Based on an internal rate of return analysis

Assignment Help Financial Management

Reference no: EM131552432

DelRay Foods must purchase a new gumdrop machine. Two machines are available. Machine 7745 has a first cost of $10,000, an estimated life of 10 years, a salvage value of $1,000, and annual operating costs estimated at $0.01 per 1,000 gumdrops. Machine A37Y has a first cost of $8,000, a life of 10 years, and no salvage value. Its annual operating costs will be $300 regardless of the number of gumdrops produced. MARR is 6 percent/year, and 30 million gumdrops are produced each year. Based on an internal rate of return analysis, which machine should be recommended?

Reference no: EM131552432

Questions Cloud

Calculate the conversion value : The conversion ratio of the bond is 25. The current market price of the stock is $50. Calculate the conversion value.

Summarize corporate social responsibility of organization : Conduct research on the Internet and select a company for which you will summarize the corporate social responsibility of the organization.

Identified two important systematic risk factors : Suppose that we have identified two important systematic risk factors: the growth rate of gross domestic product, labeled GDP,

How are they used in a metrology application : Highlight three of the statistical techniques used in metrology describing each in detail.

Based on an internal rate of return analysis : MARR is 6 percent/year, and 30 million gumdrops are produced each year. Based on an internal rate of return analysis, which machine should be recommended?

Calculate after-tax cost of debt : Calculate WTI’s after-tax cost of debt. Explain why firms that increase their leverage (like WTI) rely more heavily on effective risk management.

What role do you tend to play in groups : What role do you tend to play in groups? Is it a role you choose because you enjoy it or because you are just naturally good at it?

How much will apex pay for the fire loss : Apex Fire enters into a surplus share reinsurance treaty with Geneva Re for fire insurance coverage. How much will Apex pay for the fire loss?

Fire risk associated with this line of business : XTC retains 30 percent of the fire risk associated with this line of business,

User Account

All Pages