Analyze the problem for mfi and make clear recommendations

Reference no: EM131903185

Problem

Metal Fabrication Inc. (MFI) is investigating replacement of a roller they bought five years ago which is fully depreciated. Another company is willing to buy the roller for $23,000 delivered at their factory. The delivery will cost $3,000. If the roller is not sold the maintenance cost will be $9,500 for the next year, increasing by $100 each year thereafter. Its resale value is estimated to be $17,000 by the end of the year and $14,000, $11,000, and $7,000 each year thereafter. A new roller can be bought for $70,000 with an installation cost of $10,000. It will have no maintenance cost for the first two years, $1,000 in year 3, neareasing by $2,000 each year thereafter. Its resale value at the end of the first year is $73,000, at the end of second year is $70,000, at the end of third year is $66,000 and drops by $4,000 per year thereafter. It can be assumed that the productivity and operational costs of both systems are going to be the same. Tax and depreciation are not going to be considered. Analyze this problem for MFI and make clear recommendations. Use a MARR of 10%. Show all your cash flow diagrams and details of any calculations.

Reference no: EM131903185

Questions Cloud

What is the lifetime worth of the machine : If the machine lasts five years and has a removal cost of $1,000 with no salvage value, what is the lifetime worth of this machine?

Calculate the operating cycle and cash cycle : List at least two ways that Wal-Mart could achieve this improvement. Explain the possible risks Wal-Mart may face if it follows your suggestion.

Shelly assets include money in checking and saving accounts : Shelly's assets include money in checking and saving accounts, investments in stocks and mutual funds, Calculate Shelly's net worth.

Determine the maximum stress in the composite bar : Determine the vertical displacement of end A and the displacement of B relative to C. Also determine the maximum stress in the composite bar

Analyze the problem for mfi and make clear recommendations : Analyze this problem for MFI and make clear recommendations. Use a MARR of 10%. Show all your cash flow diagrams and details of any calculations.

What should you pay for the stock : Calculate the current value of the stock: Current dividend is $2.00, projected super normal growth for three years at 30%.

Bonds outstanding-what is cost of equity : The company has $3,400 in bonds outstanding that have 7 percent coupon and pay interest annually. The bonds are selling at par value. What is cost of equity?

Why do you think the experience of the congo : Why do you think the experience of the Congo was so different than that of Ethiopia? Be specific.

Description of the social construction of reality : A description of the social construction of reality through the lens of values, beliefs, and assumptions. Does a multicultural workforce need to confirm.

User Account

All Pages