Calculate new machine internal rate of return for monty pix

Assignment Help Managerial Accounting
Reference no: EM132975735

Monty Pix currently uses a six-year-old molding machine to manufacture silver picture frames. The company paid $104,000 for the machine, which was state of the art at the time of purchase. Although the machine will likely last another ten years, it will need a $11,000 overhaul in four years. More important, it does not provide enough capacity to meet customer demand. The company currently produces and sells 15,000 frames per year, generating a total contribution margin of $99,000.

Martson Molders currently sells a molding machine that will allow Monty Pix to increase production and sales to 20,000 frames per year. The machine, which has a ten-year life, sells for $139,000 and would cost $13,000 per year to operate. Monty Pix's current machine costs only $8,000 per year to operate. If Monty Pix purchases the new machine, the old machine could be sold at its book value of $5,000. The new machine is expected to have a salvage value of $20,000 at the end of its ten-year life. Monty Pix uses straight-line depreciation.

Problem 1: Calculate the new machine's net present value assuming a 16% discount rate?

Problem 2: calculate the new machine's internal rate of return?

Problem 3: Calculate the new machine's payback period.

Reference no: EM132975735

Questions Cloud

What is the salaries expens : M expects that all 10,000 options will vest. 50. Assuming that estimates does not change by the end of 2020, what is the salaries expense in 2020
Advent of the forth industrial revolution : Discuss how businesses can prosper during these current Covid-19 circumstances and with the advent of the forth industrial revolution
What is the credit to the share premium account : Assuming that 80% of the share options vested were exercised in 2023, what is the credit to the share premium account as a result of the exercise?
What annual interest rate should the bank set : The bank's required real rate of return is 3 percent per annum. What annual interest rate should the bank set
Calculate new machine internal rate of return for monty pix : Calculate the new machine's internal rate of return? Calculate the new machine's net present value assuming a 16% discount rate?
What is the maximum amount mr kulkarni can spend : Assuming EAR at 10% for entire time period; what is the maximum amount Mr. Kulkarni can spend on his world tour
Calculate the profitability index of the two opportunities : Calculate the profitability index of the two opportunities. Donald Martin is evaluating two new business opportunities. Each of the opportunities shown
Explain the multi-national organization : Suppose that you have been selected to lead a newly established multi-national organization affiliated to United Nations (UN). What kind of leadership approach
Describe a loyalty program : How each of the three works ( or might work) for the example that you have chosen and describe. Choose and describe a loyalty program that you participate

Reviews

Write a Review

Managerial Accounting Questions & Answers

  Manage budgets and financial plans

Explain the budgeting process and its importance to a business, identifying the components of different budgets, forecast estimates for inclusion in the budgets.

  Prepare a retained earnings statement

Prepare a retained earnings statement for the year and Prepare a stockholders' equity section of given case.

  Prepare a master budget for the three-month period

Prepare a master budget for the three-month period.

  Construct the companys direct labor budget

Construct the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced.

  Evaluate the predetermined overhead rate

Evaluate the Predetermined Overhead Rate

  Determine the company''s bid

Determine the company's bid if activity-based costing is used and the bid is based upon full manufacturing cost plus 30 percent.

  Compute the pool rates for the different activities

Complete the schedule to compute the pool rates for the different activities.

  Prepare Company financial statements

Prepare Company financial statements

  Prepare an analysis of terracycles

This individual assignment is based on the TerraCycle Inc.

  Discuss the ethical issues

Discuss the ethical issues

  Political resources in emerging markets

Calculate the GDP in Income Approach  and Expenditure Approach

  Management accounting - ehsan electronics company

A new plant accountant suggested that the company may be able to assign support costs to products more accurately by using an activity based costing system that relies on a separate rate for each manufacturing activity that causes support costs.

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