A company must install one of two systems to reduce costs. …
A company must install one of two systems to reduce costs. Both systems have useful lives of 5 years and no salvage value. The cash flows are summarized below. Year System A NCF, $ System C NCF, $ 0 −10,000 −13,500 1 3,000 3,000 2 3,000 3,500 3 3,000 4,000 4 3,000 4,500 5 3,000 5,000 IRR 15.2% 13.4% Assume the firm’s MARR is 12%. Which project should be selected on the basis of the IRR criterion? [which]
Read DetailsA process engineer needs to purchase a welding machine for a…
A process engineer needs to purchase a welding machine for a new production line. The machine costs $41,000 now, has a maintenance cost of $6,000 per year, and will last 7 years. Any time after year 5 the machine will have a salvage value of $7,000. The effective interest rate is 6% per year. What is the capital recovery cost of the machine?
Read DetailsTo help pay for construction of a new energy-efficient produ…
To help pay for construction of a new energy-efficient production facility, a mattress manufacturer recently issue $300 million in bonds. The 10-year bonds sold at their face value of $10,000, with a coupon rate of 8% per year, payable quarterly. An investor purchased one bond. How much money will the investor receive 3 months after purchasing the bond? $[a] (round to zero decimal places) The investor plans to hold the bond to maturity. What annual rate of return will they realize? [b]% (round to two decimal places)
Read DetailsA large fashion retailer recently issue $1.3 billion in bond…
A large fashion retailer recently issue $1.3 billion in bonds to help repay funds it had previously borrowed. When the bonds were sold, an enterprising 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 zero decimal places) The investor plans to hold the bond to maturity. What annual rate of return will they realize? [b]% (round to two decimal places)
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