A new manual pick-and-place machine is one alternative to improve both quality and productivity of an existing PCB assembly process. The machine costs $45,000. Operating and maintenance costs start at $5,000 the first year and increase by $2,000 each year after that. The machine will have a life of 5 years, with a salvage value of $9,000 at the end of 5 years. The company’s MARR is 8%. The capital recovery cost of the machine is $9,736. (Round answers to nearest dollar.) What are the annual equivalent operating and maintenance costs for the machine? $[aoc] What is the annual equivalent cost for the machine? $[aec]

Three years ago, the Lucky Strike mine in Arizona was purchased for $80,000. At the time of purchase, the mine contained 1,000 tons of mica. Production, sales, and taxable income for the first three years were: Year Extracted Mica (tons) Sales ($) Taxable Income ($) 1 60 18,700 20,000 2 200 60,000 27,000 3 120 57,950 40,000 The cost depletion amount for Year 3 was $9,600. (Round answers to nearest dollar.) Determine the percentage depletion amount for Year 3.  $[p3] What depletion allowance should Lucky Strike take for Year 3?  $[t3]

The Annual Equivalent Cost for three mutually exclusive alternatives are listed below.  AEC1 = $50,000 AEC2 = $55,000 AEC3 = $60,000 The alternative(s) that should be recommended is [which] 

A local mining company purchased a new ore grading unit for $80,000.  The unit has an anticipated life of 10 years and a salvage value of $10,000. Using straight-line (SL) depreciation,  What is the depreciation rate for year 4? [sr4] (two decimals) What is the depreciation charge for year 4? $[sd4] (nearest dollar) What is the book value at the end of year 4? $[sb4] (nearest dollar)

The Units of Production method of book depreciation [what] 

A large multi-national technology company recently issued $7 billion in bonds, at four different maturities (tranches), to help fund the takeover of another company.  When the bonds were sold, an investor purchased a 10-year, $10,000 bond at face value with a coupon rate of 8% per year, payable quarterly. How much money will the investor receive 3 months after purchasing the bond?   $[a] (round to nearest dollar) If the investor holds the bond to maturity, what annual rate of return will they realize?   [b]% (round to two decimal places)

Rx, Ltd. sold its prescription drug business to Goliath, Inc. for $3.1 billion. The income from product sales is $2 billion per year, and net profit is 20% of sales. What annual rate of return will Goliath make over a 9-year planning horizon? [ror] 

A company plans to spend $3,700,000 on equipment that will be depreciated using the MACRS method and a 5-year recovery period. The company uses a 6-year study period for these types of purchases and plans to keep the equipment indefinitely. Gross Income, Operating Expenses and the Depreciation Charge are given below for Year 1, with the Cash Flow After Taxes for the rest of the study period. The company’s combined marginal tax rate is 39%. Year GI OE CFBT Dt TI Taxes CFAT 0 −$3,700,000 1 $900,000 $50,000 (a) $740,000 (b) (c) (d) 2 $1,041,260 3 $917,556 4 $867,734 5 $928,734 6 $906,617 Round to nearest dollar. For Year 1, what is the cash flow before taxes, CFBT? $[cb] For Year 1, what is the taxable income, TI? $[ti] For Year 1, what is the amount of taxes, Taxes? $[x] For Year 1, what is the cash flow after taxes, CFAT? $[ca] What is the after-tax Rate of Return over the study period? [ror]%  (one decimal) If the company’s MARR is 10%, should they invest in this equipment, YES or NO? [in]

A manufacturer plans to spend $3,700,000 on equipment that will be depreciated using the MACRS method and a 5-year recovery period. The manufacturer uses a 6-year study period for these types of purchases and plans to keep the equipment indefinitely. Gross Income, Operating Expenses and the Depreciation Charge are given below for Year 5, with the Cash Flow After Taxes for the rest of the study period. The manufacturer’s combined marginal tax rate is 39%. Year GI OE CFBT Dt TI Taxes CFAT 0 −$3,700,000 1 $807,100 2 $1,041,260 3 $917,556 4 $687,734 5 $1,580,000 $330,000 (a) $426,240 (b) (c) (d) 6 $906,617 Round to nearest dollar. For Year 5, what is the cash flow before taxes, CFBT? $[cb] For Year 5, what is the taxable income, TI? $[ti] For Year 5, what is the amount of taxes, Taxes? $[x] For Year 5, what is the cash flow after taxes, CFAT? $[ca] What is the after-tax Rate of Return over the study period? [ror]%  (one decimal) If the company’s MARR is 15%, should they invest in this equipment, YES or NO? [in]

One rate of return for the following cash flow series is 35.0% per year. Year 0 1 2 3 4 5 Net Cash Flow, $ −2,000 500 1,000 2,500 −1,000 876