Decide between two different conveyor belt systems

Assignment Help Financial Management
Reference no: EM131878403

1. Hagar Industrial Systems Company (HISC) is trying to decide between two different conveyor belt systems. System A costs $208,000, has a four-year life, and requires $67,000 in pretax annual operating costs. System B costs $294,000, has a six-year life, and requires $61,000 in pretax annual operating costs. Both systems are to be depreciated straight-line to zero over their lives and will have zero salvage value. Whichever system is chosen, it will not be replaced when it wears out. The tax rate is 34 percent and the discount rate is 8 percent.

2. Calculate the NPV for both conveyor belt systems. (Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16). Negative amounts should be indicated by a minus sign.)

Reference no: EM131878403

Questions Cloud

Enron fraud scandal relate to the fraud triangle : How did the Enron Fraud Scandal relate to the fraud triangle?
Weakness of predictive validation strategy : Discuss why the time interval between predictor and criterion data collection is both a strength and a weakness of a predictive validation strategy?
Compute the value of the perpetuity of free cash flow : compute the value of the perpetuity of free cash flow beyond the horizon value. Ignore mid-year discounting.
What constant growth rate would the company just break even : At what constant growth rate would the company just break even if it still required a return of 14 percent on its investment?
Decide between two different conveyor belt systems : Hagar Industrial Systems Company (HISC) is trying to decide between two different conveyor belt systems.
What is the indicated loan-to-value ratio : What is the indicated loan-to-value ratio? What is the monthly mortgage payment? How much interest is paid in the fifth year?
What is the nominal tax savings from depreciation : What is the annual real pre-tax Net Returns in the third year? What is the nominal tax savings from depreciation?
How much money do you receive from the buyer : The current bid and ask quotes are $27.29 and $27.32, respectively. how much money do you receive from the buyer?
Current assets normally include all of the except : Current assets normally include all of the following except. The integrity of financial statement presentations and disclosures is enhanced when

Reviews

Write a Review

Financial Management Questions & Answers

  Estimate the value of the leased fee

First-year NOI for a long-term net lease is expected to be $75,000. Rent is escalating at a rate of 4 percent per year, but there is a two-year period between adjustments. Thus, the income for years 1 and 2 will be $50,000, increasing to $50,000 (1+...

  Describe major components of typical request message

Describe the major components of a typical request message from a client to a server. List at least five software components that large and complex electronic commerce sites can include in addition to a catalog display, shopping cart capabilities, an..

  Calculate minimum transfer balance required

The cash manager of Verematic, Inc., is contemplating the choice between using a wire transfer and an EDT. He estimates that his investment opportunity rate is 9%. The bank's ECR is currently 4%, and the reserve requirement is 12%. Calculate the mini..

  What is value of a share of gamma corporation common stock

What is the value of a share of Gamma Corporation common stock to an investor who requires a 20 percent return on her investment?

  Cash rebate or she takes dealer incentive financing

What are the respective monthly payments if she takes the cash rebate or she takes dealer incentive financing?

  What is a performance bond and payment bond

Why do you think construction contracts are normally accomplished by sealed bid procedures? What is a ‘Performance Bond’? What is a Payment Bond’?

  About the degree of operating leverage

Consider a four-year project with the following information: initial fixed asset investment = $410,000; straight-line depreciation to zero over the four-year life; zero salvage value; price = $22; variable costs = $14; fixed costs = $110,000; quantit..

  Range of annual cash inflows for each of two projects

Murdock Paints is in the process of evaluating two mutually exclusive additions to its processing capacity. The firm’s financial analysts have developed pessimistic, most likely, and optimistic estimates of the annual cash inflows associated with eac..

  Semiannual coupon bond matures

An 7% semiannual coupon bond matures in 4 years. The bond has a face value of $1,000 and a current yield of 7.4185%. What is the bond's price? What is the bond's YTM?

  What is the average accounting return

What is the average accounting return?

  Treausy rate-what is this stocks required rate of return

The ten year US Treausy rate is currently 3.37%, the long term expected market rate is 11.5%, and a stock's beta is 1.47. Using CAPM, what is this stocks required rate of return

  Existing bond that provides annual coupon payments

Assume the following information for an existing bond that provides annual coupon payments: Par value = $1,000 Coupon rate = 11% Maturity = 4 years Required rate of return by investors = 11% a. What is the present value of the bond? b. If the require..

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