Determine via present value method

Assignment Help Financial Management

Reference no: EM132029931

Your boss has told you to evaluate two ovens for Think the Thinkers, a gourmet sandwich shop. After some investigation, he determines that they have the following costs. He is told to assume that: a) The life of each machine is 5 years b) The company thinks it knows how to make 10% on investments no more risky than this one. At the end of the fourth year, the two different ovens can have a salvage value of $250 and $500, respectively.

Cost small oven: 1250 high quality oven: 2500

labor per year in excess of large models small oven: 750 high quality oven:0

maintenance Small:250 High quality:200

Salvage value small:250 high quality:500

Determine via present value method which machine to tell your boss to purchase.

Reference no: EM132029931

Questions Cloud

What is the acceleration of a rock thrown straight : What is the acceleration of a rock thrown straight upward on the way up? At the top of its flight? On the way down?

You can sustain without getting margin call : Are you subject to a margin call? What is the maximum price decline on the contract that you can sustain without getting a margin call.

What will happen to the spot price of the pound : Suppose the spot pound and the 90-day forward pound are both selling for $1.65, while the U.S. interest rates are 10 percent and British interest rates.

What is the resistance of the path through the patient : If the defibrillator has an 7.7 µF capacitance, what is the resistance of the path through the patient in kO?

Determine via present value method : Determine via present value method which machine to tell your boss to purchase.

Prepare the journal entries to record income tax expense : Prepare the journal entries to record income tax expense and any related deferred tax assets and liabilities for 2014. Compute taxable income

Calculate projected long-term growth rate of the dividends : ABC pays consistent dividends that grow at a constant rate. ABC is expected to pay a dividend one year from now of $1.99 and the current price of the stock.

What is the current in milliamps after one time constant : A 594 O resistor, an uncharged 1.3 µF capacitor, and a 6.53 V emf are connected in series. What is the current in milliamps after one time constant?

Understanding stock valuation so important for businesses : Why is understanding stock valuation so important for businesses? What role would the valuation play in an acquisition analysis?

User Account

All Pages