianity : This paper is the capstone project of the course, and it will describe your approach to the relationship between psychology and Christianity. You will classify your approach and note the strengths and limitations of your view as well as reflect on..
How much cash will you have from cash sale when you leave : You purchased a house for 200,000 $ financed by a loan 6% and quarterly payments over 10 years, at the end of the 6th year a change of employment forces you to leave the country and you can sell the house for 250000. How much cash will you have from ..
Two types of drivers-high-risk drivers-low and risk ones : Suppose that there are only two types of drivers: high-risk drivers, who have a higher chance of accidents, and low-risk ones who have a lower chance of accident. Suppose also that car insurance companies cannot tell apart these two groups (for examp..
Firm has four open positions on its board of directors : A firm has four open positions on its board of directors. How many shares do you need to own to guarantee your own election to the board if the firm has 387,500 shares of stock outstanding and uses cumulative voting? Each share is granted one vote.

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

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