A cherry processing facility in Northern Michigan processes…
A cherry processing facility in Northern Michigan processes both sweet and tart cherries for local growers. The facility needs to install a new cherry pitter. An analyst recently obtained the following estimates. Preliminary feasibility study (this year, year 0) $6,000 Purchase & install system (this year, year 0) $260,000 Annual operating costs (years 1-8) $16,000 in year 1, increasing by $3,000 each year Salvage value (year 8) $26,000 Other phase-out activities (year 8) $4,500 The cherry pitter would be used for eight years. The facility uses a before-tax MARR of 8% per year for these types of decisions. (Round to nearest dollar.) What is the capital recovery (CR) cost of the system? $[cr] What is the annual equivalent worth of the operating costs? $[aoc] What is the annual equivalent cost of this project? $[aec]
Read DetailsA school must purchase new equipment for its chemistry lab….
A school must purchase new equipment for its chemistry lab. Two providers submitted the following estimates. The salvage values are not expected to change. The school evaluates laboratory equipment purchases over a 4-year study period using a present worth analysis. The annual effective interest rate is 8%. Provider A Provider B First cost, $ 19,000 20,900 Annual maintenance & operating costs, $ per year 3,400 1,700 Salvage value 1,900 2,090 Life, years 5 8 What is the present worth of the cash flow for Provider A that should be used in the analysis? $[npwa] (round to nearest dollar) The net present worth of the cash flows for Provider B is −$24,990. Based on a present worth analysis, which provider should the school select, A or B? [select]
Read DetailsIn order to expand tele-health services, a provider must inv…
In order to expand tele-health services, a provider must invest in technology for video and audio calls. The cost for the new equipment is $1,900,000. The equipment would be depreciated as a 5-year property using the MACRS method. Gross income from this investment is expected to be $750,000 in year 1 and increase by $30,000 each year. Annual operating expenses are expected to be $150,000 in year 1 and increase by $20,000 each year. The provider’s combined marginal tax rate is 39%. The provider uses a study period of 6 years for these purchases and plans to keep the equipment indefinitely. What is the cash flow after taxes for Year 4? $[ca2] (round to nearest dollar) Refer to the CFAT summary below. Use the CFAT that you calculated in (a) for Year 4. What is the after-tax Rate of Return over the study period? [ror]% (round percentage to one decimal) If their MARR is 14%, should the provider invest in this equipment, YES or NO? [in] Year CFAT,$ 0 −1,900,000 1 514,200 2 609,220 3 520,472 4 (a) CFAT 5 475,763 6 439,182
Read DetailsDue to recent business conditions, you will be working from…
Due to recent business conditions, you will be working from home for the foreseeable future. To replace your daily coffee-shop habit, you decided to purchase a $420 Steamy Perkster – an automated espresso maker and milk frother. Based on your daily need for a double-shot latte, you estimate that your monthly expenses for coffee beans, milk, and descaler will be about $37.50 per month. This same drink costs $4 at your local coffee shop, including tip. At an average of 30 drinks each month and an effective interest rate of 2% per month, what is the discounted payback period for this purchase? [dpb]
Read DetailsA cherry processing facility in Northern Michigan processes…
A cherry processing facility in Northern Michigan processes both sweet and tart cherries for local growers. The facility needs to install a new cherry pitter. An analyst recently obtained the following estimates. Preliminary feasibility study (this year, year 0) $5,000 Purchase & install system (this year, year 0) $250,000 Annual operating costs (years 1-8) $15,000 in year 1, increasing by $3,000 each year Salvage value (year 8) $25,000 Other phase-out activities (year 8) $3,750 The cherry pitter would be used for eight years. The facility uses a before-tax MARR of 10% per year for these types of decisions. (Round to nearest dollar.) What is the capital recovery (CR) cost of the system? $[cr] What is the annual equivalent worth of the operating costs? $[aoc] What is the annual equivalent cost of this project? $[aec]
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