Enterprise data management system

Assignment Help Financial Management
Reference no: EM131130247

Galvanized Products is considering the purchase of a new computer system for their enterprise data management system. The vendor has quoted a purchase price of $100,000. Galvanized Products is planning to borrow 1/4th of the purchase price from a bank at 15% compounded annually. The loan is to be repaid using equal annual payments over a 3-year period. The computer system is expected to last 5 years and has a salvage value of $5,000 at that time. Over the 5-year period, Galvanized Products expects to pay a technician $25,000 per year to maintain the system but will save $55,000 per year through increased efficiencies. Galvanized Products uses a MARR of 18%/year to evaluate investments. A) What is the present worth of this investment? B) What is the decision rule for judging the attractiveness of investments based on present worth? C) Should the new computer system be purchased?

Reference no: EM131130247

Questions Cloud

Write an interepatation on given article : write an interepatation by Reading the article on The Gift that Keeps on Giving: Google, Ingress, and the Gift of Surveillance from the Surveillance & Society.
What is the profit expressed as future value : The forward price of wheat for delivery in three months is $3.90 per bushel, while the spot price is $3.60. The three-month interest rate in continuously compounded terms is 8% per annum. Is there an arbitrage opportunity in this market if wheat may ..
What sort of inefficiencies does the price control cause : Would you expect patients and doctors to find ways around the maximum price?
How many other real estate firms also be competing for sales : It is your responsibility to analyze the sales list and determine which housing development project your real estate firm should focus on. Your submission should make a clear designation which project you chose. Your analysis should be from as man..
Enterprise data management system : Galvanized Products is considering the purchase of a new computer system for their enterprise data management system. The vendor has quoted a purchase price of $100,000. Galvanized Products is planning to borrow 1/4th of the purchase price from a ban..
Consider the calculation of an external rate of return : Consider the calculation of an external rate of return (ERR). The positive cash flows in the cash flow profile are moved forward to t = n using what value of i in the (F/P, i, n-t) factors? A) 0 B) the unknown value of ERR (i') C) MARR D) IRR
Deposits were not made for the tenth and eleventh years : A deposit of $800 is planned for the end of each year into an account paying 8 percent/year compounded annually. The deposits were not made for the tenth and eleventh years. All other deposits were made as planned. What amount will be in the account ..
How does the maximum price affect the quantity of gasoline : Draw a graph to show the effects of the maximum price on the gasoline market. Label the initial equilibrium point as a and the point that shows the quantity supplied under the maximum price as b.
Analyze good health hospitals records : Analyze Good Health Hospital's records and itemize recent nosocomial infections that occurred within the past year. Identify a targeted audience within Good Health Hospital.

Reviews

Write a Review

Financial Management Questions & Answers

  What is the estimated OCF for this project

Consider a project to supply Detroit with 40,000 tons of machine screws annually for automobile production. You will need an initial $5,600,000 investment in threading equipment to get the project started; the project will last for six years.  You re..

  What is your approximate real rate of return

What is your approximate real rate of return on this investment?

  What is basis for the exchanged properties combined whole

Vern owned farm acreage he inherited several years ago. There was no building nor improvement to the land. He decided to sell the farm in an exchange and acquired two rental houses. What is the basis for the exchanged properties combined as a whole? ..

  What is the cost assigned to the equipment

Land, buildings and equipment are acquired for a lump sum of $875,000. The market values of the three assets are, respectively, $200,000, $500,000 and $300,000. What is the cost assigned to the equipment?

  Manufactures time series photographic equipment

Photochronograph Corporation (PC) manufactures time series photographic equipment. It is currently at its target debt-equity ratio of .58. It’s considering building a new $71.1 million manufacturing facility. This new plant is expected to generate af..

  What will be bonds price in year

In 2010, Apple issued $1000 face bonds with a 7% semi-annual coupon. The bonds mature in 2030. Exactly 5 years later, a company financially similar to Apple is preparing to issue 20 year $1000 face bonds with a 6.5% semi-annual coupon. What will be A..

  Minority shareholders have a greater chance of electing

Minority shareholders have a greater chance of electing a member to the board of directors if the company uses

  Make a series of deposits into a interest bearing account

You plan to make a series of deposits into a interest bearing account earning 11%. You will deposit $2000 today, $3000 two years from today, and $9000 five years from today. If you withdraw $2000 four years from today and $5000 seven years from today..

  Using a fama-french three-factor model

Fama-French Three-Factor Model An analyst has modeled the stock of a company using a Fama-French three-factor model. The risk-free rate is 3%, the market return is 10%, the return on the SMB portfolio (rSMB) is 2.6%, and the return on the HML portfol..

  Which of the three projects has the highest present value

The three proposals are listed below. An actuarial table indicated that Allison, age 37 at the time of the accident, had an anticipated life expectancy of 40 more years. Assume a discount rate of 6 percent is used, which of the three projects has the..

  What must coupon rate be on these bonds

Rhiannon Corporation has bonds on the market with 22.5 years to maturity, a YTM of 6.90 percent, and a current price of $1,057. The bonds make semiannual payments. What must the coupon rate be on these bonds?

  Dustin is considering investment-annual rate of return

Dustin is considering an investment that will pay $3200 a year for 8 years, starting 1 year from today (which is normal). How much should Dustin pay for this investment today if he wishes to earn a 6 percent annual rate of return?

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