Use both present worth and annual worth comparisons

Assignment Help Financial Management

Reference no: EM131956421

Dave Metal is examining two options – Machine A and Machine B - for a core-cutting machine. Machine A Initial Cost $ 250,000 Savings $28,000/year Maintenance Cost $10,000/year + $0.05/unit Labor $0.25/widget Life 10 years Salvage Value $22,500. Machine B Initial Cost $ 180,000 Savings $22,000/year Maintenance Cost $20,000 /year Labor $0.50/widget Life 5 years Salvage Value $ 17,000. MARR is 12 percent and the company’s sale projection is 30,000 widgets/year. Should either, both or neither machine be purchased? Use both present worth and annual worth comparisons.

Reference no: EM131956421

Questions Cloud

Target debt-equity ratio : Appraisal, Inc., has a target debt-equity ratio of .65. Its cost of equity is 13 percent, and its cost of debt is 9 percent.

Present value of an annuity due : A partnership. what's the present value of the same annuity due?

Two years future value : Two Years Future Value What is the future value of $450 deposited for two years earning 8% interest rate annually?

Create portfolio with an expected return : If your goal is to create a portfolio with an expected return of 9.2%, what is your weight in Stock A??

Use both present worth and annual worth comparisons : Dave Metal is examining two options – Machine A and Machine B - for a core-cutting machine. Use both present worth and annual worth comparisons.

Risk is major concern of almost all investors : Risk is a major concern of almost all investors. What do you think are ethical limits that managers should observe when taking risk with other people's money?

What is the price of these three bonds in dollars : What is the price of these three bonds in dollars?

Explain the relationship of time value and options : Explain the relationship of time value and options, how does it affect pricing of options, how it is looked at in business etc.

The unique procedure available to fund shareholders : What is the unique procedure available to fund shareholders for challenging a fund adviser’s management fees as excessive?

User Account

All Pages