Two machines used in your manufacturing plant

Assignment Help Financial Management

Reference no: EM131331037

You are considering the purchase of one of two machines used in your manufacturing plant. Machine A has a life of two years, costs $160 initially, and then $95 per year in maintenance costs. Machine B costs $230 initially, has a life of three years, and requires $180 in annual maintenance costs. Either machine must be replaced at the end of its life with an equivalent machine. The discount rate is 11 percent and the tax rate is zero. Calculate the EAC. (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.) EAC Machine A $ Machine B $

Reference no: EM131331037

Questions Cloud

Effective annual interest rate on this lending arrangement : You’ve worked out a line of credit arrangement that allows you to borrow up to $40 million at any time. The interest rate is .44 percent per month. In addition, 4 percent of the amount that you borrow must be deposited in a non-interest-bearing accou..

Compute the standard deviation of kohls monthly returns : The past five monthly returns for Kohl’s are 3.56 percent, 3.67 percent, −1.70 percent, 9.26 percent, and −2.58 percent. Compute the standard deviation of Kohls’ monthly returns.

Using for your flagship product battlin bobby : You are considering adding a new software title to those published by your highly successful software company. If you add the new product, it will use capacity on your disk duplicating machines that you had planned on using for your flagship product,..

Evaluating different cookie-baking ovens : You are evaluating two different cookie-baking ovens. The Pillsbury 707 costs $59,000, has a 5-year life, and has an annual OCF (after tax) of –$10,400 per year. The Keebler CookieMunster costs $92,000, has a 7-year life, and has an annual OCF (after..

Two machines used in your manufacturing plant : You are considering the purchase of one of two machines used in your manufacturing plant. Machine A has a life of two years, costs $160 initially, and then $95 per year in maintenance costs. Either machine must be replaced at the end of its life with..

Calculate the percentage changes in roe when the economy : RAK, Inc., has no debt outstanding and a total market value of $200,000. Earnings before interest and taxes, EBIT, are projected to be $26,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 12 percen..

European call option which expires today : You are the writer (seller) of a European call option which expires today. The call premium is $0.75 and the exercise price is $13.50. The underlying stock price is 12.50. What is your profit or loss? (1)

Received from drug companies for his latest discovery : Dr. Harold Wolf of Medical Research Corporation (MRC) was thrilled with the response he had received from drug companies for his latest discovery, a unique electronic stimulator that reduces the pain from arthritis. Thirty percent of the buyer’s gros..

User Account

All Pages