What is the present worth of the cash flow for machine x

Assignment Help Financial Management
Reference no: EM131222162

XYZ Corporation

The production department of XYZ Corporation is thinking of buying one of two numerically controlled zipper machines. Either would last 10 years. Additionally, the costs, in $ x 103, are:

Assume that the annual costs are paid at the end of each year and the salvage value at the end of the tenth year. Using a discount rate of 15%:

 

Machine X

Machine Y

Initial Investment

20

30

Salvage Value

5

7

Annual Operating Cost

12

6

Annual Maintenance Cost

2

4

(a) What is the present worth of the cash flow for machine X? Machine Y?

(b) Which machine should be purchased?

c. Later in the term, you are trying to figure out how much of the initial investment of the machine you purchased to allocate to the annual fixed unit costs of your product. Assuming you want to allocate the same amount each year for the next 10 years, what should that future yearly value be? How much would the machine contribute to the unit costs, assuming you achieve production volumes of 100,000
annually? Assume a discount rate of 15%.

Reference no: EM131222162

Questions Cloud

How has era affected modern adult corrections management : How has each era affected modern adult corrections management? What are the positive and negative influences of each era on the progression of adult corrections management in the United States?
Identify any supporting material used to support the claim : Identify any supporting material used to support the claim. Identify the type of reasoning used to justify the claim and explain how it uses the supporting material to make the claim.
How people view what is criminal and what is not : What are some other examples of how societal norms and standards have changed how people view what is criminal and what is not? Also, why does this occur? What changes in society that makes people look at acts differently?
Calculate the speed v of the plane : Find the speedboats final speed - what is the height of the arrow once it has traveled the 52.0 m horizontally to the tree?
What is the present worth of the cash flow for machine x : What is the present worth of the cash flow for machine X? Machine Y? - how much of the initial investment of the machine you purchased to allocate to the annual fixed unit costs of your product.
List the types of investments that may be at risk : Explain the importance of having accurate data for performing earned value management, based on the articles provided. Provide examples on how accurate and consistent data is related to risk management and decision making within project management..
How to identify the best market entry strategy : How to identify the best market entry strategy based on the business type and host country business environment (this includes the level of economic integration between home and host country, the political and legal environment of the host country)
Brand in the aerospace industry : Fiji Airways is a well-known brand in the aerospace industry but the company still struggles with identifying, attracting, and retaining its skilled workers. Manytalented people are leaving for other occupations because of the challenges in theaer..
Why did garrison get an a : Why did Garrison get an A? He wrote three full paragraphs. Each paragraph was about writing and the class he is finishing. He wrote clear, easy to read sentences.

Reviews

Write a Review

Financial Management Questions & Answers

  Think about keeping things between the lines

One way to think about the function of controlling is to think about keeping things "between the lines" as you would do when you drive a vehicle down the road. While there will be variation from time to time, managers need to limit that variation to ..

  Payback period considers timing and amount of cash flows

The payback period rule states that you should accept a project if the payback period is less than one year. The payback period considers the timing and amount of all of a project's cash flows. You are analyzing a short-term project with conventional..

  What is the current value of the companys stock

JJ Industries will pay a regular dividend of $3.15 per share for each of the next four years. At the end of the four years, the company will also pay out a $83 per share liquidating dividend, and the company will cease operations. If the discount rat..

  How big will the balloon payment be

You have just arranged for a $1,660,000 mortgage to finance the purchase of a large tract of land. The mortgage has an APR of 6.6 percent, and it calls for monthly payments over the next 20 years. However, the loan has an eight-year balloon payment, ..

  Calculate the after-tax cost of debt

Calculate the after-tax cost of debt and what is LL's after-tax cost of debt? Round the answer to two decimal places

  The qualifier for a financial advisor

The qualifier for a financial advisor would be ________.

  What is the YTM and What is the effective annual yield

Bourdon Software has 12 percent coupon bonds on the market with 16 years to maturity. The bonds make semiannual payments and currently sell for 108.8 percent of par. Current yield is 9.63%. What is the YTM? What is the effective annual yield?

  Social security system is an example of public pension plan

The Social Security System is an example of a public pension plan that is a pay-as-you-go system. What is a pay-as-you-go pension plan?

  How much principal will be paid-off by the end of year

For the past 3 years, you have been saving $60,000 of your salary each year for a down payment on your dream house. The house is located In a nice area and is currently listed at $265,000. J.P. Morgan chase bank is willing to give you a 30 year loan ..

  Considering building sensitive new airport scanning device

Howard Weiss, Inc., is considering building a sensitive new airport scanning device. His managers believe that there is a probability of 0.40 that the ATR Co. will come out with a competitive product. Expected value for the building new plant option ..

  Deposit into the account each month to meet his goal

Brett is 25 years old and wants to have $1.5 million in an investment account when he reaches age 65. He plans to begin depositing money into an investment account that earns 12%, compounded monthly. How much does he need to deposit into the account ..

  Dividends per share payable to prefer and common

Beagle Corporation has 23,000 shares of $10 par common stock outstanding and 17,000 shares of $100 par, 4.50% cumulative, non participating preferred stock outstanding. Dividends have not been paid for the past two years. This year, a $440,000 divide..

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