Calculate the eac for both conveyor belt systems

Assignment Help Financial Management
Reference no: EM131319773

Lang Industrial Systems Company (LISC) is trying to decide between two different conveyor belt systems. System A costs $236,000, has a four-year life, and requires $74,000 in pretax annual operating costs. System B costs $336,000, has a six-year life, and requires $68,000 in pretax annual operating costs. Suppose LISC always needs a conveyor belt system; when one wears out, it must be replaced. Assume the tax rate is 30 percent and the discount rate is 9 percent. Calculate the EAC for both conveyor belt systems.

Reference no: EM131319773

Questions Cloud

Design compensation and benefits package related dream job : Write a six to eight (6-8) page paper in which you: Create a job description and specifications for your dream job. Design a compensation and benefits package related to your dream job
Net income as percent of stockholders equity : The senior management of Tyler Company has proposed the following three performance measures for the company: Net income as a percent of stockholders’ equity. Employee satisfaction
Interest compounded semiannually : Best Ribs wishes to pay off a debt of $40,000 in 7 years. What amortization payment would they need to make each six months, at 6% interest compounded semiannually? (Use Table 12-2 from your text)
Find amount due at the closing : You put down a deposit of $5,000 (applied to the down payment) when the sales contract was signed. You also have these expenses: credit report, $70; appraisal fee, $110; title insurance premium, 1% of amount financed; title search, $225; and attor..
Calculate the eac for both conveyor belt systems : Lang Industrial Systems Company (LISC) is trying to decide between two different conveyor belt systems. System A costs $236,000, has a four-year life, and requires $74,000 in pretax annual operating costs. Assume the tax rate is 30 percent and the di..
Explain the various aspects of contingency planning : You are a security manager at a medium size company. Your company currently does not have a Contingency Planning CP in place. Your CIO has just asked you to brief the overall concept of CP and how we could implement it within the company. Creat..
Which test statistic will you use for your hypothesis test : Which test statistic will you use for your hypothesis test; z-test or t-test? Explain. What is the value of the test-statistic? What is the P-value?
Use the ratio guidelines : Lucerne earns a gross income of $5,500 per month and applies for a mortgage with a monthly PITI of $1,244. Lucerne has other financial obligations totaling $829 per month. (Use the ratio guidelines from your text) What type of mortgage, if any, wo..
What is the sum of the nwc and market value of fixed assets : Klingon Widgets, Inc., purchased new cloaking machinery three years ago for $4.2 million. The machinery can be sold to the Romulans today for $6.4 million. What is the book value of Klingon's total assets today? What is the sum of the NWC and market ..

Reviews

Write a Review

Financial Management Questions & Answers

  What is this years dividend yield

Suppose a company has net income of 1,000,000 and a plowback ratio of 40%. There are 50,000 shares of stock outstanding. The company plans to increase dividends by 22% each year for the next 2 years and apply a 2.25% growth rate to dividends each yea..

  What is payback period for both projects

Siva, Inc., imposes a payback cutoff of three years for its international investment projects. Year Cash Flow (A) Cash Flow (B) 0 –$ 61,000 –$ 71,000 1 23,500 15,500 2 29,000 18,500 3 21,500 27,000 4 8,500 231,000 What is the payback period for both ..

  Assume the dividend tax rate is zero

The firm you are CEO if has a current period cash flow of 1.0 million and pays no dividend. The present value of the company’s future cash flows is $2.5 million. The company is entirely financed with equity and there are 500,000 shares outstanding. A..

  What price should be set under marginal cost pricing

Assume a clinical laboratory is considering a new test. Here are the key assumptions: annual fixed direct costs = $20,000, annual overhead allocation = $10,000, variable cost per test = $5, and expected volume = 5,000 tests. What price should be set ..

  How large would barnetts uninsured deposits be

How large would Barnett's uninsured deposits be in these FDIC insured banks if the funds were held at the same point in time.

  Stock price does not change over the life of the option

You have purchased a put option on Pfizer common stock. The option has an exercise price of $56 and Pfizer’s stock currently trades at $58. The option premium is $0.50 per contract. What is your net profit on the option if Pfizer’s stock price does n..

  How much is the investment worth in todays terms

An investment offers the following cash flows: $100 one year from now, $150 two years from now, $150 in 3 years, $900 in 4 years, and $600 in 5 years. If the relevant interest rate is 8% per year (an APR, with interest compounded annually), how much ..

  Write the flow rate equation

For the year ending December 31, 2008, General Electric's revenue was $182.52 billion. Assume that the revenue increases by 5% per year and that General Electric will (continuously) invest 10% of its revenues each year at an APR of 4.7% compounded co..

  Projected ROEs between the restricted and relaxed policie

Edwards Enterprises follows a moderate current asset investment policy, but it is now considering a change, perhaps to a restricted or maybe to a relaxed policy. The firm’s annual sales are $400,000; its fixed assets are $100,000; What is the differe..

  The most difficult concept to grasp throughout the course

Reflect upon your experiences and the concepts studied throughout the course. In your own words, explain what maximizing shareholder wealth is all about. What is or was the most difficult concept to grasp throughout the course? What are some tips you..

  Identify the factors that influence equity pricing

Identify the factors that influence equity pricing. How would you value a stock of a startup company expected to grow dividends rapidly during the years 1-5 before its dividend growth stabilizes?

  The rate of return of the british stock market

If a U.S. investor in the U.S. stock market experiences a negative rate of return, is it possible for a French investor with the same investment to experience a positive rate of return?

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