Equivalent annual cost of investing in the cheap system

Assignment Help Business Economics
Reference no: EM132149129

Blooper Industries must replace its magnoosium purification system. Quick & Dirty Systems sells a relatively cheap purification system for $15 million. The system will last 5 years. Do-It-Right sells a sturdier but more expensive system for $21 million; it will last for 7 years. Both systems entail $2 million in operating costs; both will be depreciated straight-line to a final value of zero over their useful lives; neither will have any salvage value at the end of its life. The firm's tax rate is 20%, and the discount rate is 12%. Either machine will be replaced at the end of its life.

a. What is the equivalent annual cost of investing in the cheap system? (Do not round intermediate calculations. Enter your answer as a positive value. Enter your answer in millions rounded to 3 decimal places.)

b. What is the equivalent annual cost of investing in the more expensive system? (Do not round intermediate calculations. Enter your answer as a positive value. Enter your answer in millions rounded to 3 decimal places.)

Reference no: EM132149129

Questions Cloud

Comment on the merit of taking such an approach : "A Financial Planning Licensee striving for excellence in their fiduciary duty has decided to set a maximum limit of gearing for all client financial plans they
Explain how you applied social work practice skills : Describe your reactions and/or any issues related to your interaction with a client during your field education experience.
Find the present value : Also calculate the present value if the $7,00 is received after two years.
Seaboard shipping company : Compute L, Lq, W, and Wq. (Round answers to 1 decimal place, e.g. 15.5.)
Equivalent annual cost of investing in the cheap system : a. What is the equivalent annual cost of investing in the cheap system?
How can you address these issues on a micro and macro level : Forms of oppression can come together often in almost imperceptible ways to form the complex environment in which you and your clients live and interact.
Identify the case you will be using for the final project : In order to provide the appropriate intervention, social workers first need to have conducted a thorough assessment.
Confidence interval for the amount of time : What is the 95% confidence interval for the amount of time spent on personal issues?
Describe the nyc restaurant inspection system : Describe the NYC restaurant inspection system (e.g.,three main differences between the NYC and Michigan restaurant inspection systems).

Reviews

Write a Review

Business Economics Questions & Answers

  Economics assignment

This document contains various important questions and their appropriate answers in the subject field of Economics.

  Demand and supply curves

Economics is the study of the principles governing the allocation of scarce means among competing ends when the objective of the allocation is to maximize the attainment of the ends.

  Long-run perfectly competitive equilibrium for the firm

Evaluate Government intervene and correct this situation?(a) Explain the concept of a concentration ratio. A rise in the price of magarine Explain the impact of external costs and external benefits on resource allocation long-run perfectly c..

  Supply and demand diagrams

Explain each of the following using supply and demand diagrams,  With the use of a graph, explain how these two programs affect cigarette consumption and the price of cigarettes.

  Case study: fisher-price toys

The case study of the Fisher-Price Toys, Inc., a popular case in basic economics and management from the prestigious Harvard Business School.

  Draw the production possibility curve

Draw the production possibility curve and a. Define consumer surplus and producer surplus.

  Tax revenue

The Australian government administers two programs that affect the market for cigarettes

  Maximize total welfare

How many tickets to sell to maximize total welfare.

  Difference between the cv and the ev

The change in consumer surplus (?CS) is not "theoretically" justifiable like the CV and EV but it continues to be the most widely used measure of consumer welfare change. Explain how this can be reconciled

  Depict von neumann-morgenstern utility index u in a diagram

Depict the von Neumann-Morgenstern utility index u in a diagram

  What is the market solution

What is the market solution (market price and quantity) and What is the total surplus of the society under the market solution

  Calculate gross national product and net national product

Calculate gross national product and net national product

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